Health Reimbursement Arrangements are another type of Consumer-Directed Health Plan.

HRA funds do not accrue to the employee and therefore offer the employee little incentive to control spending. Indeed, the only way to gain value from the money is to spend it. Thus, it is possible that HRAs could increase health care spending rather than reduce it as consumer-driven plans are intended to do.

The major differences are:

• The savings account is not portable if the employee leaves
• Any surplus in the account belongs to the employer
• Funds cannot be invested by employee to earn interest
• Funds must be used for medical expenses only