What do Health Reimbursement Accounts consist of?

Health Reimbursement Accounts (HRAs) consist of funds that are set aside by employers to reimburse employees for qualified medical expenses. This type of account is designed to provide financial support for out-of-pocket healthcare costs that employees may incur.

Employers contribute to HRAs, and the funds are not subject to taxation as income for the employees receiving the reimbursements, making it a tax-advantaged benefit. Employees can use the funds for a variety of eligible medical expenses, which allows for greater flexibility and support in managing healthcare costs.

The other options do not accurately reflect the purpose or structure of HRAs. For instance, while retirement accounts are beneficial, they do not fall under the category of health reimbursements. Employee-funded accounts, such as Flexible Spending Accounts (FSAs), differ from HRAs since they involve employee contributions rather than solely employer funding. Government funds are not typically involved in HRAs, as these accounts are employer-specific designed exclusively for employee healthcare reimbursements.