CPB Certified Professional Biller Certification Practice Exam

Which of the following best describes an HRA?

1. A tax-exempt account for health expenses

2. A retirement fund for medical costs

3. A defined benefit plan for health reimbursements

4. A flexible spending arrangement for health services

The correct answer is: A defined benefit plan for health reimbursements

The most accurate description of a Health Reimbursement Arrangement (HRA) is that it serves as a tax-exempt account set up by an employer to reimburse employees for qualified medical expenses. Since it directly pertains to the reimbursement aspect, the option that emphasizes that concept best is the one related to it being a defined benefit plan for health reimbursements. This correctly identifies that HRAs provide a predefined benefit level that employers can offer to employees for out-of-pocket healthcare costs. HRAs are funded solely by employers and do not involve any employee contributions. The reimbursement aspect is crucial because it distinguishes HRAs from other types of accounts or arrangements; they are designed specifically for health expense reimbursement rather than being savings or investment vehicles. In contrast, the other options describe different types of arrangements unrelated to the specific function of an HRA, such as tax-exempt accounts that might refer to Health Savings Accounts (HSAs), retirement funds, or flexible spending arrangements (FSAs), which operate under different structures and rules.