How to Combine HRA to HSA
Establish a Health Reimbursement Arrangement Compatible with Health Savings Accounts
HRAs must follow existing rules to be used with HSAs.working on laptop 6 image by Philip Date from Fotolia.com
Define the HRA to cover vision, preventative care and dental benefits, but not medical expenses in the plan document. The HRA can also cover the insurance premiums for the High Deductible Health Insurance Policy (HDHP) that employees must carry to qualify to hold an HSA. Coverage of medical expenses by both an HRA and HSA is illegal under regulations that specify the source of first dollar coverage, so medical costs must be taken out of the HSA account or covered by insurance in this situation. If the HRA is set up to cover retirees, there is no restriction on holding both HRA and HSA.
Employees must receive copies of HRA plan descriptions.The blue form for the letter. image by Andrey Khritin from Fotolia.com
Distribute copies of the HRA plan description to employees. Educate employees about the defined benefits in the arrangement. Enroll employees in a high deductible health insurance policy (HDHP).
- 3). Employees open individual health savings accounts based on their eligibility by having a high deductible health insurance policy. In 2014, all employees will be eligible for insurance coverage of this kind regardless of preexisting conditions or income.
- 4). Maintain the HRA and the HSA as compatible with current regulations. HDHPs must be in good standing and cannot lapse.