HRA Claim Reimbursement Methods

[Guest BeneGal]

In setting up an HRA with a health plan ($2000 deductible) we want to know if the following two scenarios are acceptable.

1. Set up the HRA for $1000 but it can only begin paying after the employee has expensed THEIR $1000 toward the $2000 deductible. The ee would have to show proof of the first $1000 being applied to their deductible then, claims after that could be submitted for reimbursement up to the $1000 HRA amount.

2. Set up the HRA to pay 50% of the employee's deductible which would again be $1000 but pay it out 50% at a time meaning... ee sends a claim for $300 the HRA reimburses $150 of that and the HRA keeps reimbursing 50% of all claims submitted until it pays out a total of $1000.

Can an HRA be set up with these stipulations? Is it violating anything? Seems that in both cases the HRA is still making available the $1000 it is designed to provide (in this case).

:confused: :confused: :confused: :confused: :confused:

[Guest Rae Posey]

Two questions... why does your plan have such a large deductible, and what entity is administering your HRA plan? In other words, are you locked in to the $2,000 deductible HRA plan? Although either of your suggestions should probably be ok, this can be done in a much more simple way.

[GBurns]

From what you have posted I understand that there will only be reimbursement for expenses (from the employer) up to $1,000.

I understand this to mean that if the employee has only $1,200 in expenses for the year, the employer would only reimburse $1,200 - 1,000 or $200.

If this is so, Why do you need an HRA instead of a standard 105 MERP?

The only purpose of a HRA is to allow the rollover of unused employer contributions. In your illustration there will be no unused contributions because there is no pre-funding only reimbursement of expenses.

[Ron Snyder]

Each of the provisions you describe could be done legally, but I have to endorse the comment of GBurns: This could be done without an HRA and you evidence no intent to have funds roll over from year to year.