Noticed a new benefit at work: Healthy Future HRA balance.

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stimulacra
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Noticed a new benefit at work: Healthy Future HRA balance.

Post by stimulacra » Tue Mar 13, 2018 3:18 pm

While logging in to my benefits portal at work today I noticed a new account balance on the account dashboard (via MyCigna).

It appears to be a Healthy Future – Health Reimbursement Account (HRA). The current balance is $391.26. It earns an interest rate of 6% per year.

It is separate from my HSA which I contribute the maximum amount to and my employer kicks in $1,000.

Looks like in addition to the HSA my employer deposits around $130 into this HRA each month.

The account status says “inactive” so after a series of conversation with HR and benefits admin (no one was familiar with the benefit) it appears to be a new retirement benefit for retired employees who are over the age of 55 or have 15 years of service after the age of 40. Any type of separation of employment prior to those two conditions being met means I lose the HRA balance.

Over a 20 year period this would end up being around $77k with the 6% compounded and 2% annual inflation. Doesn't really change my world too much but sounds nice if it's there.

Is anyone familiar with this or how to handle it in their investment planning?

Dottie57
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Re: Noticed a new benefit at work: Healthy Future HRA balance.

Post by Dottie57 » Tue Mar 13, 2018 3:25 pm

HRA has been around for a while. Employer funds it. If money is not used then it rolls over. If you leave employer, you lose money in HRA.

I did google retirement HSA And found this link with explanation

http://www.fundoffice.org/spd/eit-spds- ... eb-ao.html

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grabiner
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Re: Noticed a new benefit at work: Healthy Future HRA balance.

Post by grabiner » Tue Mar 13, 2018 9:00 pm

This HRA may make you ineligible to contribute to an HSA, since it can pay medical expenses. (For similar reasons, an FSA makes you ineligible to contribute to an HSA.)
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Spirit Rider
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Re: Noticed a new benefit at work: Healthy Future HRA balance.

Post by Spirit Rider » Wed Mar 14, 2018 12:48 am

grabiner wrote:
Tue Mar 13, 2018 9:00 pm
This HRA may make you ineligible to contribute to an HSA, since it can pay medical expenses. (For similar reasons, an FSA makes you ineligible to contribute to an HSA.)
From the information in the original post, this appears to be an Retirement HRA. As indicated by the OP it is "inactive" while employed and only becomes "active" after separation if the minimum age and vesting requirements are met.

According to the IRS It does not make an individual ineligible to contribute to an HSA until that "retirement".

Retirement HRA. A retirement HRA that pays or reimburses only those medical expenses incurred after retirement (and no expenses incurred before retirement). In this case, the individual is an eligible individual for the purpose of making contributions to the HSA before retirement but loses eligibility for coverage periods when the retirement HRA may pay or reimburse section 213(d) medical expenses. Thus, after retirement, the individual is no longer an eligible individual for the purpose of the HSA.

stimulacra
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Re: Noticed a new benefit at work: Healthy Future HRA balance.

Post by stimulacra » Wed Mar 14, 2018 11:01 am

Thank you everyone for the additional info.

For the time being I'm going to consider the HRA a wildcard bonus benefit and keep planning as if it wasn't there.

I was thinking about making the investable portion of my HSA 100% equities and have the HRA 6% interest rate function as more of a fixed income portion mentally but that's making a strong assumption that I'll stay put for the next couple of decades.

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Re: Noticed a new benefit at work: Healthy Future HRA balance.

Post by Spirit Rider » Wed Mar 14, 2018 12:35 pm

I think both are good ideas. I would add a couple of suggestions to add to the plan. Both involve what to do if/when you are able to retire with this plan.

1. Like when you enroll in Medicare, retirement from this plan if meeting the age and vesting requirements will make you ineligible for HSA contributions. However, under the rules for married people either you or your spouse can have an HSA qualifying family HDHP and your spouse can make the full HSA family contribution including her >= age 55 catch-up contribution.

This can either be a private plan, your spouse's employer plan or your retiree health plan if one exists. Many employers with retiree health plans are starting to add HSA qualifying HDHPs. Sometimes with the minimum deductible allowed.

2. Since HSAs can be inherited and HRAs can not. You will want to use the HRA first.

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