125 Plans/Health Reimbursement Arrangement: How is an HRA different from an FSA?

An HRA is a reimbursement account set up and funded by your employer to cover eligible healthcare expenses. An FSA is a reimbursement account set up and funded by the employee. Unlike a healthcare FSA where the IRS defines the eligible services, the employer defines the services eligible for reimbursement from an HRA. Typically, an employer will reimburse healthcare services like doctor’s office visits and hospital services, and prescription drugs. For details on qualified expenses for your plan, check your summary plan document. Your employer will provide you this document which details the rules of coverage.