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Health Reimbursement Arrangements sit in a confusing middle ground between FSAs and HSAs, and many employees who have one are not sure exactly what it covers. Understanding HRA eligible expenses matters because, unlike an FSA, you did not choose to contribute to it — your employer funds it entirely. That means every dollar you do not use is money your employer set aside for your benefit that can go unclaimed.
The catch is that HRA rules vary significantly from one employer to another. While the IRS sets broad guidelines, your employer has wide latitude to define which expenses the HRA will reimburse and at what limits. This article explains the general framework, but it is educational only and is not tax or benefits advice — always confirm the specifics with your own plan administrator, since your plan’s terms control.
What Is an HRA?
A Health Reimbursement Arrangement is an employer-funded, tax-advantaged arrangement that reimburses employees for qualified medical expenses and, in some designs, individual health insurance premiums. Unlike FSAs, employees do not contribute to HRAs through payroll deductions. The employer puts the money in and sets the rules for how it can be used. Reimbursements for qualified expenses are generally tax-free to the employee, though the exact tax treatment depends on the plan design and current law.
HRAs were historically used alongside group health plans, but the landscape broadened after federal rules issued in 2019 created new options that took effect in 2020. The Individual Coverage HRA (ICHRA) allows employers to reimburse employees for individual health insurance premiums and medical expenses. The Excepted Benefit HRA (EBHRA) provides a capped amount for additional medical expenses beyond group coverage. Traditional group-integrated HRAs still exist as well, and small employers may offer a Qualified Small Employer HRA (QSEHRA). Your employer’s plan documents will specify which type you have. For a comparison with other account types, see our healthcare costs guide.
Standard HRA Eligible Expenses
The IRS allows HRAs to reimburse expenses that qualify as medical care under Section 213(d) of the Internal Revenue Code — the same broad definition used for FSAs and HSAs, and the one detailed in IRS Publication 502. Commonly covered HRA eligible expenses include medical service copays, deductibles, and coinsurance; prescription medications; dental services and procedures; vision care including exams and corrective lenses; mental health and counseling services; and, under current rules, many over-the-counter medications and menstrual care products.
However — and this is the crucial point — your employer can restrict the HRA to cover fewer categories than the IRS allows. Some employers limit an HRA to only cover deductible expenses before insurance kicks in. Others restrict coverage to specific categories such as dental and vision only. A few design their HRA to reimburse only prescription drugs. The key document is your Summary Plan Description (SPD), which outlines exactly what your specific HRA covers. When in doubt, ask your benefits administrator to point you to the eligible-expense list for your plan.
Types of HRAs and Their Differences
Group-Integrated HRA
The traditional model pairs an HRA with a group health insurance plan. The HRA typically covers deductible costs, copays, and other out-of-pocket expenses up to the employer-funded limit. As a general rule, these HRAs can only be offered to employees who are enrolled in the employer’s group health plan.
Individual Coverage HRA (ICHRA)
Available since 2020, ICHRAs allow employers of any size to reimburse employees for individual health insurance premiums purchased on or off the ACA marketplace, as well as qualified medical expenses. There is no federal cap on how much an employer can contribute. Employees generally must have qualifying individual health coverage to participate, and — importantly — they typically cannot also claim ACA premium tax credits for the months an affordable ICHRA offer applies. Because the interaction with premium tax credits is nuanced, employees weighing an ICHRA against a subsidized marketplace plan should verify the tradeoff for their situation.
Excepted Benefit HRA (EBHRA)
EBHRAs provide a capped, inflation-adjusted amount each year for expenses not covered by the employer’s group plan — common uses include dental, vision, and certain other coverage. The annual limit is set by the IRS and indexed over time (it was $2,150 for plan years beginning in 2025 and rises modestly with inflation, so confirm the current year’s figure). Employees generally must be offered the employer’s group plan to participate, but the EBHRA covers expenses the group plan typically does not.
Qualified Small Employer HRA (QSEHRA)
QSEHRAs are designed for smaller employers (generally those with fewer than 50 full-time-equivalent employees) that do not offer a group health plan. They can reimburse individual premiums and qualified medical expenses up to an annual cap set by the IRS. For taxable years beginning in 2026, the QSEHRA maximum is $6,450 for self-only coverage and $13,100 for family coverage, per IRS Revenue Procedure 2025-32. These limits are adjusted annually, so verify the current figure for your plan year.
Expenses That Are Usually Not HRA Eligible
Even under the broadest HRA design, certain expenses generally remain ineligible. Cosmetic procedures performed solely to improve appearance do not qualify. Health club dues and gym memberships are typically excluded unless specifically prescribed to treat a diagnosed condition (and even then, documentation is usually required). Long-term care insurance premiums are generally not reimbursable through an HRA. Personal-care items like toiletries, general wellness supplements, and non-medicated products are usually not eligible.
