HRA Frequently Asked Questions

What is a Health Reimbursement Arrangement?

A Health Reimbursement Arrangement (“HRA”) is an employer funded “accident or health plan” (“Plan”), that (i) provides individual accounts for reimbursing employees, retirees and their dependents for qualified medical expenses and (ii) permits any unused portion of the account at the end of the year to be carried forward to the next year. Unlike flexible spending accounts, there is no annual “use it or lose it” requirement.

What is required to have a qualified HRA?

• An HRA must be funded solely through employer contributions or mandatory employee contributions. Employees cannot voluntarily contribute on either a pre-tax or after-tax basis.
• Amounts must be used for “qualified medical expenses,” as defined in Internal Revenue Code (IRC) Section 213, of an employee, or the employee’s spouse or dependents. HRA assets may also be used to reimburse post-employment health insurance premiums (including Medicare) or premiums for qualified long term care insurance.
• Each medical expense submitted for reimbursement must be “adjudicated” as a “qualified” medical expense by the Plan Administrator (substantiated with documented proof) prior to reimbursement from the HRA.
• Amounts cannot be used for any purpose other than to cover qualified medical expenses. Therefore, an HRA cannot pay a death benefit without regard to medical care expenses. Amounts cannot be paid directly or indirectly to participants in cash.
• Reimbursements are not permitted for expenses incurred prior to the effective date of the HRA or before the date the participant first became enrolled in the HRA. Reimbursements are also not permitted for expenses for which a deduction was allowed on any prior year Form 1040.
• HRAs are subject to the nondiscrimination requirements under IRC Section 105(h), which generally prohibits discrimination in favor of highly compensated employees with respect to eligibility to participate and benefits provided.

Are contributions to an HRA taxable to employees?

Employees are not taxed on employer contributions. IRC Section 106 provides tax-exclusion for contributions an employer makes to an HRA.

Are withdrawals from an HRA taxed?

Assets used to pay for qualified medical expenses are not taxed. IRC Section 105 provides tax-exclusion for amounts received as reimbursement of medical care expenses.

What are the tax consequences should an HRA be shown to not qualify?

If an HRA fails to meet the requirements provided in the HRA Guidance, all distributions made, including those for qualified medical expenses will be taxable to the participants.

How do I file my tax return when I have taken a distribution from the HRA?

Expense reimbursements under HRAs for qualified medical expenses are not reportable to the IRS. No other distributions from the HRA are allowed and therefore, there is no IRS reportable event.

Who is eligible for an HRA?

Eligibility requirements (for enrolling in the plan, receiving contributions, and for receiving reimbursements) are as established by the HRA Plan. An HRA provides reimbursements for former employees after termination of employment or retirement. An employee who has met the requirements for receiving reimbursements is referred to as “claim active.”

How are contributions determined in an HRA?

The amount and frequency of contributions are determined by the Plan. There are no IRC limits to the amount that may be contributed. The HRA Plan may place limits on contributions.

Can I make contributions to my HRA?

No, you cannot voluntarily choose to contribute. According to the IRS, an HRA must receive contributions only from the employer or from mandatory employee contributions. Employees may not contribute on their own. Contributions aren’t includible in income and reimbursements from an HRA that are used to pay qualified medical expenses aren’t taxed.  The one exception is when an employee makes contributions as allowed under COBRA continuation. The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events.

How do I get access to the assets in my HRA?

Assets in an HRA may only be used to reimburse a qualified plan participant for qualified medical expenses. To access your account for a qualified medical expense claim, contact the plan administrator. Instructions on how to submit a claim are found in the Participant Guide.

Who is a qualified plan participant?

A qualified participant is an employee, a previous employee, the spouse or dependent of an employee or previous employee who has a vested benefit under the plan. See your employer’s plan document for a detailed explanation of qualified participant.

Can an HRA have a vesting schedule?

Yes. Vesting is the right to non-forfeitable ownership of employer contributions. An HRA may be non-forfeitable, depending on the terms of the HRA Plan. Assets in your HRA are only available to pay claims once you have satisfied the vesting requirements of your HRA Plan.

What is a qualified medical expense?

Section 213(d) of the Internal Revenue Code defines what a qualified medical expense is. A list of qualified medical expenses is included in the Participant Guide.

How do I process a claim?

Your employer has hired TASC as the Plan Administrator to review claims and to process them. A more detailed discussion on how to process a claim is included in the Participant Guide.

How long will it take to process my reimbursement claim?

Generally, no more than one to two weeks from when you submit the request to the Plan Administrator. The Plan Administrator is responsible for reimbursing you directly.

Can I use my HRA to pay for medical expense I incurred prior to becoming a member of the plan?

No. An HRA may not reimburse a medical care expense that is attributable to a deduction allowed under Section 213 for any prior taxable year. Additionally, an HRA may neither reimburse a medical care expense that is incurred before the date the HRA is in existence nor reimburse a medical care expense that is incurred before the date an employee first becomes enrolled under the HRA.

Can I request a distribution from my account directly from Voya?

