HRA 101

Question 1

What are the different HRA plan types?

Answer 1

1) First Dollar HRA
2) Second Dollar HRA
3) Sandwich (Donut) HRA

Question 2

Who determines what expenses are eligible?

Answer 2

Employer (as long as the expenses are within IRC 213(D))

Question 3

Define First Dollar HRA

Answer 3

The funds are available to you up front (like FSA) which means you can use the funds on your first expense

Question 4

Define Second Dollar HRA

Answer 4

You have to pay up to your deductible before HRA kicks in

Question 5

Define Sandwich (Donut) HRA

Answer 5

You pay a certain amount, then HRA will cover the second amount, and then you pay for the rest (HRA is the meat in the middle of sandwich)

Question 6

What is the most common HRA plan type and why?

Answer 6

The most common is first dollar HRA because second and sandwich HRA causes too much employee confusion

Question 7

What are the 5 different types of HRAs?

Answer 7

1) General Purpose HRA
2) Limited Purpose HRA
3) Limited Purpose Post Deductible HRA
4) Health Incentive Arrangement (HIA)
5) Retiree Reimbursement Arrangement (RRA)

Question 8

Can an HRA be limited to certain expenses or certain categories of expenses?

Answer 8

Yes

Question 9

Can unused funds be rolled over?

Answer 9

Yes

Question 10

What happens to unused funds at the end of the plan year?

Answer 10

Funds are forfeited

Question 11

What happens to unused funds when you are terminated/retired?

Answer 11

You are able to spend down any unused funds

Question 12

TRUE or FALSE: You can name a beneficiary to your HRA

Answer 12

False

Question 13

TRUE or FALSE: An HRA can be paired with a general purpose FSA?

Answer 13

True

Question 14

Legally, what document is an employer required to have?

Answer 14

A Plan Document that defines the plan provisions in legal terms. Also, a Summary Plan Description (SPD) that summarizes these provisions in an easily understood format

Question 15

What should the Plan Document outline?

Answer 15

Eligibility requirements, enrollment periods, and requirements, plan year/period of coverage, HRA rules (if applicable) and contributions

Question 16

Who can the HRA funds be used on?

Answer 16

Employee, spouse, and his/her dependents

Question 17

TRUE or FALSE: The account holder can fund the HRA.

Answer 17

False - HRA can only be funded by the employer.

Question 18

Define Runout Period

Answer 18

Timeframe to submit eligible expenses from the previous plan year as outlined in the plan

Question 19

Can I continue to use my HRA when I select COBRA?

Answer 19

Yes

Question 20

Is it required that an HRA be paired with an HDHP?

Answer 20

No

Question 21

Who is not eligible for an HRA?

Answer 21

1) Sole proprietors
2) Partners in a partnership
3) Member of an LLC
4) More than 2% shareholders of S corporation

Question 22

When is Form 5500 required?

Answer 22

Needs to be submitted to the Department of Labor if funded and/or if 100 or more participants at beginning of the plan year

Question 23

When are funds available to the employee?

Answer 23

Employer gets to elect the amount to contribute to each employee and when funds are available (immediately, quarterly, per pay period)