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 longer eligible to make contributions to an HSA. An HRA Deductible is only required in the year you are making tax-free contributions to an HSA.
Your HRA Deductible has to equal high-deductible health plan (HDHP) minimum deductibles for the contribution year. Self-only: $1,350 Family: $2,700 for 2018.
So, I am a single employee with an HDHP and I am contributing $2,000 to an HSA in 2018. Also, my employer is offering a QSEHRA with a $3,600 annual benefit allowance. How do I comply with the IRS's HRA Deductible?
Well, if I am paying an insurance premium on my HDHP, I can collect a reimbursement for that expense without regard to the deductible. I can also collect reimbursements for any dental or vision expenses I incur. For any other medical expenses, I will continue to submit claims to the plan but I will write on the claim, "do not reimburse, apply to deductible." Once I then reach my deductible, all of my medical expenses going forward are reimbursable, up to the plan limit.
Administrators, HRA Deductibles are a self-compliance feature. The administrator will have no visibility as to which employees are on HDHPs. HRA Deductibles should be considered only when a participant requests an HRA Deductible be applied to their account.
To track deductible in eTrack, add deductible amount underneath "Total HRA Eligible" row. Input expense but do not enter expense amount in the "Amount Paid" column. Instead, input amount to apply to deductible under "Amount Eligible." When the two figures are equal, the deductible has been met: