Medical Expense Insurance Practice Exam 2026 – Complete Test Prep

Health Reimbursement Arrangements are funded by the employer, not the employee. The employer sets aside a specific amount to reimburse the employee for qualified medical expenses, and the reimbursements are generally tax-advantaged for the employee. This means the money is not counted as taxable income when used for eligible medical costs. The funds can be used for eligible medical expenses, and many HRAs allow some rollover or carryover of unused funds depending on the plan design. The statement that it is funded entirely by the employee does not fit how HRAs are structured, making it the exception.