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Questions & Answers

The Health Reimbursement Account (HRA)

1. What is a Health Reimbursement Account (HRA)?

The HRA component of ERIP is an IU-sponsored benefit account that allows participants to use the account balance for certain IRS-eligible medical expenses that are not covered by insurance.  Participants must be enrolled as the employee in an IU-sponsored medical plan on June 30, 2011 in order to receive the HRA.

2. How much do I receive?

  • The amount of the HRA credit depends on the employee’s age and IU-sponsored medical plan membership level on June 30, 2011.  For years that the participant is under Medicare age (65), the annual amount will be:
Employee Only $6,000
Employee with Child $11,000
Employee with Spouse $13,500
Family  $14,500
  • When the ERIP participant is eligible for Medicare (age 65), the HRA amount is $5,000 per year.
  • The University will make these contributions for a total of 5 years. However, contributions will end earlier if the participant becomes eligible for medical coverage through another employer or spouse/domestic partner employed by IU, or dies. 

3. When is the amount credited to my HRA?

The University will credit the applicable lump-sum amount to the ERIP participant’s HRA within the first month following the separation date and then every anniversary for a total of 5 years. When the employee reaches age 65 and is eligible for Medicare, the credit will be $5,000 per year for the remainder of the 5 total years.   

4. Is the money paid directly to me?

      The money is credited to the participant’s HRA, not directly to the employee.

5. Is the money in the HRA taxed?

The HRA is not considered taxable income. See Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans

6. What expenses can be reimbursed through my HRA?

  • The ERIP participant can use the HRA to reimburse medical expenses within the meaning of Section 213(d) of the Internal Revenue Code on behalf of the participant, his or her spouse, and his or her eligible dependents. Examples of medical expenses that qualify for HRA reimbursement:
    • After-tax medical insurance premiums (COBRA and Retiree premiums)
    • *NEW* Medicare Supplement (“Medigap”) plan premiums
    • Deductibles and copayments not covered by another medical plan
    • Dental and vision care expenses not cover by another plan
    • Eyeglasses
    • Prescription drugs
    • Preventive care
    • Medicare Part B & Part D premiums
  • For a complete list of medical expenses that qualify for reimbursement refer to IRS Publication 502 Medical and Dental Expenses.
  • The IRS does not allow the use of HRA funds for expenses associated with a domestic partner, unless the partner qualifies as a dependent under IRS regulations.
  • Some expenses not allowed by the IRS include: non-prescription drugs and medicines, cosmetic procedures, health club dues, expenses covered by an insurance or government program, etc.
  • Eligible expenses must be incurred on or after the effective date of the HRA.  For example, if the last day of employment is June 30, 2011, the HRA effective date will be July 1, 2011.

7. Are my Medicare Part B and Part D premiums qualified medical expenses reimbursable from my HRA?

Yes, Medicare Part B is a supplemental medical insurance and premiums participants pay for Medicare Part B are a medical expense.  Check the information received from the Social Security Administration to find out the premium.

Additionally, Medicare Part D is a voluntary prescription drug insurance program for persons with Medicare A or B.  Participants can include as a medical expense premiums paid for Medicare D.

*NEW* The HRA funds can also be used to reimburse the premiums for Medicare Supplement (“Medigap”) plans.

8. How do I access the money in my HRA?

  • Mail, fax, or submit claims online to Nyhart, the plan administrator, in order to receive reimbursement for expenses already paid (see How to submit claims); or
  • Use the IU HRA debit/Visa card to pay for expenses at the time of service. Participants can use the card at any physician’s office, medical facility, pharmacy, or other merchant that accepts Visa (see How to use the debit/Visa card).  Participants may still be required to substantiate some purchases with receipts, so the HRA card does not eliminate the need to keep and submit receipts.
  • If participants receive a bill for services, they can pay the bill by writing the card number on the invoice and mailing it in, or by providing the card information over the phone. Participants may also use the card for mail order pharmacy service.

