Health Reimbursement Account (HRA) 2020

Lesson Progress:

A health reimbursement account (HRA) has these features:

  • An HRA is a savings account at a financial institution that allows a person to have money for out-of-pocket medical expenses.
  • Only the individual’s employer is allowed to contribute to the account; this money is excluded from the employee’s gross income.
  • Workers are not allowed to contribute to the account.
  • The account is owned and controlled by the employer.
  • Withdrawals from the account are not taxed; withdrawn money must be used to pay for qualified medical expenses of the employee or the employee’s family (such as hospital, doctor, dentist, prescription drugs, physical therapy, long-term care, contact lenses, eyeglasses, lab expenses, etc.).
  • The money cannot be withdrawn for things other than to pay for qualified medical expenses.
  • The employer is able to decide if any unused amount deposited in a particular year can be carried over to the following years.