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...

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. Th...

Employee Statuses The Qualified Small Employer HRA requires that the benefit be offered to all Full-Time Permanant employees that work an average of 30 hours per week. What does that mean? How does one know if an employee has to be included? In this section we will answer those questions by defining employee statuses. Full-Time Employee A full-time employee is an individual reasonably expected to work at least 30 hours per week. For this purpose, “hours” include each hour for which an employee is paid or entitled to payment for performing duties for the employer or entitled to payment even if no work is done (e.g. holiday, vacation or sick time). Employees with variable hours may also be considered fulltime, benefits eligible employees if they work an average of 30 hours or more per week during a look-back measurement period. Temporary (short-term) employees and seasonal employees may also be considered full time. Variable Hour Employees The ACA defines an empl...

All HRA plans, from the Single Participant 105 plan to the Qualified Small Employer HRA, function in similar ways. Over the years employers have begun to realize the value of the HRA as a total replacement strategy What is a Health Reimbursement Arrangement (HRA)? There are two families of HRA, traditional Section 105 HRAs and Qualified Small Employer 9831(d) HRAs. Both are employer-funded health plans that reimburse employees tax-free for eligible out-of-pocket medical expenses, including individual health insurance premiums. The differences lie in the plan structure, various structures have evolved over the decades to comply with the constantly changing regulatory environment.  How do they work? Employers define a dollar amount they are willing to contribute to employees’ medical expenses. Employees spend money on qualified medical expenses and submit a request to be reimbursed and proof of the expense to the employer or the employer’s claim reviewer. Once approved the company re...

IRS Statement Prior to the Presidential Election “The IRS plans to reject electronically filed “silent returns” beginning in FS 2017....Silent returns filed by paper will go to the Error Resolution/Rejected Returns unit as the IRS issues Letter 12C, informing the taxpayer of the issue. If the taxpayer does not respond to the Letter 12C, the IRS will issue a notice to inform the taxpayer that the IRS estimated an ISRP and made an adjustment accordingly. If the taxpayer’s original return claimed a refund, the IRS will offset the refund with the ISRP balance. January 20, 2017 Presidential Executive Order “To the maximum extent permitted by law, the Secretary of Health and Human Services (Secretary) and the heads of all other executive departments and agencies (agencies) with authorities and responsibilities under the Act shall exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or require...