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  • HSA with an HRA

    Can my wife open an HSA if her employer offers a Health Reimbursement Arrangement to pay her deductible?

  • #2
    Yes, as long as the HRA qualifies to be an HSA (meaning minimum deductible limit is met except for such costs as wellness care).
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      I am still a little confused.  So her employer automatically sends us reimbursement checks to cover the deductible and we never see any expenses related to healthcare when visiting the Doctors or ER etc.  We due ensure costs for things such as prescriptions. Would an expense such as that count as wellness care? Thanks

      Comment


      • #4
        An HRA is HSA-qualified as long as it does not provide coverage below the IRS-mandated deductible level for HSAs except for preventive care benefits. The IRS-mandated deductible for 2016 (family) is $2,600. That means that no benefits are provided until the insured has met the deductible, including co-pays or prescriptions paid for prior to meeting the deductible.

        I'm not sure what this sentence means," We due ensure costs for things such as prescriptions" but prescriptions do not count as wellness care, afaik. You tell me - you're the AspiringDoc!
        Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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        • #5
          I am confused about this issue as well.

           

          For example, I have a 3000 deductible from BCBS, but a HRA of 2750. Id assume I cannot qualify for an HSA because Im only paying 250 deductible. Is there some way I can modify my HRA to only reimburse after I meet the required high deductible for HSA ($1600)?

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          • #6
            Sorry spell check   ensure was meant to be incur.

            Comment


            • #7




              I am confused about this issue as well.

              For example, I have a 3000 deductible from BCBS, but a HRA of 2750. Id assume I cannot qualify for an HSA because Im only paying 250 deductible. Is there some way I can modify my HRA to only reimburse after I meet the required high deductible for HSA ($1600)?
              Click to expand...


              Are you sure the HRA is not funding $2,750 toward post-deductible costs? You are correct that that is what it needs to stipulate but I doubt you can do it on an individual basis.
              Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

              Comment


              • #8
                To be HSA eligible, you have to meet the minimum deductible of $2,600 for family (even if your plan's deductible is higher) before the HRA kicks in, so the HRA would only cover what insurance doesn't after that.  That's entirely dependent on how her employer's HRA is structured.  If her HRA is not one of the following arrangements, below, then according to Pub 969, she wouldn't be eligible for HSA contributions unless she suspends the HRA.

                My question is, can you double-dip, such as suspend the HRA for a certain period, make your HSA contribution, then re-instate it afterward?

                __________________________________________________ _______________________

                https://www.irs.gov/publications/p969/ar02.html#en_US_2015_publink1000204042

                Other employee health plans.   An employee covered by an HDHP and a health FSA or an HRA that pays or reimburses qualified medical expenses generally cannot make contributions to an HSA. Health FSAs and HRAs are discussed later.  However, an employee can make contributions to an HSA while covered under an HDHP and one or more of the following arrangements.


                • Limited-purpose health FSA or HRA. These arrangements can pay or reimburse the items listed earlier under Other health coverage [accidents, disability, dental, vision] except long-term care. Also, these arrangements can pay or reimburse preventive care expenses because they can be paid without having to satisfy the deductible.

                • Suspended HRA. Before the beginning of an HRA coverage period, you can elect to suspend the HRA. The HRA does not pay or reimburse, at any time, the medical expenses incurred during the suspension period except preventive care and items listed under Other health coverage [accidents, disability, dental, vision]. When the suspension period ends, you are no longer eligible to make contributions to an HSA.

                • Post-deductible health FSA or HRA. These arrangements do not pay or reimburse any medical expenses incurred before the minimum annual deductible amount is met. The deductible for these arrangements does not have to be the same as the deductible for the HDHP, but benefits may not be provided before the minimum annual deductible amount is met.

                • Retirement HRA. This arrangement pays or reimburses only those medical expenses incurred after retirement. After retirement you are no longer eligible to make contributions to an HSA.


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                • #9
                  Can anyone elect to suspend their HRA, in order to qualify for a HDHP?

                   

                   

                  Comment


                  • #10
                    Do you mean, suspend HRA to qualify for HSA contributions? Because you can have an HDHP and an HRA anytime.

                    HDHP = high deductible health plan, your insurance plan with a deductible > $1300 self-only or > $2600 family, and OOP max < $6,550 self only or < $13,100 family, and zero assistance until you meet your deductible, other than preventive visits (with a few other caveats)

                    HSA = health savings account, your account which you are always eligible to use if you've got it, but only able to *contribute* to if you have an HDHP and no current HRA or health FSA (other than limited or post-deductible HRAs, as noted above).
                    https://www.irs.gov/publications/p969/ar02.html#en_US_2015_publink1000204025

                    HRA = health reimbursement arrangement, an employer account that can be used to reimburse qualified medical expenses tax-free. They are completely funded by the employer (no salary deferral, no reporting on your taxes). If they provide benefits prior to your meeting the minimum deductible for HDHPs ($1300/self and $2600/family, even if your particular plan has a deductible above those), they disqualify you from an HSA. https://www.irs.gov/publications/p969/ar02.html#en_US_2015_publink1000204194

                    So if you have an HDHP (which it seems you do, unless the plan's details give you more stuff before hitting your deductible), and your HRA reimburses you for expenses before hitting $1300 on your own with no help, then you don't seem to be eligible to contribute to an HSA.

                    I don't know how one goes about suspending an HRA; I'd ask your HR department. Sorry not to answer the question directly.

                    Comment


                    • #11




                      Can anyone elect to suspend their HRA, in order to qualify for a HDHP?
                      Click to expand...


