HEALTH REIMBURSEMENT ACCOUNT - HRA

Employer-funded plans that reimburse employees for medical expenses that are not covered by the standard insurance plan of the company. Because the employer funds the plan, any distributions are considered tax deductible (to the employer). Reimbursement dollars received by the employee are generally tax free.

The disadvantage to HRAs is that companies may choose whether to start or fund a plan. Also, if a plan has already been established, the employer has the right to cancel it at virtually any time.

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