Availability of 125 plan contributions for claims reimbursement during the year

[Guest jdglennCPA]

An employer has a high deductible health insurance plan. The employer wants to set up a cafeteria plan and contribute various amounts, pre-tax, to the plan for the employees to use towards the high deductible. However, the employer only wants to only make available to the employee the amount contributed to date to the plan on their behalf. Can an employer do that or does that fall under the uniform coverage rules.

If the employee elects to put in their own money, the employer is okay with making the whole year's election available for claims reimbursement...but wants to limit the availability of the employer contributed piece.

[papogi]

Having an HRA for the employer amounts, and a regular FSA for the employee amounts will make this happen without a problem.

[KJohnson]

You can accomplish this by running an FSA through the cafeteria plan for employee contributions and running a separate HRA for the employer contribution piece. Go to benefitslink.com and search for HRA and you should be able to find some guidance. Uniform coverage does not apply to HRAs. You could write your HRA to only cover expenses that go toward the deductible. You can also allow employees to "carry over" amounts in an HRA, but this is not required.

Another possiblity would be to have a single HSA assuming your high deductible health plan qualifes. HSAs were part of the Medicare bill late last year. You can have both employee pre-tax contributions through a 125 Plan and employer contributions to an HSA. The employee controls the HSA and there is no uniform coverage rule. Again, search for HSA under benefits link. If you only wanted the employer piece to go towads the deductible rather than other medical expenses, this might to tough to accomplish with an HSA.

There is a good article on today's benefitslink comparing HRAs and HSAs.