Accident & Health FundamentalsQuestion 19 of 716
A Health Reimbursement Arrangement (HRA) is most accurately described as:
a.A long-term care insurance contract that reimburses nursing home charges on a daily benefit basis
b.An optional group insurance rider that replaces COBRA continuation coverage once employment ends
c.An employer-funded, employer-owned arrangement that reimburses employees for qualifying medical expenses
d.An employee-funded savings account, funded by salary reduction, that earns interest and is portable like an HSA
Explanation
An HRA is funded solely by the employer (not by employee salary reductions) and is owned by the employer. It reimburses employees, tax-free, for qualified medical expenses up to the amount the employer allocates, under rules in IRC §105 and IRS guidance.
Law Reference: 26 U.S.C. §105; IRS Notice 2002-45 (HRA)This topic, taught in full in the California Life & Health Insurance Producer Exam guide. California Life & Health Insurance Producer Exam — Complete Study Guide (2026) — PDF + EPUB, $19.99 · 14-day refund →
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