How does my employer benefit from a health reimbursement account plan?

Health reimbursement accounts (HRA) offer many advantages to employers, as well as to employees. HRAs are employer-established and employer-funded benefit plans that may be offered in conjunction with other employer-provided health benefits. Employers have complete flexibility to offer various combinations of benefits in designing their plan. Some benefits of an HRA that an employer can enjoy include the following.
  • The employer -- not the employee -- owns the HRA. If an employee with an HRA changes or loses his or her job, any remaining amount in an HRA defaults to the employer.
  • High deductible medical plans -- typically required for the HRA -- encourages employees to adopt healthier lifestyles.
  • High-deductible health plans also have lower premiums.
  • Funds reimbursed from the HRA aren't subject to payroll taxes or Social Security taxes.
  • HRAs encourage employees to use their medical plan and HRA funds wisely. Employees become more aware of the costs of medical care, which likely will reduce costs in the future.
  • Employee retention. Because HRAs offer benefits to employees they can help employers attract and retain the best employees. 

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Important: This content reflects information from various individuals and organizations and may offer alternative or opposing points of view. It should not be used for medical advice, diagnosis or treatment. As always, you should consult with your healthcare provider about your specific health needs.