Health Reimbursement Account - HRA

AAA

DEFINITION of 'Health Reimbursement Account - HRA'

Employer-funded plans that reimburse employees for incurred medical expenses that are not covered by the company's standard insurance plan. Because the employer funds the plan, any distributions are considered tax deductible (to the employer). Reimbursement dollars received by the employee are generally tax free.

The downside to HRAs is that companies may choose whether to start or fund such a plan. Also, if a plan has already been established, the employer has the right to cancel it at virtually any time.

INVESTOPEDIA EXPLAINS 'Health Reimbursement Account - HRA'

As a benefit, an employee may be reimbursed for qualified medical expenses from his or her employer. The funds received are tax-free, but because the plan is employer funded, the employer has the right to cancel or alter the distributions at any time. In spite of this, many employees consider HRAs as a valuable benefit given the rising cost of health care.

RELATED TERMS
  1. Affordable Care Act

    A federal statute signed into law in March 2010 as a part of ...
  2. Medicare Supplementary Medical ...

    Health insurance sold by private insurance companies meant to ...
  3. Accident And Health Benefits

    Fringe benefits provided to employees for sickness, accidental ...
  4. Deductible

    1. The amount you have to pay out-of-pocket for expenses before ...
  5. Insurance

    A contract (policy) in which an individual or entity receives ...
  6. Health Savings Account - HSA

    An account created for individuals who are covered under high-deductible ...
Related Articles
  1. Fighting The High Costs Of Healthcare
    Home & Auto

    Fighting The High Costs Of Healthcare

  2. How To Avoid Medical Debt
    Home & Auto

    How To Avoid Medical Debt

  3. What Does Medicare Cover?
    Insurance

    What Does Medicare Cover?

  4. 10 Sources Of Nontaxable Income
    Taxes

    10 Sources Of Nontaxable Income

comments powered by Disqus
Hot Definitions
  1. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  2. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  3. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  4. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  5. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center