What a Health Reimbursement Account Is

A Health Reimbursement Account (HRA) is money your employer sets aside to pay for your medical expenses. You do not put money in — your employer does. When you have a medical bill, you submit it to the HRA plan, and the plan reimburses you for the cost, up to the amount your employer has allocated for you that year.

The key difference from other health accounts is that you never own the money. It stays in an account managed by your employer or a third-party administrator. Your employer decides how much to put in each year, what types of medical expenses it covers, and what happens to unused money at the end of the year. Because your employer controls the account, the rules vary widely from one workplace to another.

HRAs are often paired with a high-deductible health plan — a type of insurance where you pay lower monthly premiums but a higher amount out of pocket before insurance kicks in. The HRA money helps cover those out-of-pocket costs.

Key Takeaways

  • Your employer funds the HRA, not you, and the money remains the employer's property until you use it for covered medical expenses.
  • You pay for medical care out of pocket first, then submit receipts and bills to the HRA plan for reimbursement.
  • What the HRA covers depends entirely on your employer's plan — some cover only insurance deductibles and copays, others cover a wider range of medical costs.
  • Unused HRA money at the end of the year typically does not roll over to the next year, though some employers allow a small carryover or grace period.
  • You lose access to the HRA if you leave your job, though federal law allows you to continue health insurance coverage through COBRA.

How You Use an HRA to Pay Medical Bills

The process starts when you receive a medical bill. You pay it yourself using your own money — a deductible, a copay, or a cost for a service your insurance does not cover. Then you gather the receipt or bill and submit it to your HRA plan administrator, either by mail, online portal, or mobile app, depending on how your employer's plan is set up.

The plan administrator reviews your submission to confirm the expense is covered under your employer's HRA rules. If it is, they reimburse you — usually by depositing money into your bank account or sending a check. The reimbursement typically takes one to two weeks, though some plans are faster.

Some employers offer an HRA debit card instead. You link it to the HRA account, and you can use it to pay for covered medical expenses directly at the point of care, without having to pay out of pocket and wait for reimbursement. Not all employers offer this option, so check with your benefits administrator about what your plan provides.

What Medical Expenses an HRA Covers

HRAs can cover a broad range of medical costs, but your employer decides the scope. Common covered expenses include insurance deductibles, copays, coinsurance (the percentage of a bill you pay after insurance), and prescription drugs. Some plans also cover dental work, vision care, mental health treatment, and physical therapy.

What is not typically covered includes health insurance premiums themselves, over-the-counter medications without a prescription, cosmetic procedures, and expenses for services your health insurance does not cover at all. Your employer's plan document — sometimes called a Summary of Benefits and Coverage or plan summary — lists exactly what is and is not covered. Ask your benefits administrator or human resources department for a copy if you do not have one.

Because the rules vary so much, do not assume an expense is covered. Submit the bill with your receipt, and let the plan administrator tell you whether reimbursement is possible. If they deny it, ask them to explain which part of the plan rules excluded it.

How Much Money You Get and When

Your employer decides the annual amount allocated to your HRA account. This might be a flat amount for all employees, or it might vary based on your salary, job level, or family size. Some employers contribute the full amount at the start of the year; others spread it across paychecks throughout the year.

You can use the money anytime during the plan year, which usually runs from January 1 to December 31, though some employers use a different calendar. There is no limit on how many times you submit claims or how much you reimburse in a single month — you can only reimburse up to the total amount your employer has allocated.

If you use less than the full amount by the end of the year, what happens next depends on your employer's rules. Many employers do not allow unused money to roll over — you lose it. Some employers allow a small carryover, typically $500 to $1,000. A few offer a grace period of up to two and a half months into the next year to submit claims for expenses from the previous year. Check your plan document or ask your benefits administrator what applies to your HRA.

What Happens to Your HRA When You Leave Your Job

When you leave your employer, your access to the HRA ends when ready. You cannot submit new claims or receive reimbursements for expenses after your last day of work. Any unused money in the account stays with your employer — you do not get to keep it or transfer it elsewhere.

This is one reason to submit HRA claims promptly before you leave a job. If you have medical bills from your time as an employee, submit them before your final day so the plan has time to process them while you are still covered.

If you need to continue health insurance after leaving your job, you may be able to use federal COBRA coverage, which lets you stay on your employer's health plan for up to 18 months. However, COBRA does not include the HRA — you would have to pay the full cost of the health insurance premiums yourself. Some employers offer retiree health plans or other options; ask your benefits administrator what is available.

HRAs Compared to Other Health Savings Accounts

An HRA is often confused with a Health Savings Account (HSA) or a Flexible Spending Account (FSA), but they work differently. An HSA is an account you own and control — you contribute your own money, and it rolls over year to year. An FSA is also funded by your contributions, but unused money does not roll over. An HRA is funded entirely by your employer and does not roll over in most cases.

Another difference: you can take an HSA with you if you leave your job, but you cannot take an HRA or FSA. If your employer offers an HSA alongside a high-deductible plan, you might have the option to use both the HRA and the HSA for the same medical expenses — check your plan rules, because some employers do not allow this.

The right account for you depends on what your employer offers. If your employer offers an HRA, use it to cover medical costs before spending your own money. If you also have access to an HSA, you can use both, though the rules about which expenses each one covers can be complex — your benefits administrator can clarify.

Common Mistakes to Avoid With Your HRA

The biggest mistake is waiting until the end of the year to submit claims. If you have receipts from earlier in the year, submit them now. Processing takes time, and if the plan runs out of money or closes before your claim is processed, you may not be reimbursed. Some employers also have important date for submitting claims — often 30 to 90 days after the end of the plan year — so do not assume you have unlimited time.

Another common error is not keeping receipts. The plan administrator will ask for proof that you paid the bill and that the expense is covered. A credit card statement alone is usually not enough — you need the itemized receipt or medical bill showing what was charged and why. Keep receipts for at least three years in case the plan audits your claims.

Do not assume an expense is covered without checking. Submitting a claim for something not on the covered list wastes time and may trigger a denial. If you are unsure, call your benefits administrator or check the plan document before you submit.

Frequently Asked Questions

Can I use my HRA for my family members' medical bills?

Yes, if they are covered under your health insurance plan. You can submit claims for your spouse and children's medical expenses. However, if a family member is not on your health plan, you cannot use your HRA for their bills — the expense must be for someone covered by the insurance your employer provides.

What if I do not use all my HRA money by the end of the year?

In most cases, unused money is forfeited — you lose it. Some employers allow a carryover of $500 to $1,000 to the next year, or a grace period of up to two and a half months to submit claims for the previous year's expenses. Check your plan document or ask your benefits administrator what your employer allows.

Can I withdraw HRA money for non-medical expenses?

No. The HRA can only be used for medical expenses covered by your plan. If you try to withdraw money for other purposes, you will owe taxes on it and may face penalties. The money is meant specifically for health care costs.

Do I have to enroll in an HRA, or is it automatic?

This depends on your employer. Some employers automatically enroll all employees in the HRA if they are on a high-deductible health plan. Others require you to enroll during open enrollment. Check with your benefits administrator or human resources department to confirm whether you are enrolled and what your annual allocation is.

Can I use my HRA to pay health insurance premiums?

Usually not. Most HRAs cannot be used to pay your health insurance premiums. However, some employers allow HRA funds to cover COBRA premiums if you leave the job, or to pay for certain types of supplemental insurance. Check your specific plan rules.