Author Topic: HRA and HSA  (Read 2043 times)

boarder42

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HRA and HSA
« on: September 19, 2016, 07:35:57 AM »
alright i've done some research around on this but cant find the specific example of how this works. 

My wife will hopefully be switching jobs in the next year to my company.  We are both currently on her company's healthcare b/c it offers an HSA and is cheaper for better services.

At my company we will be on the HDHP where the company puts 1k per year into an HRA account for us.  assuming i dont contribute anymore from my paycheck to this account, can i contribute to an HSA up to the limit minus the 1k my company puts in the HRA?
« Last Edit: September 19, 2016, 08:54:44 AM by boarder42 »

iluvzbeach

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Re: FSA and HSA
« Reply #1 on: September 19, 2016, 07:43:27 AM »
It's my understanding that as long as you are in a qualified HDHP you can contribute to an HSA.  Don't quite understand, though, why the employer is contributing to an FSA. That seems rather odd. You may want to do more research by reviewing the employer's benefits package and whether it gives you the option to contribute to an HSA.

boarder42

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Re: FSA and HSA
« Reply #2 on: September 19, 2016, 08:01:35 AM »
It's my understanding that as long as you are in a qualified HDHP you can contribute to an HSA.  Don't quite understand, though, why the employer is contributing to an FSA. That seems rather odd. You may want to do more research by reviewing the employer's benefits package and whether it gives you the option to contribute to an HSA.

it doesnt ... we're an S-corp ESOP ... it makes it extremely hard/impossible to have HSAs ... i wonder if i can deny the FSA contribution if it inhibits me from contributing to an HSA.

boarder42

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Re: FSA and HSA
« Reply #3 on: September 19, 2016, 08:54:19 AM »
Big Edit.  apparently its an HRA account not an FSA accont that my employer funds.  i had no idea these were different things. title has been adjusted.

Cromacster

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Re: FSA and HSA
« Reply #4 on: September 19, 2016, 09:15:25 AM »
Big Edit.  apparently its an HRA account not an FSA accont that my employer funds.  i had no idea these were different things. title has been adjusted.

Hah good to know! big difference.

I have been exploring this as well as a potential employer offers an HRA plan and I currently have an HSA plan.  I haven't found too many great answers on the world wide web, but it sounds like it is possible just not with payroll deduction.  The main thing to figure out is if the HRA plan is considered limited purpose.  The health plan also has to fulfill the requirements of an HSA plan (deductible etc).

boarder42

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Re: FSA and HSA
« Reply #5 on: September 19, 2016, 09:19:05 AM »
Big Edit.  apparently its an HRA account not an FSA accont that my employer funds.  i had no idea these were different things. title has been adjusted.

Hah good to know! big difference.

I have been exploring this as well as a potential employer offers an HRA plan and I currently have an HSA plan.  I haven't found too many great answers on the world wide web, but it sounds like it is possible just not with payroll deduction.  The main thing to figure out is if the HRA plan is considered limited purpose.  The health plan also has to fulfill the requirements of an HSA plan (deductible etc).

yes pre the 500 bucks a person they give us the plan meets the requirements for an HSA.  its just a question of where that issue lies.  basically deductible is 1500 and max OOP is 3500 but when you add in the 500 they give us for healthcare costs that makes them 1k and 3k which i assume will make the plan not available for an HSA.  i emailed HSA bank about it to see what they have to say.  will report back here.  i wish there was a way to decline that payment as it would net me more money annually but really i'm just worrying about pennies here as my wife will get a 30% increase in pay and our ESOP is crazy good so it will expedite FIRE by a few years

MDM

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Re: FSA and HSA
« Reply #6 on: September 19, 2016, 12:29:26 PM »
The main thing to figure out is if the HRA plan is considered limited purpose.  The health plan also has to fulfill the requirements of an HSA plan (deductible etc).
Bingo.

See Publication 969 (2015), Health Savings Accounts and Other Tax-Favored Health Plans:
Quote
...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

boarder42

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Re: HRA and HSA
« Reply #7 on: September 19, 2016, 01:10:47 PM »
yeah pretty sure you all just confirmed what i thought.

wonder if there is anyway i can get them to not give me the 500 bucks. 

Cromacster

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Re: HRA and HSA
« Reply #8 on: September 19, 2016, 01:24:21 PM »
yeah pretty sure you all just confirmed what i thought.

wonder if there is anyway i can get them to not give me the 500 bucks.

    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.

To me this reads as you could still use the 500 given to you by you're company, but anything outside of "except preventive care and items listed under Other health coverage" would have to be covered by you.


boarder42

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Re: HRA and HSA
« Reply #9 on: September 19, 2016, 01:37:42 PM »
yeah pretty sure you all just confirmed what i thought.

wonder if there is anyway i can get them to not give me the 500 bucks.

    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.

To me this reads as you could still use the 500 given to you by you're company, but anything outside of "except preventive care and items listed under Other health coverage" would have to be covered by you.
oh i see if i elect to suspend it. i mean in theory could one suspend an HRA for a day or a week and fully fund the HSA and then unsuspend it?

charis

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Re: HRA and HSA
« Reply #10 on: September 19, 2016, 01:45:24 PM »
yeah pretty sure you all just confirmed what i thought.

wonder if there is anyway i can get them to not give me the 500 bucks.

    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.

To me this reads as you could still use the 500 given to you by you're company, but anything outside of "except preventive care and items listed under Other health coverage" would have to be covered by you.

If I've read this correctly, I had the same issue this year, except flipped - I tried to suspend my HSA during a period when we were contributing to my husband's HRA/FSA, which had a contract-related June termination date.  After it terminated, I resumed contributions to our HSA, which I was hoping to max this year.   

It turns out that I all did was terminate MY contributions to the HSA during the FSA period, but my employer was still putting in 125/month.  HR told me that they couldn't stop those contributions.   What I did was withdraw those contributions (plus interest earnings) from the overlap period, and I will treat it like taxable income on my return.  Hopefully that solves the problem?? 

I'd like to think that shouldn't matter because the FSA funds went to my lasik, which isn't covered in any part by my HDHP or counted in any way toward my deductible.
« Last Edit: September 19, 2016, 01:51:23 PM by jezebel »

boarder42

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Re: HRA and HSA
« Reply #11 on: September 19, 2016, 01:48:42 PM »
man wouldnt it be great if they could simplify the damn tax code.  its absurd the hoops we jump thru, and the amount of knowledge you need to even start looking for how to jump

robartsd

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Re: HRA and HSA
« Reply #12 on: September 19, 2016, 01:54:24 PM »
    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.

To me this reads as you could still use the 500 given to you by you're company, but anything outside of "except preventive care and items listed under Other health coverage" would have to be covered by you.
The way I read the IRS Publication, you should be able to elect to suspend the HRA during an open enrollment period. Unlike a FSA, HRA funds can roll over, so your employer's contribution to the HRA can be used for medical expenses incurred in a later year when the HRA is not suspended (only your HSA can reimburse for expenses incurred during the suspense period). You may be able to 1) suspend your HRA, 2) contribute to a HSA, and 3) pay medical expenses out of pocket. Then in FIRE use HRA funds for post retirement medical expenses (essentially turning your HRA into a Retirement HRA). Of course, you'll want to confirm details with your employer or plan administrator.