You are adding a new question onto an old topic, and I don’t quite follow the question. You may need to post more details. An HRA is an employer provided arrangement. The employee is never allowed to take cash out of the account for any reason except for qualified medical expenses. However, it is not necessary for the HRA to the pay the expense directly. The employee or retire may pay the expense and then submit proof to the HRA to be reimbursed.
If the HRA paid money to the employee or retiree without proof of corresponding qualifying medical expense, the compliance burden is on the HRA administrator or employer. They can face significant fines and penalties. If the employee or retiree received free money as a payout from their HRA and did not use it to pay for a qualifying medical expense, they should report it as “other taxable income”.
