A Health Reimbursement Arrangement (HRA) is funded solely by what?

A Health Reimbursement Arrangement (HRA) is funded solely by what?

• A. Employee contributions
• B. Federal funds
• C. An employer's contributions
• D. State grants

Answer: (C)

A Health Reimbursement Arrangement (HRA) is a type of employer-funded account that helps employees pay for qualified medical expenses. The key characteristic of an HRA is that it is solely funded by contributions from the employer, not employees, federal funds, or state grants. This means the employer sets aside a certain amount of money for each employee, which can then be used to reimburse them for out-of-pocket health costs. This structure provides a tax-advantaged way for employers to support their employees’ healthcare needs without requiring employee contributions to the fund.

A Health Reimbursement Arrangement (HRA) is a type of employer-funded account that helps employees pay for qualified medical expenses. The key characteristic of an HRA is that it is solely funded by contributions from the employer, not employees, federal funds, or state grants. This means the employer sets aside a certain amount of money for each employee, which can then be used to reimburse them for out-of-pocket health costs. This structure provides a tax-advantaged way for employers to support their employees’ healthcare needs without requiring employee contributions to the fund.