Clarifying Health

The only thing I would add is Publication 969 might be helpful to review (http://www.irs.gov/pub/irs-pdf/p969.pdf) as well as the rules for Section 125 plans (http://www.zanebenefits.com/blog/How-Section-125-Cafeteria-Plans-Work)

To confirm with other answers, look in your plan documents or SPD. Reimbursement plans can be set up differently from employer to employer. For example, if you are being offered a Health Reimbursement Arrangement, and you receive allowance amounts monthly, then it could be correct that you received just a pro-rated amount. However, if you receive an annual allowance, then you would have full use of the balance from the beginning of the year. Does that make sense?

I agree with others - that clarification is needed. Is it currently a group health insurance policy or reimbursement of individual health insurance premiums?

Hi John, Generally, you can claim contributions you made and contributions made by any other person, other than your employer, on your behalf, as an adjustment to income. IRS Publication 969 is a helpful resource for HSA rules: http://www.irs.gov/pub/irs-pdf/p969.pdf This article outlines the 2014 HSA Rules: http://www.zanebenefits.com/blog/bid/289564/Health-Savings-Account-HSA-2014-Rules-Requirements Does that answer your question? Christina

I agree with Chaz. The HDHP is generally an ERISA health plan. I am not sure if we have answered your question. Could you rephrase?

Hi Gary, The amount you can contribute to your HSA depends on the type of HDHP coverage you have, so you don't need to open an HSA account for your wife, but rather you would need to have an HSA-qualified plan that your family was also covered under. Does that make sense? Here are a couple resources I always go to: http://www.zanebenefits.com/blog/bid/289564/Health-Savings-Account-HSA-2014-Rules-Requirements http://www.irs.gov/pub/irs-pdf/p969.pdf

Here is an interesting infographic on the top 3 voluntary products in 2014: http://www.zanebenefits.com/blog/the-top-3-voluntary-products-for-2014-infographic According to Tower Watson, the top three voluntary products are traditional supplemental medical insurance options (vision, dental, and accident), traditional wealth (disability), and traditional security (life insurance). Emerging trends include financial counseling, one supplemental medical option (critical illness), and one security option (identity-theft protection).

Here is a helpful overview of how Section 125 plans work, that I think might help: http://www.zanebenefits.com/blog/How-Section-125-Cafeteria-Plans-Work

No. An employee insurance contribution cannot be varied based upon age or sex. It can, however, be varied based upon bone-fide job criteria such as job title, hours worked weekly, location, etc. For reference, see: http://www.zanebenefits.com/blog/Using-Premium-Reimbursement-Employee-Classes-to-Recruit-and-Retain-Key-Employees

Here's a good summary on the changes to reimbursing individual health insurance premiums with an HRA or Section 105 plan. On September 13, 2013, the Department of Labor issued Technical Release 2013-03 which modifies existing annual limit regulations as they pertain to stand-alone health reimbursement arrangements (HRAs) for plan years starting on or after January 1st, 2014. The changes present both good news and bad news. The bad news... Under the interim final rules for the PHS Act Section 2711 annual limit requirements, a flexible spending arrangement as defined in IRC Section 106©2 is exempted. Many sponsors of stand-alone HRAs have been using this exemption to ensure their plan complies with the PHS Act Section 2711 annual limit and PHS Act Section 2713 preventative care requirements. As part of the Technical Release, Health and Human Services (HHS) has reversed its position that flexible spending arrangements as defined above are exempted from the 2711 annual limit requirements. According to the Technical Release, this change goes into effect for plan years beginning on and after January 1, 2014. In other words, the section 106©2 flexible spending arrangement exemption will still be available for plans with plan years beginning before January 1, 2014. This gives ample time for existing sponsors of stand-alone HRAs to ensure compliance. The good news... Employers can still reimburse employees for individual health insurance premiums. For the first time, the Department of Labor, the Department of Treasury, and Health and Human Services have coordinated to issue formal confirmation that employers are 100% allowed to reimburse individual health insurance premiums tax-free under the tax code. This is a MAJOR positive. We repeat - employers are still allowed to reimburse employees tax-free for individual health insurance premiums. What is the solution for plan years beginning on or after January 1st, 2014? For plan years beginning on or after January 1st, 2014, one solution is to adopt a limited Healthcare Reimbursement Plan (HRP). The HRP is structured to only reimburse: - Health insurance premiums up to a specified monthly healthcare allowance, - Preventative care as required by PHS Act Section 2713 at 100% without cost-sharing. This structure ensures the HRP complies with the PHS Act 2711 annual limit requirements and the PHS Act 2713 preventative care requirements as outlined in the Technical Release. Additionally, care must be taken in the design and administration of the HRP to ensure the plan does not meet the definition of an eligible employer-sponsored plan in IRC Section 5000A and consequently qualify as minimum essential coverage. This ensures employees participating in the HRP are able to receive a tax subsidy via the new health insurance marketplaces assuming they meet additional eligibility criteria. Source: New Guidance on Tax-Free Reimbursement of Individual Health Insurance

Also, here's a helpful overview of the changes to FSAs (and other "account" based health plans) in 2014.

