What financial characteristic distinguishes an HRA from other accounts?

The distinguishing financial characteristic of a Health Reimbursement Arrangement (HRA) is that only the employer makes contributions to the account. This is a critical feature because it differentiates HRAs from other types of health-related accounts like Health Savings Accounts (HSAs) or Flexible Spending Arrangements (FSAs), which may allow both employer and employee contributions.

Since HRAs are entirely funded by the employer, employees do not contribute any of their own salary to the account, which can make HRAs an attractive option for employees as they do not have to allocate part of their earnings toward healthcare expenses through this account.

This characteristic also aligns with the purpose of an HRA, which is to reimburse employees for qualified medical expenses incurred while allowing employers to control healthcare costs effectively by setting limits on the amount contributed or reimbursed to employees.