Can I Withdraw Money From My HRA Account?

A Health Reimbursement Arrangement (HRA) is an employer-funded health benefit designed to help employees pay for qualified medical expenses. You generally cannot directly “withdraw” cash from an HRA like a personal bank account. Instead, HRAs operate on a reimbursement model, where funds are used to cover eligible expenses after they have been incurred.

How HRA Funds Work

HRA funds are entirely owned and funded by the employer, distinguishing them from personal savings accounts or other health benefit options. This employer ownership means the funds are not portable; employees do not take the HRA balance with them if they leave the company. Unlike Health Savings Accounts (HSAs) or Flexible Spending Accounts (FSAs) where employees can contribute, HRAs receive contributions solely from the employer.

Employers determine the amount they contribute and the specific rules governing the HRA, which can vary significantly between plans. The HRA serves as a dedicated pool of money for specific healthcare reimbursements, not for direct cash withdrawal.

Eligible Healthcare Expenses

Medical expenses eligible for HRA reimbursement are determined by IRS rules and the employer’s specific HRA plan design. Employers can further limit which expenses their HRA will cover. Common categories of eligible expenses include a wide range of medical, dental, and vision care services.

Examples of eligible expenses include doctor visits, hospital stays, prescription medications, and dental work. Deductibles, co-pays, and coinsurance amounts incurred under a health plan are also frequently covered. Some over-the-counter (OTC) items, such as medicines and menstrual care products, are also eligible without a prescription.

Reimbursement and Accessing Funds

Accessing HRA funds involves a structured reimbursement process. An employee incurs an eligible healthcare expense and pays for it out-of-pocket. After payment, the employee submits a claim to the HRA administrator for reimbursement. This claim requires specific documentation, such as an itemized receipt from the healthcare provider or an Explanation of Benefits (EOB) from the insurer.

The documentation must show the service or item, date of purchase, and amount incurred. Once the claim is reviewed and approved, reimbursement is issued to the employee, commonly through direct deposit or check. Some HRAs may also provide a debit card for direct payment at the point of service, though receipts should still be saved for verification.

Managing Unused HRA Balances

What happens to unused HRA funds depends on the specific plan design established by the employer. Some HRA plans allow for a “rollover” feature, permitting unused balances to carry over to the next plan year. Many plans, however, have a “use-it-or-lose-it” provision, where unused funds are forfeited at the end of the plan year if not utilized.

Upon termination of employment, HRA funds are generally forfeited, as they are employer-owned and not portable. Unlike Health Savings Accounts (HSAs), which are employee-owned and remain with the individual, HRA balances typically revert to the employer when an employee leaves the company. While some plans may offer a limited “run-out” period for submitting claims for expenses incurred before termination, the funds do not transfer with the employee.