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Health Reimbursement Arrangements (HRAs)

  Traditional HRA
Qualified Small Employer HRA (QSEHRA)
What is it?

Tax-advantaged employer plan that reimburses employee medical expenses.

Tax-preferred small employer plan that pays or reimburses employee qualified medical expenses.

What are some advantages to it?
  • No federal income tax or employment tax on contributions.
  • Tax-free distributions for qualified medical expenses.
  • Funds can be carried over from year to year at employer’s discretion.
 
  • No federal income tax on payments or reimbursements if the employee has minimum essential health coverage.
  • Reimbursements or payments may be made immediately when the employee becomes eligible to participate.
 
What expenses can it be used to pay? Expenses that generally qualify for the medical and dental expenses deduction, but not traditional health insurance premiums. Expenses that generally qualify for the medical and dental expenses deduction, as well as individual health insurance premiums.

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