Note: None of this should be taken as legal or tax advice.

HRAs (Health Reimbursement Arrangements) are governed by Section 105 of the Internal Revenue Code. Only employers may contribute to HRAs. All reimbursements are excluded from an employee’s gross income and wages subject to FICA (7.65%). Similarly, employers deduct reimbursements as a business expense and exclude them from wages subject to FUTA (0.8%) and the employer portion of FICA (7.65%).

See Publication 969 for more information.