9. When do I have to submit claims?

Claims for medical expenses incurred while participating in the plan can be submitted for reimbursement at any time while still participating in the plan. Claims will be paid from the HRA up to the amount accumulated in the account at the time the claim is submitted.  Claims cannot be reimbursed if the expense was incurred prior to the date participation began. There will be a 90-day claim deadline after the 5-year term to file claims for services incurred before the end of the 5-year term. After the claim deadline, any remaining balance in the HRA is forfeited.

10. If I have more expenses in one year than is available in my HRA, can I get reimbursed in the following year once IU credits my HRA again?

Yes.  Save the original claim submission documentation and resubmit after the HRA has been credited again.

11. Will I forfeit my HRA balance if I don’t use it all during the year?

Any amount remaining in the HRA at the end of a year will carry forward and can be used in subsequent years to pay for eligible medical expenses.  Any funds remaining after the end of 5 years will be forfeited.

12. What happens if I don’t use all of my HRA balance within five years?

At the end of the five year period beginning with the retirement date, any amounts remaining in the HRA will be forfeited.  For example, if a participant retires on June 30, 2011, s/he may use the HRA to pay for qualified medical expenses incurred through June 30, 2016 by submitting claims by August 30th, 2016.

13. What happens if I am or will turn age 65 and become eligible for Medicare while participating in ERIP?

  • All participants enrolled as the employee in an IU-sponsored medical plan on June 30, 2011 will be provided an HRA, regardless of age.
  • Those who are age 65 or older at the commencement of ERIP will be credited $5,000 in their HRA each year. 
  • Those who turn age 65 during the 5 years as a participant in ERIP will receive a contribution amount based on the medical plan membership level for each year that they are under age 65, then $5,000 for the years that the participant is 65 or older.

14. If I die before the end of the five year period, what happens to my HRA?

  • If a participant dies after separating from the University, but before the end of the five year period, the funds in the HRA can be transferred to the spouse or IRS eligible dependents. The spouse and dependents will continue to be eligible for reimbursement under the HRA for their qualified medical expenses during the remaining time in the 5-year period. 
  • No additional funds are contributed to the HRA after the ERIP participant has died.  If there is no spouse or dependent at the time of the participant’s death, the HRA funds will be forfeited.
  • Transferring HRA funds to a spouse or dependent is not automatic. The surviving spouse or dependent will need to contact University Human Resources to initiate the process.

15. If my marital or family status changes, does the amount credited to the HRA change?

The annual amount credited to the HRA does not change if there is a marital or family status change during the 5 year period.  It remains based on the enrollment level as of June 30, 2011.

16. Why does the HRA benefit not cover my domestic partner?

The IRS does not allow the use of HRA funds for expenses for a domestic partner unless the partner qualifies as a dependent under IRS regulations.

17. What happens to my HRA if I get another job that has medical care benefits?

  •  When the ERIP participant becomes employed elsewhere and is eligible for medical care benefits through their employer, the participant will no longer be considered an ‘Eligible Individual’ and will receive no additional contributions to the HRA
  • The ERIP participant will have 90 days, after they are no longer deemed an ‘Eligible Individual,’ in which to submit claims for reimbursement of qualified expenses to Nyhart  in order to use any remaining funds in their HRA account.
  • Any funds in the HRA account after 90 days is forfeit.   

18. What happens if my new job does not have medical care benefits?  Will I continue to receive the HRA contributions for the remaining years in the 5 year period?

In this circumstance, the HRA contributions will continue if the participant does not have medical care coverage.

19. What happens if I move to my spouse’s IU medical plan?

  • When the ERIP participant becomes covered under a spouse’s IU medical care plan, the participant will no longer be considered an ‘Eligible Individual’ and will receive no additional contributions to the HRA
  • The ERIP participant will have 90 days, after they are no longer deemed an ‘Eligible Individual,’ in which to submit claims for reimbursement of qualified expenses to Nyhart  in order to use any remaining funds in their HRA account.
  • Any funds in the HRA account after 90 days is forfeit. 

 

 

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