Can HRA covered employee “suspend” medical reimbursement for HSA eligibility?

  • Questions
  • HSA
  • Can HRA covered employee "suspend" medical reimbursement for HSA eligibility?

The IRS rules allow an employee to contribute to an HSA while covered by an HRA only if the HRA is limited to preventative care, and a few other expenses.

According to the rules, this limitation can be elected before the coverage period begins by ‘suspending’ the medical benefit of the HRA.

How does an employee covered by an Admin America HRA elect to suspend their HRA?

Suspended HRA: Before HRA coverage begins, you suspend your HRA by electing to forgo reimbursement for medical expenses incurred during the coverage period. As a result, you are HSA-eligible during the suspension period. The suspension does not apply to otherwise HRA-eligible expenses that are permitted insurance, permitted coverage, or preventive care.

Marked as spam
Posted by Anonymous
Asked on June 26, 2020 9:23 am
Private answer

Eligible employees can notify their HR representative regarding their intention to suspend HRA coverage for an upcoming Plan Year.  Your HR representative will instruct Admin America that you will not be a Plan Participant for the applicable Plan Year.

The IRS requires that the election to suspend HRA coverage must be made before the Plan Year starts and must be irrevocable for the duration of the Plan Year (once the Plan Year starts).  Newly hired employees who first become eligible for HRA coverage in the middle of the Plan Year must elect to suspend their HRA coverage their coverage waiting period ends.

Marked as spam
Posted by Trey Tompkins
Answered on July 9, 2020 9:55 pm