Additionally, expenses that have already been reimbursed by another source — including insurance payments, FSA reimbursements, or HSA distributions — cannot be double-reimbursed through the HRA. The rules prohibit using two tax-advantaged accounts or an insurer plus an account to cover the same dollar of expense. Keep your receipts and explanations of benefits so you can show an expense was not reimbursed elsewhere if your administrator asks.
How to Get Reimbursed From Your HRA
The reimbursement process varies by administrator but generally follows a consistent pattern. First, incur an eligible medical expense and obtain a receipt or explanation of benefits. Then log into your HRA administrator’s portal and submit a claim with the date of service, provider, expense amount, and documentation. The administrator reviews the claim against your plan’s eligible-expense list, and approved claims are paid by direct deposit or check — often within a few business days to a couple of weeks, depending on the administrator.
Some HRAs issue debit cards that work much like FSA cards, letting you pay directly at the point of service, while others operate on a reimbursement-only basis. Check your plan documents to see which method applies and whether there are deadlines (such as a run-out period) for submitting claims.
HRA vs FSA vs HSA: Quick Comparison
Understanding where your HRA fits relative to other tax-advantaged accounts helps you coordinate benefits effectively. HRAs are funded solely by your employer, while FSAs are funded through your own payroll deductions, and HSAs can receive contributions from both you and your employer. HRA funds may roll over depending on your employer’s plan design; FSA funds are generally subject to a use-it-or-lose-it rule (with limited carryover or grace-period options some employers offer), and HSA funds always roll over.
HRAs are generally not portable — they belong to the employer, and unused funds typically revert to the employer when you leave (though ICHRA and some designs have their own rules). FSAs similarly usually end with employment. HSAs, by contrast, are individually owned and stay with you for life. Some employees have access to both an HRA and an FSA, which can provide additional coverage when coordinated properly. A common tactic is to spend HRA funds first for expenses the HRA covers, and reserve FSA funds for expenses outside the HRA’s scope — but the right order can depend on your plan’s rules, so confirm with your administrator.
Frequently Asked Questions
Can I use my HRA for dental and vision expenses?
It depends on your employer’s plan design. Many HRAs cover dental and vision expenses, but some restrict coverage to medical expenses only, and others (like an EBHRA) may be aimed specifically at dental and vision. Check your Summary Plan Description or contact your benefits administrator to confirm what your specific HRA covers.
Do HRA funds roll over?
That is up to your employer. Some HRAs allow unused funds to carry over to the next plan year, while others follow a use-it-or-lose-it model similar to FSAs. Your plan documents will specify whether rollover is permitted and whether there is a maximum rollover amount.
Can I have both an HRA and an HSA?
Sometimes. A general-purpose HRA that reimburses all medical expenses will typically make you ineligible to contribute to an HSA. However, a limited-purpose HRA (for example, one covering only dental, vision, or post-deductible expenses) can generally be paired with an HSA. Ask your benefits administrator about the specific design of your HRA to determine HSA compatibility, and confirm the current IRS rules.
What happens to my HRA when I leave my job?
In most cases, the HRA balance reverts to your employer when you leave. Some employers allow a limited run-out period to submit claims for expenses incurred before your termination date. ICHRA participants may have different rules. Review your plan documents for the specifics that apply to your situation.
Disclaimer: This article is for general informational purposes only and is not tax, legal, or benefits advice. HRA eligibility, dollar limits, and reimbursement rules are set by the IRS and, most importantly, by your specific employer’s plan documents, and they change over time. Your employer’s plan — not just the IRS Section 213(d) definition or IRS Publication 502 — determines what your HRA actually covers. Dollar figures cited here (such as QSEHRA and EBHRA limits) are indexed annually and may change. Always verify current eligibility, limits, and procedures with your plan administrator and a qualified tax professional before relying on them.
Make the Most of Your HRA
Since HRA funds are employer money earmarked for your healthcare, not using them is essentially leaving part of your compensation on the table. Read your plan documents to understand exactly which HRA eligible expenses your plan covers. Track your eligible out-of-pocket expenses throughout the year and submit claims promptly. If your HRA does not roll over, make sure you have claimed all eligible expenses before the plan year ends. And coordinate with your FSA or HSA to get the most tax-advantaged value from every healthcare dollar you spend — checking with your plan administrator whenever you are unsure how the pieces fit together.
Sources
- IRS — Publication 502, Medical and Dental Expenses
- IRS — Section 213(d) of the Internal Revenue Code (definition of medical care)
- IRS — Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans
- IRS — Revenue Procedure 2025-32 (2026 QSEHRA inflation-adjusted limits)
- HealthCare.gov — Individual Coverage HRAs (ICHRAs) and the marketplace
- IRS, Department of Labor, and Department of Health and Human Services — 2019 final rule establishing ICHRAs and Excepted Benefit HRAs