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Health reimbursement arrangements

HRA guide: how health reimbursement arrangements work

An HRA is a health reimbursement arrangement: an employer-funded benefit for eligible health expenses. Learn how the main HRA types differ, where ICHRA fits, and what to check before choosing or using one.

What is an HRA?

An HRA (health reimbursement arrangement) lets an employer reimburse eligible medical expenses under a written benefit plan. The employer supplies the funding; an employee cannot fund an HRA through salary reductions. The benefit is a promise to reimburse qualifying costs up to the plan's allowance, not automatically a cash account the employee owns. source

ICHRA is a type of HRA. It requires qualifying individual health insurance or Medicare for the covered person. The insurance pays covered medical claims; the ICHRA reimburses expenses permitted by its terms. Choosing an HRA type and choosing an insurance policy are separate decisions. source

How the names fit together

HRA
Employer-funded health reimbursement

ICHRA
Qualifying individual coverage

QSEHRA
Eligible small employers

Other HRA designs
Different coverage and expense rules

HSA and health FSA are separate benefits, not types of HRA.

Find the answer you need

Start with the question in your benefits notice or employer decision.

HRA types & plan design

Types of HRA: ICHRA, QSEHRA and other arrangements

Identify the arrangement and the insurance it works with before applying a rule.

Read the guide
Small employer comparison

ICHRA vs. QSEHRA: which rules change the decision?

Compare eligibility, contribution limits, group coverage and employee tax credits.

Read the guide
Employee benefit comparison

HRA vs. HSA vs. FSA: funding, ownership and eligibility

Understand who funds the benefit, who keeps the money and which benefits can coexist.

Read the guide
Reimbursement & employee costs

HRA eligible expenses: what can be reimbursed?

Check premiums, medical bills, plan restrictions and the evidence needed for reimbursement.

Read the guide

How does HRA reimbursement work?

  1. The employer establishes the benefit. It selects a permitted arrangement, eligible employees, reimbursable expenses, an allowance and a start date.
  2. The employee meets the coverage requirements. Those requirements depend on the HRA type. An ICHRA needs qualifying individual coverage or Medicare; a QSEHRA uses a broader minimum-essential-coverage test for tax-free reimbursements.
  3. The expense is documented. The employee or administrator provides the required proof of coverage and eligible expenses.
  4. The employer reimburses the approved amount. The payment cannot exceed the eligible expense or available benefit. Claim deadlines, payment timing and carryover depend on the arrangement and plan.

A card or direct premium-payment service can change the payment workflow, but it does not remove the eligibility and documentation requirements. Start with what an HRA can reimburse. source source source

Is an HRA health insurance?

An HRA is a reimbursement benefit, not an insurance policy with its own carrier network and covered services. Some HRAs are legally group health plans, but that does not make the reimbursement allowance a comprehensive insurance policy. Your actual policy determines doctors, prescriptions, deductibles and covered services.

For ICHRA, begin with how the benefit and insurance fit together. If you have already been offered it, use the employee guide before choosing coverage. source

What are the benefits and tradeoffs of an HRA?

For an employer, an HRA can define the reimbursement budget and support a particular benefits strategy. For an employee, it can help pay eligible health costs. The practical value depends on the allowance, covered expenses, available insurance and the work needed to get reimbursed.

An employee may still face premiums above the allowance, deductibles and other costs. A reimbursement benefit may also affect Marketplace premium tax credits or eligibility to contribute to an HSA. Those are separate tests, and the answer can change with the HRA type. Compare ICHRA and QSEHRA tax-credit rules and HRA and HSA compatibility. source source source

Where should employers and employees start?

Employers: first decide whether you are replacing group coverage, supplementing it or offering benefits for the first time. Then check the eligible HRA designs. If ICHRA is a candidate, compare ICHRA with group insurance, build the complete cost picture and use the implementation checklist.

Employees: find the full arrangement name in your benefits notice, the amount available, who is covered and which expenses qualify. Ask the administrator if the document only says “HRA.” The same acronym alone cannot tell you whether your current insurance will work.

ICHRA Report specializes in ICHRA. This HRA library explains the wider category so the detailed ICHRA guidance is applied to the right situation.

Sources and evidence

1
Internal Revenue Service — Publication 969: HRA, HSA and health FSA structuresFederal benefit structures, employer-only HRA funding, medical reimbursement, unused balances and HSA interaction. 2025 edition; annual figures are not reused as current limits.Source reviewed 2026-09-13
 2
HealthCare.gov — Individual Coverage Health Reimbursement ArrangementsFederal overview of ICHRA contributions, employee classes, class-size minimums, affordability, and implementation timing.Source reviewed 2026-09-11
 3
Internal Revenue Service — Notice 2017-67: QSEHRA requirementsSections A-H and K: employer and employee eligibility, same terms, annual-limit mechanics, coverage proof, reimbursement and premium-tax-credit interaction. Historical dollar examples are not current limits.Source reviewed 2026-09-13
 4
Internal Revenue Service — Internal Revenue Bulletin 2019-28 — HRA integration final rulesPrimary regulatory text for ICHRA notice timing, individual-coverage substantiation, classes, and opt-out rules.Source reviewed 2026-08-16

Review dates are recorded for each source above. Company pages are useful for confirming how a product is described, but they do not prove service quality or customer results.