Yes. The government considers this double dipping. If you are using an HRA (or other type of compliant premium reimbursement arrangement such as an HRP), you can technically be reimbursed for spousal plans, however you need to pay for the premiums after-tax and NOT pre-tax. Hope that helps!

It's my understandings that the value of an HRA will not be affected if it can reimburse health insurance premiums or not. The value will still be the amount available for reimbursement. This article may help: Stand-alone HRAs Can Still Reimburse Health Insurance Premiums

PHS Act Section 2711 has caused some confusion in regards to HRAs. This section, in general, prohibits group health plans from imposing lifetime or annual limits on the dollar value of essential health benefits. However, there is an exception to these regulations as stated by (ii) in the quoted text below: "§ 2590.715-2711 No lifetime or annual limits. (a) Prohibition— (1) Lifetime limits. Except as provided in paragraph (b) of this section, a group health plan, or a health insurance issuer offering group health insurance coverage, may not establish any lifetime limit on the dollar amount of benefits for any individual. (2) Annual limits— (i) General rule. Except as provided in paragraphs (a)(2)(ii), (b), and (d) of this section, a group health plan, or a health insurance issuer offering group health insurance coverage, may not establish any annual limit on the dollar amount of benefits for any individual. (ii) Exception for health flexible spending arrangements. A health flexible spending arrangement (as defined in section 106©(2) of the Internal Revenue Code) is not subject to the requirement in paragraph (a)(2)(i) of this section. ..." Under section 106©(2) there are certain types of stand alone HRAs that are exceptions to this regulation. Section 106©(2) states: "Section 106©(2) Flexible spending arrangement - For purposes of this subsection, a flexible spending arrangement is a benefit program which provides employees with coverage under which— (A) specified incurred expenses may be reimbursed (subject to reimbursement maximums and other reasonable conditions), and (B) the maximum amount of reimbursement which is reasonably available to a participant for such coverage is less than 500 percent of the value of such coverage." So, in order to ensure that your stand alone HRA is exempted from the Section 2711 rules, it must: - Set a cap on annual rollover so that the maximum amount of available reimbursement is always less than 5 times the annual value of the HRA - Modify the HRA plan to exclude qualified long term care premiums as defined in IRC section 7702B©

A Health Reimbursement Arrangement (HRA) is the best way to reimburse deductibles, co-pays, and eligible medical expenses while insured under an individual health insurance plan. As for legally providing only the CEO of a company with benefits, a HRA allows employers to set up different classes of employees based on bona-fide job criteria to which you can provide different benefits. "To comply with IRS and ERISA regulations, employee classes within the HRA must: Be based on bona-fide business differences. These may include job categories, geographic location, part-time or full-time status, date of hire, etc. Treat all “similarly situated” employees equally. By creating classes based on genuine job categories, all employees within a class will be “similarly situated”. Not discriminate against unhealthy people. An employer cannot provide inferior benefits to specific individuals with adverse health conditions. (However, the law does permit employers to provide superior benefits to individuals with adverse health conditions.) Spell out the requirements for classes and benefits in the ERISA plan document." (source: HRA Employee Classifications) So technically, you could set up a class based on the job criteria of a CEO and provide benefits to that one class.

Charles, With a defined contribution plan you can define different classes of employees and then specify different allowances to give each class. Read HRAs: A Smart Health Insurance Alternative for Churches for more details.

The IRS now requires all over-the-counter medications to include a doctor's prescription in order to be to be reimbursed through an HRA. Read a full article on Over-the-Counter Medicines and HRAs. If the participant is submitting a large amount of OTC expenses, then they will have to prove (with documentation) that it is treating a medical condition. The Plan Admin should not know what the participants' medical expenses are for. If you suspect drug usage, you may explore the option of giving employees a random drug test. If Zane Benefits is your HRA Administrator, we are always here to answer such questions, via e-mail, online forum, and phone! Disclaimer: This information is general in nature and does not apply to any specific U.S. state except where noted. Health insurance regulations differ in each state. See a licensed agent for detailed information on your state. Zane Benefits, Inc. does not sell health insurance.

Hi Lcarr, What did you end up deciding for administering your HRA? If you're still debating this, or for others who are, here are two useful articles: 15 Features to Expect from an HRA Administrator 3 Reasons an Employer Should use an HRA Administrator Happy to answer any questions you might have about HRAs or HRA Administration!

According to the interim regulations, the restriction on annual limits applies differently to certain account-based plans, especially where other rules apply to limit the benefits available. HRAs are a type of account-based group health plan and typically consist of a promise by an employer to reimburse medical expenses for the year up to a certain amount, with unused amounts available to reimburse medical expenses in future years (see Notice 2002-45). By its definition, an HRA imposes annual limits on essential health benefits. That is, reimbursements an HRA participant may receive during a year are limited to the balance of his or her notional HRA account. As a result, the following HRA plans have been exempted from the annual limit requirements: "Integrated" HRAs "Flexible Spending Arrangement" HRAs "Excluded" HRAs "Excepted" HRAs "Retiree" HRAs" Read More: Determining if an HRA is Exempted from Annual & Lifetime Limits

We provide a sample SBC for HRA on our website: SBC for HRA