No. Expenses paid from an HRA must be reviewed to determine if the claim is a qualified expense and if the expense has been incurred by a qualified individual. Your employer has hired TASC as the Plan Administrator to review and process claims. A more detailed discussion on how to process a claim is contained in the Participant Guide.

Can I use my HRA to pay for long-term care?

Long-term care expenses are not considered qualifying reimbursable expenses. Qualified long-term care insurance premiums are acceptable. Check your HRA Plan document for any specific benefit restrictions.

What happens to the assets in my account at death of participant?

Death benefits cannot be provided under an HRA. Amounts in the account can only be used for qualified medical expense reimbursements. This is because IRC Section 105, which provides the basis upon which the HRA Guidance was made, provides an exclusion from tax only if amounts are used for qualified medical expenses.

Amounts remaining in the account at death can be used to reimburse qualified medical expenses for the spouse or dependents of the deceased employee/retiree. The terms of the Plan would dictate how this continued coverage will be provided. If no spouse or dependents survive the employee/retiree, amounts remaining in the account may be forfeited.

Forfeitures are dictated based on HRA Plan provisions.

If I leave my employer can I move my HRA to my new employer?

Generally no; however, should you be vested in the HRA Plan, you will be able to process claims against the assets in your account until it is exhausted. The HRA would continue to reside in the Trust your employer established to hold the assets.

How are the assets supporting my HRA protected?

The assets contributed by your employer are held in a Trust. Your employer established this Trust to shelter the assets from creditors and has established an Oversight Board to act as a fiduciary and manage the Trust for the exclusive benefit of those participants covered by the HRA Plan. 

There are 2 Trust arrangements for HRAs. Both arrangements provide protection of HRA Plan assets and are designed to assure participants that the assets in their HRA will not revert back to your employer.

1. Voluntary Employees’ Beneficiary Association (VEBA) Plan – A VEBA is a type of tax-exempt trust used by its members and eligible dependents to pay for eligible medical expenses. The plan is typically funded by an employer. Depending on the organization, plan employee contributions may or may not be mandatory, although individual elections are not permitted. However, employees must be covered by an employer-sponsored health plan to be eligible for VEBA membership.
2. Section 115 Integral Part Trust – An IRC Section 115 trust provides tax-exclusion for income derived from any essential government function. The IRS has ruled that a separate entity (e.g., a trust) may qualify for this exclusion, so long as the entity is performing some government function. A trust providing employee welfare benefits to government employees will be considered an integral part of the state or political subdivision, thereby entitling it to tax-exclusion under IRC Section 115.

How is my HRA being invested?

Your Plan Sponsor has selected an investment option in which contributions will be invested, until such time that you as the plan participant make allocation changes and/or fund transfers. Each participant will receive confirmation containing the specifics on the fund(s) the Plan Sponsor has selected for your HRA Plan. More information on the investment options available in your HRA Plan are provided to you at time of enrollment. 

Can I change the way my HRA assets are invested?

Yes. Your employer has provided a number of funds that represent a variety of asset classes you may select from. You may change your allocation online.

What services do I receive?

The services provided by Voya are:

• Employee education and communications through local representatives
• Investment options from some of the best known fund families in the industry
• Trust services

The services provided by TASC are:

• Online account access
• Investment recordkeeping
• Medical care expense reimbursements
• Account statements
• Toll-free customer call services (web and VRU 24/7 availability)
  • Toll-free: 1-866-678-8322
  • Toll-free secure fax: 1-866-450-1480
  • Service hours: 7:30 a.m. – 5:30 p.m. Central Time
     

How do I get more information about Voya and my HRA?

First, read through your Participant Guide. You will find a good deal of information on your HRA Plan in this document. If you desire additional information, contact TASC.

We do not offer tax or legal advice. Seek the advice of a tax attorney or of a tax advisor prior to making a tax-related investment decision.

You should consider the investment objectives, risks, charges and expenses of the variable product and its underlying fund options offered through a Health Reserve Account carefully before investing. The information booklets and underlying fund prospectuses containing this and other information can be obtained by contacting your local representative. Please read the information carefully before investing.

Funding Agreements under a Health Reimbursement Arrangement are long-term investment vehicles which allow you to allocate employer contributions among variable investment options that have the potential to grow tax free. Account values fluctuate with market conditions; when withdrawn the principal may be worth more or less than original amount invested.

A Health Reimbursement Arrangement is not an insurance policy. Third party administration services are provided by Total Administrative Services Corporation (TASC). TASC and Voya Financial® are not affiliated entities. This information is provided as general guidance and is not intended to be considered investment, legal, or tax advice. Any taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor. This information is provided as general guidance. It is not intended to be legal or tax advice. Any taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor. This information is not intended to be considered tax or investment advice.

Insurance products issued by Voya Retirement Insurance and Annuity Company, One Orange Way, Windsor, CT 06095-4774. Securities are distributed by Voya Financial Partners, LLC (member SIPC). All companies are members of the Voya® family of companies. Securities may also be through other broker-dealers with which Voya has selling agreements. Insurance obligations are the responsibility of each individual company. Product and services may not be available in all states. Voya Institutional Trust Company is the trustee of the Voya Health Reserve Account.