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HEALTH REIMBURSEMENT ARRANGEMENTS HRA’s COORDINATION WITH OTHER ACCOUNTS OR ARRANGEMENTS An HRA may be coordinated with an FSA, subject to certain rules, e.g., mutually exclusive coverage, layering of coverage (FSA first). If coverage is provided under both an HRA and an FSA for the same medical care expense, amounts available under an HRA must be exhausted before reimbursements may be made from the FSA. Notice 2002-45, Sec. V, 2002-28 IRB 93. Under no circumstances may an employee be reimbursed for the same medical expense by both an HRA and an FSA. Notice 2002-45, Sec. V, 2002-28 IRB 93. TAX TREATMENT OF DISTRIBUTION Distribution for qualified medical expenses are generally not taxable. Notice 2002-45, Sec. I, 2002-28 IRB 93. Employer-sponsored HRAs may not reimburse non-qualified medical expenses or any other expenses. Notice 2002-45, Sec. II, 2002-28 IRB 93. PORTABILITY/CARRYOVER OF FUNDS Participants in an HRA may carry forward any unused portion of the maximum dollar amount at the end of a coverage period to increase the maximum reimbursement amount in subsequent coverage periods. Notice 2002-45, Sec. I, 2002-28 IRB 93. DEATH/DIVORCE There are no special rules regarding death or divorce. Subject to the terms of the HRA coverage can continue to a spouse or dependents of a deceased employee. The impact of the COBRA rules on HRAs is unclear; additional guidance on this subject has been requested from the IRS. ADMINISTRATION An HRA is generally administered by the employer, subject to the terms of the HRA document. | ||
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