max pretax levels?

[Guest Compliance questioner]

We have a group that is installing a HRA that will be paying for 100% of in-network deductible and a Health FSA with a 2k max. They have a 403b plan already in place.

The benefits manager is getting nervous that there is a maximum on tax-sheltered benefits a employer can provide. I'm not aware of anything, but I want to make sure that there aren't any limits of pre-tax monies that an individual can run through or a total an employer can run through.

Thanks!

[GBurns]

I have never heard of an "over all" limit, although there are limits on each individual plan, whether statutory or plan document imposed.

There are limits to the amount that can be contributed to a 403(B) and DCAP that are statutory and as you show the FSA has a plan limit.

What you have posted does raise some questions:

If the HRA takes care of the "100% in-network deductible" will that not affect the employee's use of the FSA?

How will the employer know how much to contribute to the HRA? If this was a straight 105(B) MERP, I could understand, but you said it was an HRA. It seems that your plan design will not be economically justified for the employer.

[Guest Compliance questioner]

The plan is actually a MERP in nature. The TPA we are using adjusted their docs for the MERP plans to be HRA, to include MERPS.

The MERP is paying only on the deductible and will pay first on the innetwork deductible. The employees can decide for themselves if they think they will need to plan for coinsurance above and beyond the deductible as well as any Section 213 expenses not covered by insurance.

[GBurns]

I, personally, have no idea what it is that you are trying to explain.

In an HRA, the employer allocates and funds a predetermined amount to an account from which the employee spends, any unused amounts roll over to another period etc.

In a MERP, the employer does not have a predetermined amount (although there might be a cap or limit) and does not pre-fund. The employee only gets money as reimbursment AFTER they have had an expense. There is no unused amount and no rollover.

If the plan that you are talking about is going to cover deductibles, it can either:

1. Fund an account from which the employee can draw as needed but only for deductibles. This could be a HRA.

2. Reimburse the employee for any amount spent on deductibles only. This would be a MERP.

From what you have posted there is the added complication of the employee deciding about other expenses. However, you did state that "they will need to plan for coinsurance above and beyond the deductible as well as any Section 213 expenses not covered by insurance." This implies employee contributions and I presume on a pre-tax basis. This is not allowed in an HRA but is allowed in an FSA or a MERP.