subject: Retirees, California Health Insurance And Health Reimbursement Arrangements [print this page] As one approaches retirement, it is increasingly important to have some sort of protection from major medical bills. Did you know that while you are still employed, you may be eligible for a Health Reimbursement Arrangement?
Health Reimbursement Arrangements, popularly known as HRAs, allow employers to legally reimburse their employees with tax-free money for qualified health care expenses and health insurance premiums. Depending on your employer, they may continue reimbursing you during your retirement years under the Retirement HRA. The Retirement HRA is allowed by the Internal Revenue Code under Section 213(d) which delineates the qualified expenses that can be reimbursed by an HRA Account.
What Are The Qualifications To Participate In The Retirement HRA?
You are qualified to participate in the Retirement Health Reimbursement Arrangement if you had a balance in your Additional Security Benefit (ASB) plan that converted to a Retirement HRA on July 1, 2005. You are also eligible to participate if you're a communication participant working for a participating employer. Your participation starts on the very first day your employer places funds in your HRA retirement benefit plan.
How Does An HRA For Retirees Work?
Your employer will continually fund your HRA Account. The amount that your employer contributes is determined by your employer. It will also depend on what was agreed to between both parties. The balance of your account grows via the contributions placed by your employer and through investment earnings. The retirement reimbursements are available for qualified medical expenses once you reach retirement age and have fully stopped working.
Qualified health care expenses for retirees include co-payments, deductibles and health insurance premiums. For retirees older than 65, they can use their HRA retirement account to pay for Medicare Part A, B and D as well as Medicare Advantage Plan premiums.
How Does The Funding For HRA Retirement Accounts Work?
It is your employer who will solely fund the HRA retirement account. The contribution rate for each hour worked is established under the collective bargaining agreement between employers and employees. You have to take note that this type of account does not allow employee contributions. Meaning, you get tax-free money but contributions are not tax deductions. You will simply rely on the contributions that your employer deposits for your balance to grow.
When Can You Use HRA Funds?
Once you turn the retirement age of 62, you are allowed to use the HRA funds to pay for qualified medical expenses stated under Section 213(d) of the IRS Code. These reimbursements should not be used if your medical expenses are paid by any other health insurance coverage that you have.
To be eligible for retirement, you should be 62 or older and must have ceased industry employment. The reimbursements can only be received by the retiree once a claim is filed. A claim form should be completed along with an itemized receipt for the qualified health care expenses.
When Will Coverage End?
HRA retirement coverage ends once your employer decides to terminate or amend the retirement benefits. Coverage also stops once you have depleted the funds in your HRA Retirement Account.
by: Wiley Long
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