Indiana State Life and Health Insurance Practice Exam

What must be in place for an individual to be eligible for benefits under a Health Reimbursement Arrangement?

1. All employees must enroll

2. Establishment by the employee

3. Approval from a healthcare provider

4. Established by the employer

The correct answer is: Established by the employer

For an individual to be eligible for benefits under a Health Reimbursement Arrangement (HRA), it is essential that the arrangement is established by the employer. An HRA is a type of employer-funded benefit plan that reimburses employees for qualified medical expenses. Unlike other accounts that employees can set up on their own, such as Health Savings Accounts (HSAs), HRAs are specifically employer-sponsored plans designed to help employees cover their healthcare costs. This employer establishment is critical because it provides the framework within which the benefits are funded and administered, defining eligible expenses and the structure of reimbursement. Employees cannot individually create or manage an HRA without employer involvement. In contrast, the other choices do not accurately reflect the requirements for HRA eligibility. For instance, all employees enrolling is not a necessity, as participation can vary among the workforce. Similarly, approval from a healthcare provider is not a requirement for accessing benefits through an HRA, as it is the employer’s guidelines that dictate what expenses can be reimbursed, rather than needing pre-authorization from healthcare professionals. The notion that the employee must establish the arrangement is incorrect, as it contradicts the essential employer-driven nature of HRAs.