Health Reimbursement Arrangement

[Guest Nini]

Does anyone know of a requirement that the HRA must state the amount of the employer contribution?

A client wants to establish an HRA and plans on increasing the contribution amount each year (at least for the first couple of years). They don't want to have to amend the plan each year to state the increased amount.

Would it be as simple as stating in the HRA that the amount of the employer contribution shall be determined each year by the BOD in resolutions adopted prior to the beginning of the plan year? They would also do a communication piece each year.

Any guidance/citation is appreciated - thanks.

[J Simmons]

Nini,

No cite, but I do suggest that you include a default amount in the plan document as to what amount will apply for a year if no resolution is adopted for an upcoming year before it begins. That way if the employer's board doesn't meet for whatever reason, or this issue is overlooked, you yet have some basic level of HRA accruals for the year. If the resolution can be adopted after the year begins, but expenses before the resolution is adopted (say back to the first day of the year) qualify for reimbursement you may have a problem.

[Jacmo]

Nini--that's exactly what we do--i.e, make a statment in the docs that the amount is to be reviewed annually. Just be sure that the ER keeps a copy of the annual notice or statement to the employees with their Plan Doc/SPD file.

[leevena]

Nini, you can also have a maximum amount of dollars contributed. You could state that the total amount available to the employee is equal to the deductible.

[Guest taxesquire]

in situations like this, I will often reference an "appendix" to the plan, setting forth the amount, that can be changed without a formal amendment. I like this idea b/c it establishes a written record of what was historically provided.