What is a Health Reimbursement Account (HRA) primarily used for?

A Health Reimbursement Account (HRA) is primarily utilized as a fund established by employers to reimburse employees for qualified medical expenses. This type of account is designed to help employees manage their healthcare costs, as the funds contributed by the employer are tax-exempt and can be used to cover out-of-pocket medical expenses such as deductibles, copayments, and certain types of non-reimbursed medical costs.

HRAs are beneficial because they allow employers to offer a flexible and customizable way to enhance their employees' benefits packages without requiring employees to save or directly contribute to the account themselves. The employer holds ownership of the account, meaning that unused funds may be retained by the employer if the employee leaves the company.

In contrast, the other options provided misrepresent the purpose of an HRA: an employee savings account typically refers to accounts where employees can save their own money for health expenses (like a Health Savings Account or HSA), employer-funded retirement benefits pertain to pension plans or contributions toward retirement savings rather than immediate health costs, and a type of insurance policy focuses on coverage and dependents rather than direct reimbursement of medical expenses.