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Multiple sub-accounts under one HRA Plan?? Or participation in two at the same time?


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It just keeps getting more interesting. I'd love anyone's thought on the following, which relates to the intersection of the new world of the Affordable Care Act and Health Reimbursement Accounts (HRAs).

Here's what I know:

1. HRAs, to comply with the ACA, must be 'integrated' with the health plan.

2. Stand-alone HRAs are out - unless its a retiree-only HRA.

I have clients (public sector) who have an Active Employee (integrated) HRA (employer makes contributions to active employees) AND a retiree-only (stand alone) HRA (employer makes specified contributions for a limited number of years to retirees.

Here's the the @#%# hits the fan:

Client may want to rehire a retired individual (who still receives the retiree HRA contribution in the retiree-only HRA account) for part-time work. In the re-hired position, the individual is eligible for the active employee HRA contribution.

Some vendor/promotor types, locally, are scaring a lot of employers by pointing out the conflict here, and saying that the active-employee HRA made for the retiree will "blow up the retiree HRA" (which, if it is not for retirees-only [by receiving a contribution for an 'active', does not satisfy the ACA).

I believe that an assumption is being made here that there is only one HRA and that an active-employee's HRA is 'converted' into a retiree-only account when someone retires.

In actuality, I believe that we should actually be talking about two separate HRAs here: one for actives (integrated) and one for retirees. Contributions make to a retiree should go into a literally different/segragated account than for when the person was active.

Additionally, I would think that the 'problem can be addressed' by adopting a rule under which a person is eligible for only one type, but not both types, of HRA contribution at a time. (Maybe freeze the retiree HRA contribution while the person is a rehired active.

Alternately, perhaps the rehired person could simply receive both types of contributions at the same time, so long as the active-portion goes into the active sub-account and the retiree portion goes into the retiree sub-account. (The person did, after all, attain 'retirement' status at some point, and barring plan language to the contrary, arguably remains entitled to a retiree contribution).

Hmmmmm.....

I imagine this is an area where we'll see more regulation/guidance, but for now - it provides a window for local trouble makers to rattle the nervous employers. Sigh.

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