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Possible to have an HSA and an HRA?

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  • Possible to have an HSA and an HRA?

    I have a single member s-corp and buy personal insurance through the exchange that is eligible for an HSA. HSA is fully funded and used for investment. Is it also possible to open an HRA through my s-corp? I have had some medical expenses and am curious if I could get additional tax savings. I do not itemize my personal taxes.

  • #2




    I have a single member s-corp and buy personal insurance through the exchange that is eligible for an HSA. HSA is fully funded and used for investment. Is it also possible to open an HRA through my s-corp? I have had some medical expenses and am curious if I could get additional tax savings. I do not itemize my personal taxes.
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    It is possible, but > 2% S-corp owners are taxed on HRA reimbursements. Oddly enough, if you are a sole proprietor and hire your spouse (W2), s/he can participate and list you as a dependent.
    Our passion is protecting clients and others from predatory advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      The HRA has to be a post-deductible only HRA in order to be compatible with an HSA.  The good thing about that is that it can start reimbursing at the minimum mandated deductible, not necessarily the deductible of the plan.  So if your HDHP (whose premiums can be paid with HRA money) has a family deductible of $4,000, the HRA can start paying after the federal minimum family deductible of $2,600. See IRS pub 969.

      However, self-employed persons aren't qualified for HRAs. I apologize that I do not know if that applies so single-shareholder S-corporations.

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      • #4
        I am relocating and starting a new job in the late Spring of 2019 that offers an HRA. Prior to that time, I do have an HSA eligible HDHP. Can I contribute the full amount to my HSA at the beginning of 2019? And in the Spring cancel my coverage because the job change offers health benefits and use my HRA from the new job for the rest of the year?

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        • #5
          Your maximum HSA contribution limit is based on pro-rated months of eligibility.

          You will be HSA ineligible on any month you are covered on the 1st of that month under a general purpose HRA.

          So no, you can not make the full year's HSA contribution. Only the pro-rated amount of the months of eligibility.

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