What is a limitation of Health Reimbursement Accounts?

Health Reimbursement Accounts (HRAs) have specific characteristics that influence their portability when an employee changes jobs. The correct answer highlights that HRAs are not portable. This means that if an employee leaves their job, they cannot take the HRA funds with them to a new employer. The employer owns the account, and therefore, any unspent funds usually revert back to the employer upon termination of employment.

This limitation is significant because it affects how employees perceive the value of their benefits. Employees may feel less inclined to use their benefits wisely, knowing they cannot carry the funds with them if they move to a new job. Additionally, since HRAs are employer-funded, their portability is restricted compared to other accounts like Health Savings Accounts (HSAs), which remain with the employee regardless of job status.

Other options present characteristics that do not accurately reflect the limitations of HRAs. For example, while contributions can be made by the employee, they are primarily funded by the employer. The assertion that funds can be used for any purpose is misleading, as HRAs are designed for qualified medical expenses only. Furthermore, requiring a premium payment upfront is not inherently a limitation of HRAs, as this varies by the plan structure and employer offerings. Thus, the non-portability