Does an HRA Roll Over? Carryover Rules by HRA Type

Whether your Health Reimbursement Arrangement rolls over depends entirely on how your employer wrote the plan. Federal tax rules let unused HRA balances carry forward into the next plan year, but the IRS does not require it.¹ Some plans let you keep every dollar you don’t spend. Others cap the rollover at a set amount or percentage. Many forfeit unused funds at year-end. The only place to find your answer is your employer’s plan document or Summary Plan Description.

Why Your Employer Sets the Rule

An HRA is funded entirely by the employer. You never contribute through payroll deductions.¹ Because the company puts up all the money, it decides how the account works, including whether unused dollars survive into the next year.

IRS Notice 2002-45 confirmed that HRAs are not bound by the anti-deferral rules that apply to health FSAs, so employers are free to permit carryovers.¹ Many choose not to, because accumulating balances create a long-term liability on the company’s books. If your plan uses a “use it or lose it” design, whatever remains at year-end returns to the employer.

One rule applies no matter what your plan says: unused HRA funds can never be paid out as cash. Cashing out a balance would disqualify the arrangement and make every reimbursement taxable for every participant, including past ones for legitimate medical expenses.

Common Carryover Structures

When a plan does allow rollovers, the document usually caps or limits them. The structures you’re most likely to see:

Fixed dollar cap. The plan carries up to a set amount, such as $500 or $1,000, and forfeits anything above it.
Percentage-based cap. Only a portion of the remaining balance, such as 25 or 50 percent, moves forward.
Time-limited carryover. Rolled-over funds must be spent within a window, for example the first 90 days of the new plan year, or they’re forfeited.
Unlimited rollover. The full unused balance carries forward indefinitely. This is the most generous design and the least common.
No carryover. The default when the plan document is silent on the question. Balances are forfeited at year-end.

Because the IRS sets no mandatory structure, the variation across employers is wide. If you can’t find rollover language in your plan document, ask HR or the benefits administrator to confirm before the plan year ends.

Carryover Rules Vary by HRA Type

Federal rules recognize several distinct HRA designs. The employer’s flexibility to allow a carryover looks similar across them, but the interaction with annual contribution limits differs.

Qualified Small Employer HRA (QSEHRA)

The QSEHRA is for businesses with fewer than 50 employees that do not offer a group health plan. For 2026, the maximum annual reimbursement is $6,450 for self-only coverage and $13,100 for family coverage.² Those limits are set by statute and adjust for inflation.³

QSEHRAs can allow carryovers, but any rolled-over amount counts against the next year’s limit. If you carry $1,000 into 2026 on self-only coverage, your employer can add only $5,450 in new funds and stay within the $6,450 ceiling. When the employer already contributes the maximum, a carryover provision offers no practical benefit because there’s no room for it.

Individual Coverage HRA (ICHRA)

An ICHRA reimburses you for premiums on an individual health insurance policy, including a marketplace plan. There is no statutory cap on employer contributions, and employers can allow unused balances to roll forward.⁴ Terms must be identical for everyone in the same defined class of employees, though amounts can differ between classes.

Excepted Benefit HRA (EBHRA)

An EBHRA sits alongside a traditional group health plan and covers items the main plan may not, such as dental, vision, or short-term care. For 2026, the employer can make up to $2,200 in new funds available per year.⁵ Carryover balances from prior years do not count against that cap, so a rolled-over balance can push your total available funds above $2,200.

Group Coverage HRA

A group coverage HRA (sometimes called an integrated HRA) pairs with a traditional employer-sponsored health plan. These often have tighter carryover rules because the employer is already managing costs through the group plan. The rollover rule still comes from the plan document.

A Run-Out Period Is Not a Carryover

Employees often confuse the two, and they work differently. A run-out period is a window after the plan year ends, typically 30 to 90 days, during which you can submit claims for medical expenses that occurred while the old plan year was still active. It exists to give you time to gather receipts.

A run-out period does not let you spend last year’s balance on this year’s expenses. A doctor visit on January 15 of the new plan year cannot be filed against your prior-year HRA balance during the run-out window. Miss the submission deadline and you lose the reimbursement even if the account still has money in it.

A carryover, by contrast, moves unused money forward so you can spend it on new expenses. Some plans offer both features, some offer one, and some offer neither.

How a Carryover Balance Affects HSA Eligibility

If you have a High Deductible Health Plan and want to contribute to a Health Savings Account, a general-purpose HRA, including one with a carried-over balance, will typically disqualify you from making HSA contributions.⁴ A general-purpose HRA can pay medical costs before you meet the HDHP deductible, so you aren’t truly bearing that deductible out of pocket.

A few HRA designs preserve HSA eligibility:

A limited-purpose HRA reimburses only dental, vision, and preventive care. Carryover balances in this type do not affect HSA contributions.
A post-deductible HRA reimburses nothing until you have met the minimum HDHP deductible ($1,700 self-only or $3,400 family in 2026).⁴
A suspended HRA is one you elect to freeze before the coverage period begins. While frozen, it can’t reimburse general medical expenses, and you can fund an HSA. HSA eligibility ends once the suspension does.

If you want both a carryover and an HSA, confirm your HRA is one of these compatible types. A general-purpose HRA balance rolling into the new plan year can disqualify you from HSA contributions for the entire year, even if you never touch the HRA money.

What Happens to a Carryover Balance If You Leave

Leaving the employer, whether by resignation, layoff, or retirement, generally means you lose access to whatever HRA balance remains. The employer owns the account, so the money does not transfer to a new job or convert to a personal account.

Two features can preserve access temporarily. Some plans include a spend-down provision that lets former employees keep submitting claims for expenses incurred before separation, and sometimes for a limited period after. It’s optional and only exists if the plan document says so. A spend-down can extend to a surviving spouse and dependents after an employee’s death, again only if the plan allows it, and only for qualifying medical expenses.

If your employer has 20 or more employees and the HRA is a group health plan, you may be able to keep the account through COBRA for 18 to 36 months after a qualifying event.⁶ You can be charged up to 102 percent of the full plan premium.⁷ The premium is usually a blended rate rather than one based on your individual balance, so a large carried-over balance can make COBRA worthwhile while a small one may cost more than you’d recover. Missing a COBRA payment permanently forfeits the remaining funds.

1
Internal Revenue Service. Health Reimbursement Arrangements Notice 2002-45
2
Internal Revenue Service. Publication 15-B, Employer’s Tax Guide to Fringe Benefits (2026)
3
Office of the Law Revision Counsel. 26 USC 9831 – General Exceptions
4
Internal Revenue Service. Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans
5
Internal Revenue Service. Revenue Procedure 2025-19
6
U.S. Department of Labor. COBRA Continuation Coverage
7
U.S. Department of Labor. Continuation of Health Coverage (COBRA)