HRA Employer Sponsored Health Reimbursement Account
(Doc ID 648538.1)
Last updated on JULY 08, 2020
Applies to:PeopleSoft Enterprise HCM Human Resources - Version 8.8 SP1 and later
Information in this document applies to any platform.
Is PeopleSoft developing a product or enhancing the FSA module to handle the Health Reimbursement Account? (Refer to Revenue Ruling 2002-41, Notice 2002-45 and Section 213 of IRS Tax Code.)
The Health Reimbursement Account (HRA) is similar to the FSA with notable differences. Like the FSA the HRA allows money to be set a side to offset medical costs, but unlike the FSA an HRA is 100% employer funded and allows the money to rollover from one year to the next. In addition, the HRA is portable and if an employee is terminated they can continue to use the funds for healthcare reimbursement. This will include the option of using the funds for premium reimbursement for Medicare Supplemental coverage.
Employers may choose to pair the HRA with a high deductible healthcare plan since the HRA funds can be used towards deductibles and co-pay costs. There are variables that will need to be considered such as how the HRA will coordinate with the FSA account. Employers may require that employees exhaust the FSA before being able to access the MRA. This will require a rollover option once the FSA goal amount is met. Funding of the MRA will need to be determined. One option might be to fund at the beginning of the year, and another to fund as claims are received and then fund remaining balance on 12/31/xx so it can roll over to the next year.
Request to add functionality on base benefits for employers to offer this plan and to build interfaces with service providers that may be contracted to process the claims in conjunction with claims against the FSA. Also request to build the functionality in the FSA module to process claims in conjunction with claims against the FSA.
In processing claims, employers may likely choose to cover only services covered through the medical and dental plans. For example: services for RK (or Lasik) surgery, while a covered expense under the FSA may be excluded from reimbursement from the HRA.
Recent IRS Revenue Ruling allowing the HRA should be consulted. Aggressive benefit managers were offering medical plan options with high annual deductibles ($2000)with an HRA as early as 2003. These plans were expected to be offered by many more companies for plan years starting in January.
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