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  • HSA and HRA

    discussing having both the HSA as an investment tool but also using HRA for small business owning physicians

  • #2
    I am a physician that owns a corporation.  I am paid to my corporation and then my corporation pays me, so essentially I am a small business owner with one employee (myself).  I currently use an HSA with an HDHP and my corporation contributes the annual amount to my HSA.  However, I have recently been looking into HRA's that are compatible with HSA.  Am I correct in understanding that 1) you can have both 2) your HRA can only kick in when you have met $2,600 of your deductible?

     

    My biggest question, is to get to that deductible amount are you required to pay from your HSA?  Or, can you pay out of pocket to the deductible, then use your HRA to pay the remaining amount until you hit your out of pocket max, and continue to contribute the maximum to your HSA ($6,750) allowing it to grow untouched tax free?

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    • #3

      1. Yes

      2. Yes

      3. No, you are not required to pay from your HSA.

      4. Yes, you pay OOP to the deductible then switch over to HRA. But wouldn't your insurance kick in after the deductible?


      Bernard Health has a great example here.
      Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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      • #4
        If it's a post-deductible HRA, which it's required to be in order to be compatible with HSA contributions, then you can begin using the HRA for medical expenses once you meet the federal minimum deductible of $2600/family (or $1300 if it's only you on the plan) - even if your high-deductible health plan has a higher one.

        Another good thing about HRAs is that they can reimburse health insurance premiums. See page 18 of IRS pub 969: https://www.irs.gov/pub/irs-pdf/p969.pdf

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        • #5
          You can only have an HSA with an HRA if the HRA is "limited purpose" (or post-deductible.) An "unlimited purpose" HRA is usually used to convert a HDHP to a low deductible health plan for the employees. That way the employer has lower premiums for the insurance and hopes the actual expenses are low so he doesn't have to pay out the whole HRA for everyone at the company.

          The "post-deductible" HRA is a different beast and a lot less beneficial to the employee than a regular unlimited purpose HRA. That's why it is permitted to use an HSA when you have one. Details on page 4 of the above link.
          Helping those who wear the white coat get a fair shake on Wall Street since 2011

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