Your HRA balance is the dollar amount your employer has committed to reimburse you, tax-free, for eligible medical expenses during the plan year. It isn’t cash sitting in an account with your name on it. It’s a bookkeeping entry on your employer’s ledger, closer to a spending limit than a savings account, and you access it by paying for a qualifying expense first and then submitting a claim.
Because the balance is notional rather than funded, it doesn’t earn interest and it isn’t yours in the way an HSA is. Your employer sets the annual amount, decides which expenses qualify, chooses whether unused funds roll over, and controls what happens when you leave. You work inside those rules, subject to IRS guardrails.
How You Actually Use the Balance
Using your HRA is a reimbursement process. You pay the provider, then submit a claim to the plan administrator with supporting documentation, usually an itemized receipt or an Explanation of Benefits statement from your insurance carrier. The administrator checks the expense against the plan’s eligible list. If approved, you’re reimbursed and your available balance drops by that amount.
Many administrators issue debit cards linked to the HRA that pay providers directly at the point of sale. Convenient, but not a free pass. The administrator may still request documentation after the charge to verify that the expense qualified. If you ignore those requests, the charge can be reclassified as ineligible and you’ll owe the money back.
Before any large medical expense, check the balance first. Running up a bill above your available funds means paying the difference out of pocket with no reimbursement waiting behind it.
What Expenses Your Balance Can Cover
Eligible expenses are defined by IRS Section 213(d), the same standard used for the medical expense tax deduction. The list is broader than most people expect. It covers doctor and hospital visits, prescription drugs, dental work, vision care, mental health treatment, chiropractic care, and physical therapy. Less obvious items also qualify: acupuncture, fertility treatments, hearing aids, smoking cessation programs, and home modifications for a disability.
Since the CARES Act took effect, over-the-counter medications no longer require a prescription to be reimbursable through an HRA. Menstrual care products like tampons, pads, and cups also qualify.
Your employer can narrow this list. Some HRAs cover only dental and vision, others only individual health insurance premiums. Read the plan’s Summary Plan Description rather than assuming every Section 213(d) expense is in play. Gym memberships, cosmetic procedures, and general wellness products not prescribed for a specific medical condition don’t qualify. If a non-qualifying expense slips through, the tax consequences can hit the entire plan, not just the bad claim.
What Happens to Unused Balance at Year End
Rollover depends entirely on how your employer designed the plan. Employers can allow full carryover of unused amounts into the next year, cap carryovers at a fixed dollar amount, or forfeit the entire unused balance. Some plans stack carryovers on top of the next year’s new allocation; others count them against it. The Summary Plan Description is the only reliable answer for your plan.
Two terms often get confused, and the difference matters. A run-out period gives you extra time after the plan year ends to submit claims for expenses you already incurred during that year. You can’t rack up new expenses during a run-out; you’re only filing paperwork for old ones. Run-out periods are commonly 90 days, though your employer sets the exact length. A grace period, by contrast, lets you actually incur new expenses after the plan year ends and still draw on the prior year’s balance. Grace periods are less common in HRAs and more typically associated with FSAs.
How Much Your Balance Can Be
The type of HRA your employer offers determines the ceiling on your balance.
An integrated (group health plan) HRA is paired with an employer-sponsored group health plan. There is no federal cap on employer contributions, and it can reimburse any Section 213(d) expense the plan allows.
An Individual Coverage HRA (ICHRA) reimburses premiums for individual health insurance you buy on your own, plus other qualifying medical expenses. There is no federal maximum contribution. You must maintain individual health coverage to participate; lose that coverage and the balance is forfeited.
A Qualified Small Employer HRA (QSEHRA) is available only to employers with fewer than 50 employees that don’t offer a group health plan. For 2026, the maximum annual reimbursement is $6,450 for self-only coverage and $13,100 for family coverage. You must have minimum essential coverage to receive reimbursements.
An Excepted Benefit HRA (EBHRA) can be offered alongside a group health plan but covers a narrower set of expenses, often limited to dental, vision, and short-term insurance premiums. The annual employer contribution is capped at $2,150 for 2025, with the 2026 figure not yet released. Carryover amounts don’t count against the annual limit, which makes this type more flexible for accumulating funds over time.
One boundary worth noting if you also have or want a Health Savings Account: a general-purpose HRA that reimburses all medical expenses will disqualify you from contributing to an HSA. Limited-purpose, post-deductible, and suspended HRA designs can preserve HSA eligibility, but that depends on your employer’s plan.
What Happens to Your Balance When You Leave
For most HRA types, the unused balance is forfeited when employment ends. The employer owns the arrangement; you can’t take it with you. Your employer may offer a short post-termination window to submit claims for expenses you incurred while still employed, and once that window closes, any remaining balance reverts to the employer.
COBRA can extend access. Most HRAs are group health plans, so employers with 20 or more employees generally must offer COBRA continuation coverage for the HRA after a qualifying event such as termination or a reduction in hours. If you elect COBRA, you keep access to your HRA balance and receive the same annual increases active employees get. You pay the full premium, calculated using either an actuarial method or a past-cost method, plus up to a 2% administrative fee.
QSEHRAs are the exception. They aren’t considered group health plans, so COBRA doesn’t apply. When you leave an employer that offers a QSEHRA, the balance is simply forfeited.
One thing your employer cannot do is cash you out. Paying you the dollar value of your remaining balance in cash, or converting it to another non-medical benefit, would make every reimbursement you ever received from the plan taxable. That rule is why unused balances vanish rather than get paid out.
Checking and Protecting Your Balance
Most plan administrators provide an online portal or mobile app where you can check your remaining balance, view claim status, and download reimbursement history. Keep copies of every receipt and Explanation of Benefits statement you submit. Administrators occasionally request additional documentation months after a claim was paid, and if you can’t produce it, the reimbursement may be reversed. The IRS can review HRA transactions during an audit, and your employer bears the burden of proving reimbursements went to qualifying expenses.
Your claims stay reasonably private. HRAs are employer-sponsored health plans and therefore covered entities under HIPAA. Your employer’s HR department generally cannot see the specific diagnoses or treatments behind your claims. A third-party administrator handles the review, and the employer typically receives only aggregate cost data.