                      You could probably opt out, but you'd be giving up free dollars. Not sure about the wisdom of that. If the contribution limit for an HSA were higher, might make sense.
                      Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

                      Comment


                      • #12




                        To be HSA eligible, you have to meet the minimum deductible of $2,600 for family (even if your plan’s deductible is higher) before the HRA kicks in, so the HRA would only cover what insurance doesn’t after that. That’s entirely dependent on how her employer’s HRA is structured. If her HRA is not one of the following arrangements, below, then according to Pub 969, she wouldn’t be eligible for HSA contributions unless she suspends the HRA. My question is, can you double-dip, such as suspend the HRA for a certain period, make your HSA contribution, then re-instate it afterward?
                        Click to expand...


                        I have a HDHP with deductibles of $4000 individual/$8000 family.  So, are you saying that my HRA can reimburse my medical expenses above $1300 (individual) or $2600 (family) and still maintain my ability to contribute to an HSA even though my actual deductibles are higher than $1300/$2600?  Do I not have to meet the actual deductibles of my policy before the HRA kicks in if I want to maintain my eligibility to contribute to the HSA?

                        Comment


                        • #13







                          To be HSA eligible, you have to meet the minimum deductible of $2,600 for family (even if your plan’s deductible is higher) before the HRA kicks in, so the HRA would only cover what insurance doesn’t after that. That’s entirely dependent on how her employer’s HRA is structured. If her HRA is not one of the following arrangements, below, then according to Pub 969, she wouldn’t be eligible for HSA contributions unless she suspends the HRA. My question is, can you double-dip, such as suspend the HRA for a certain period, make your HSA contribution, then re-instate it afterward?
                          Click to expand…


                          I have a HDHP with deductibles of $4000 individual/$8000 family.  So, are you saying that my HRA can reimburse my medical expenses above $1300 (individual) or $2600 (family) and still maintain my ability to contribute to an HSA even though my actual deductibles are higher than $1300/$2600?  Do I not have to meet the actual deductibles of my policy before the HRA kicks in if I want to maintain my eligibility to contribute to the HSA?
                          Click to expand...


                          Here's what they have to say about that: [link]
                          However, an employee can make contributions to an HSA while covered under an HDHP and one or more of the following arrangements.


                          • Limited-purpose health FSA or HRA. These arrangements can pay or reimburse the items listed earlier under Other health coverage except long-term care. Also, these arrangements can pay or reimburse preventive care expenses because they can be paid without having to satisfy the deductible.

                          • Suspended HRA. Before the beginning of an HRA coverage period, you can elect to suspend the HRA. The HRA does not pay or reimburse, at any time, the medical expenses incurred during the suspension period except preventive care and items listed under Other health coverage . When the suspension period ends, you are no longer eligible to make contributions to an HSA.

                          • Post-deductible health FSA or HRA. These arrangements do not pay or reimburse any medical expenses incurred before the minimum annual deductible amount is met. The deductible for these arrangements does not have to be the same as the deductible for the HDHP, but benefits may not be provided before the minimum annual deductible amount is met.

                          • Retirement HRA. This arrangement pays or reimburses only those medical expenses incurred after retirement. After retirement you are no longer eligible to make contributions to an HSA.


                          Depends on if your HRA sets a deductible as well.  Some pay for all expenses, even those before the deductible, which renders you ineligible for HSA contributions.  But if your HRA is a post-deductible HRA with a deductible set to at least $1300/self or $2600/family (the minimum), it can provide benefits after that point (even before meeting your HDHP deductible) and you can still maintain your eligibility to contribute to an HSA.

                          I don't know if that has to be written into your HRA's terms, or if you can just not draw on it until you get to that amount.


                          Comment


                          • #14
                            I was hoping to get some help. I am a shareholder in my group, and we are all employees of our corporation. We have an HRA plan. As a shareholder, all of our expenses ultimately come out of our pocket, so the benefit is basically a tax deduction since any submitted expense is deducted from our pre-tax income. This is handled through my corporation's management company.

                            My family currently has health insurance through my wife's employer- it is a HDHP with a HSA. It has an annual deductible of $4000. Her employer contributes $1800 annually to her HSA account and we contribute the balance to reach the annual maximum of $6750 for 2016.

                            Am I eligible to submit for my family's healthcare expenses to my HRA? It sounds as if based on the previous discussion that I could submit for any out of pocket expenses exceeding $2600. Is that correct? Does it matter that the HRA is through my corporation but our healthcare insurance is obtained through my wife's employer? Any help would be appreciated!

                            Comment


                            • #15




                              I was hoping to get some help. I am a shareholder in my group, and we are all employees of our corporation. We have an HRA plan. As a shareholder, all of our expenses ultimately come out of our pocket, so the benefit is basically a tax deduction since any submitted expense is deducted from our pre-tax income. This is handled through my corporation’s management company.

                              My family currently has health insurance through my wife’s employer- it is a HDHP with a HSA. It has an annual deductible of $4000. Her employer contributes $1800 annually to her HSA account and we contribute the balance to reach the annual maximum of $6750 for 2016.

                              Am I eligible to submit for my family’s healthcare expenses to my HRA? It sounds as if based on the previous discussion that I could submit for any out of pocket expenses exceeding $2600. Is that correct? Does it matter that the HRA is through my corporation but our healthcare insurance is obtained through my wife’s employer? Any help would be appreciated!
                              Click to expand...


                              To qualify to have an HRA plan, your company must have group health insurance. Since you don't participate in that plan, I don't believe that you would qualify to submit expenses for reimbursement. And if you participated in that plan, you wouldn't qualify for the HSA plan. (Fully prepared for DMFA to correct me 'cause I think he knows a lot more about this topic than I :-))

                              I suppose it could make sense to for your wife and kids to have family coverage with her plan and for you to have single coverage with your group. Would just have to put the pencil to it.
                              Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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