What is a defining characteristic of Health Reimbursement Accounts?

Health Reimbursement Accounts (HRAs) are defined by several key characteristics, one of which includes the concept of non-portability. Non-portability means that the funds in an HRA cannot be taken by the employee upon leaving the employer or plan. This is a crucial aspect of HRAs, as the account is typically owned by the employer and intended to reimburse employees for qualified medical expenses incurred while participating in the company's health benefits plan.

This feature encourages employees to utilize their benefits within the context of their employment. When an employee leaves the organization, they generally forfeit the remaining balance in the HRA, which differentiates it from other types of accounts, such as Health Savings Accounts (HSAs), which are more portable and belong to the individual account holder.

It's important to understand the implications of non-portability in the broader context of health benefits and employer-sponsored plans. This characteristic affects the way employees view their health spending and incentivizes them to stay with a company that offers an HRA reimbursement structure.