A benefit plan that is funded solely by the employer, and not through salary reduction, that reimburses the employee for qualified medical expenses.
Comment: In brief: An employer book-keeping account for medical expenses that allows carryover and accumulation, but with very limited portability.
An employee who satisfies the eligibility requirements as established by the employer, subject to IRC § 105(h) nondiscrimination rules.
ELIGIBILITY – HIGH DEDUCTIBLE PLAN REQUIREMENTS
No requirements that an account be funded by the employer. Typically, reimbursed amounts are paid directly from an employer’s general assets.
Typically, an employer bookkeeping account. A covered employee’s rights are typically those of an unsecured, general creditor and are limited by the terms of the HRA.
ACCOUNT FUNDING/USE OF A CAFETERIA PLAN
Amounts contributed to an HRA cannot be paid through employee salary reduction and must only be paid through employer contributions. Notice 2002-45, Sec. I, 2002-28 IRB 93.
Employer contributions to an HRA may not be attributable to salary reduction or otherwise provided under an IRC § 125 cafeteria plan. Notice 2002-45, Sec. IV, 2002-28 IRB 93.
There are no statutorily prescribed limits to the amount of contributions that may be made to an HRA. An employer sponsoring the HRA, however, may place limits on contribution amounts by including plan language to that effect.
HRA contributions to a separate fund are potentially subject to IRC § 419 deduction limits.