Who is responsible for funding a Health Reimbursement Arrangement (HRA)?

The correct answer is that the employer is responsible for funding a Health Reimbursement Arrangement (HRA). HRAs are employer-established benefit plans that allow for tax-free reimbursement of qualified medical expenses incurred by employees. The funds contributed by the employer can be used by employees to pay for expenses such as deductibles, copayments, and other out-of-pocket healthcare costs.

One of the primary features of an HRA is that the employer has discretion over the contributions and how the funds can be spent. Unlike health savings accounts (HSAs) or flexible spending accounts (FSAs), HRAs cannot be funded by employees; only the employer can make contributions. This aspect highlights the employer's responsibility in funding the HRA for the benefit of their employees.

In contrast, insurance companies, while they may provide health insurance plans, do not fund HRAs directly. Employees typically do not contribute to HRAs either, and Medicare, being a federal health insurance program primarily for individuals aged 65 and older or those with certain disabilities, is unrelated to the funding of HRAs. Thus, the employer's role is central to establishing and funding an HRA to support their employees' healthcare needs.