HRA Administration for Small Business - HRA Plan Docs

Yes, you can have an HRA and an HSA at the same time and it is great... Okay, but there are some rules you have to follow and some extra work for the administrator. First, if you are making tax-free contributions to an HSA, the IRS requires  that individuals have a minimum deductible on their health insurance from all sources (including HRAs and QSEHRAs) in order to make tax deductible contributions to their Health Savings Account (HSA). We call this an HRA Deductible. However, there are some expenses that can be reimbursed through the HRA without regard to an HRA Deductible. These expenses include: Insurance premiums Wellness/preventive care Expenses resulting from accidents Dental expenses Vision expenses Real World Application It is important there is no confusion between having an HSA and making contributions to an HSA. Funds from an HSA can be used to pay for the qualified medical expenses of the account holder and her dependents, even if the account holder is no

The Legal Definition The Internal Revenue Code defines medical expenses in  26 U.S. Code § 213 : (d) Definitions For purposes of this section— (1) The term “medical care” means amounts paid— (A) for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body, (B) for transportation primarily for and essential to medical care referred to in subparagraph (A), (C) for qualified long-term care services (as defined in section 7702B(c)), or (D) for insurance (including amounts paid as premiums under part B of title XVIII of the Social Security Act, relating to supplementary medical insurance for the aged) covering medical care referred to in subparagraphs (A) and (B) or for any qualified long-term care insurance contract (as defined in section 7702B(b)). The Internal Revenue Service (IRS) establishes guidelines for what types of medical expenses may be reimbursed tax-free through an HRA. These