Which statement best describes a Health Reimbursement Account (HRA)?

• A. Medical Expenses That Would Normally Be Deductible On A Tax Return
• B. Nonprescription medicines for non-health related purposes
• C. Cosmetics Not Related to Health
• D. Groceries

Answer: (A)

Health Reimbursement Accounts are employer-funded plans used to reimburse employees for medical expenses that would typically be deductible on a tax return. The funds are provided by the employer and are used specifically for qualified medical costs, with reimbursements generally not taxable to the employee when used for those expenses. This makes the description of reimbursing Medical Expenses That Would Normally Be Deductible On A Tax Return the best fit.

The other examples describe costs that aren’t considered qualified medical expenses for reimbursement—nonprescription medicines for non-health purposes, cosmetics, and groceries—so they wouldn’t be covered by an HRA.