With an HRA, you get maximum tax savings while building a valuable source of money for expected—and unexpected—healthcare expenses. HRAs provide a unique “triple” tax-saving advantage:

1. Contributions are tax-free;

2. Investment growth (if any) is tax-free; and

3. Withdrawals for qualified healthcare expenses are tax-free.

This is the best possible tax advantage==even better than tax-deferred 457, 403(b), and 401(k) plans with taxable withdrawals. Tax savings includes state income tax (most states), federal income tax, and Social Security and Medicare (FICA) taxes. Individual situations vary, but you could save up to 30% or more. That's $300 or more in tax savings for every $1,000 in your HRA!

Your HRA has several advantages compared to health savings accounts (HSAs) and flexible spending accounts (FSAs).

1. IRS rules do not require coverage under a high-deductible health plan (HDHP). You can enroll in the medical plan of your choice.

2. Your HRA covers retiree medical premiums before and after age 65, including Medicare Part B, Part D, and supplement premiums.

3. There are no annual use-or-lose or carryover limits to worry about. Your unused HRA funds roll over from year to year.

4. There are no IRS contribution limits. Contributions are usually determined by collective bargaining or employer policy.

You get to choose from a menu of available investment fund options, kind of like your deferred compensation or similar retirement plan. Investment changes are allowed once per calendar month.

More information about your plan’s investment fund lineup is available after logging in or upon request. You should consult with a professional financial advisor and carefully read the fund fact sheets and prospectuses before making investment decisions.

Depending on your employer's plan design, you can begin using your HRA while your still working or after you separate or retire.

• Claims. When eligible, you can easily submit claims and supporting documentation after logging in online or from our mobile app, HRAgo®. Just click Claims and follow the onscreen instructions. If you'd rather use a paper form, download and print our Claim Form.

• Debit Card. You can use your free HRA debit card to pay qualified medical care expenses directly from your HRA. Remember to save all supporting documentation for every debit card transaction in case we have to request copies.

• Automatic Premium Reimbursement. If you're retired, we can automatically reimburse most monthly medical, dental, and vision insurance premiums, including Medicare premiums. To set up an automatic premium reimbursement, log in online or from our mobile app, HRAgo®, click Claims, then click Set Up an Automatic Premium Reimbursement and follow the onscreen instructions. If you’d rather use a paper form, download and print our Automatic Premium Reimbursement form.

You can use your HRA money for a broad range of medical, dental, and vision expenses that aren’t covered or paid in full by insurance. This includes expenses for your spouse and any qualifying dependents. Common examples that generally qualify are listed below. Certain restrictions, requirements, or exceptions may apply.

• Chiropractic care

• Contact lenses, solutions

• Copays

• Deductibles

• Dental care (non-cosmetic)

• Dentures, adhesives

• Eyeglasses

• First-aid supplies

• Flu shots

• Hearing aids

• Insulin

• Laser eye surgery

• Orthodontia

• Over-the-counter medicines, products

• Physical therapy

• Prescriptions

• Vision care

In addition, insurance premiums that usually qualify include COBRA, long-term care, medical, dental, vision, and Medicare. For more details, read our What’s Covered handout.

Section 213(d) of the Internal Revenue Code defines what is a qualified “medical care” expense. IRS Publication 502 contains guidance that primarily focuses on expenses deductible on tax returns. However, many of the examples it contains also qualify for HSA purposes.

Your HRA covers you, your spouse, and dependents. This includes your young-adult children through the end of the calendar year in which they turn age 26.

Generally, dependents must satisfy the IRS definition of “Qualifying Child” or “Qualifying Relative” as of the end of the calendar year in which expenses were incurred. These requirements are defined in Section 105(b) of the Internal Revenue Code. Internal Revenue Code definitions supersede and may differ from state definitions.

Read our Who's Covered handout for more details.

Here are several things to keep in mind if you have a general purpose (full-coverage) healthcare flexible spending account (FSA) or health savings account (HSA) in addition to your HRA.

1. You can have all three types of accounts (HSA, FSA, and HRA).

2. You can use either account in any order.

3. However, during any period that you or your spouse make or receive contributions to an HSA, your FSA or HRA coverage must be placed in a “limited purpose” status, according to IRS rules. Limited purpose means your FSA and/or HRA may only be used for dental- and vision-related expenses. In addition, limited purpose HRAs may be used for qualified high-deductible health plan, dental, and vision premiums.

4. You can elect limited purpose coverage using our FSA or HRA Limited Coverage Election form. Forms are available online after logging in and clicking Resources. If you have an HSA on our platform, your full-coverage FSA and/or HRA will be automatically converted to limited purpose at open enrollment for HSA contribution eligibility purposes.

5. Limited purpose FSA and HRA coverage is required only for HSA contribution eligibility. Once you or your spouse are no longer making or receiving HSA contributions, you can have a full-coverage healthcare FSA and/or HRA with no limitations.

If you pass away, your surviving spouse and qualified dependents may continue using any remaining HRA funds to reimburse their eligible medical care expenses and premiums on a tax-free basis.

In the unlikely event you pass away with no eligible survivors, the executor or other representative of your estate can spend down your account by filing claims for any unreimbursed medical care expenses you may have incurred prior to your death. Remaining funds, if any, after all final claims have been reimbursed would then be forfeited and re-contributed per the terms of the Plan Document or otherwise applied as directed by your employer. IRS Revenue Ruling 2006-36 does not permit the payment of benefits to non-dependent heirs.