Employers often offer an HRA in conjunction with your health insurance plan in order to help offset your out-of-pocket responsibility. Your health insurance plan may require you to pay out of your own pocket in the form of copayments and/or a deductible before your insurance plan starts paying for services. Also, once you meet your deductible, you may need to pay a percentage (‘coinsurance’) of services until you meet your out-of-pocket maximum. An HRA helps offset your deductible and coinsurance responsibility by allowing you to pay for those costs from funds set aside by your employer. The funds your employer contributes are not included in your salary and are not considered taxable income.
125 Plans/Health Reimbursement Arrangement: How will I benefit from my an HRA?