Introduction to Health Reimbursement Arrangements
A Health Reimbursement Arrangement (HRA), commonly referred to as a Health Reimbursement Account, is an IRS approved, employer-funded, tax-advantaged employer health benefit plan that reimburses employees for out-of-pocket medical expenses and individual health insurance premiums. A Health Reimbursement Arrangement is not health insurance. A Health Reimbursement Arrangement allows the employer to make contributions to an employee’s account and provide reimbursement for eligible expenses. An HRA plan is an excellent way to supplement health insurance benefits and allow employees to pay for a wide range of medical expenses not covered by insurance. 
Health Reimbursement Arrangements are Notional
Health Reimbursement Arrangements are notional arrangements; no funds are expensed until reimbursements are paid. Through Health Reimbursement Arrangements, employers reimburse employees directly only after the employees incur approved medical expenses.
Health Reimbursement Arrangements have no Annual Limits
Unlike a Health Savings Account (HSA), there is no limit to the amount of money an employer can contribute to an employee’s Health Reimbursement Arrangement.
Health Reimbursement Arrangement Eligible Expenses
A Health Reimbursement Arrangement may reimburse any expense considered to be a qualified medical expense under IRS Section 213 of the Code, including premiums for personal health insurance policies. Within IRS guidelines, employers may restrict the list of reimbursable expenses in any way they choose for their HRA plan.
Health Reimbursement Arrangements Allow Annual Rollover
Health reimbursement arrangement balances may roll forward from year to year. Employers can design the program not to allow balances to roll over from one year to the next. However, limiting the rollover feature defeats a key Health Reimbursement Arrangement advantage. Employers may allow employees to have access to their Health Reimbursement Arrangement accounts after retirement. However, employers may not pay/distribute cash or other benefits balances to any employee on the HRA plan.
Health Reimbursement Arrangement Administration Reporting Features
HRA Administration Reporting features make real-time monitoring of Health Reimbursement Arrangement liabilities, reimbursements and utilization easy. Employers can change plan benefits at any time or cancel the entire plan at any time. Further, Health Reimbursement Arrangements allow employers to establish plan year maximum reimbursements for any given category of expense (e.g., dental) and to establish a maximum balance that any participant class may hold at a time.
Source: http://www.zanebenefits.com/blog/bid/97288/Health-Reimbursement-Arrangement-HRA-What-is-it
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