Contributions to HRAs

How much can employers contribute?

Employers determine the contribution amount and whether to fund monthly, quarterly or annually. They can change the rules every year, including no funding at all. They can also set an account cap or limit so that no additional contributions can accrue until the employee participant uses the account and the balance falls below the cap. There are no government-imposed limits on funding.

Can employees contribute to the HRA?

No. Unlike an HSA, employees are not allowed to contribute to the HRA.

Can contributions be forfeited?

This depends on the plan rules set by the employer. They can allow carryover, set limits on carryover amounts, and define how many years that funds can carryover. The employer can require funds be forfeited at termination or retirement, or allow funds to be used under certain circumstances (participant reached a specific age, completed specified years of service, etc.)