A health reimbursement arrangement (HRA) is an employer-funded plan that reimburses employees for medical expenses that are not reimbursed elsewhere (i.e., a type of MERP). Although an HRA cannot be offered under a Code § 125 cafeteria plan, the IRS has confirmed their tax-favored treatment. Employers typically create notational (i.e., unfunded) HRA accounts for each participating employee and then reimburse the employee for any substantiated medical expenses up to his or her account balance. Unlike a health FSA, employees are not allowed to contribute directly or indirectly to an HRA. An HRA may permit any unused balance remaining in an employee's HRA account at the end of the year to be carried over and used towards the next year's eligible medical expenses. The employer decides whether to allow a carry over. In addition, the employer can allow former employees to "spend down" any balance remaining in their HRA accounts on the date they terminate employment. Some employers use spend-down features to provide employer funding of retiree medical benefits. Like all MERPs, an HRA is subject to certain Code requirements. Some HRAs are offered as stand-alone arrangements (meaning that they are not tied to a health insurance plan), and some are offered as "integrated" arrangements (meaning that they are used in conjunction with a health insurance plan - often a high deductible plan, where the HRA is used to pay medical expenses that are below the deductible or that are otherwise not paid by the health insurance plan).