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HRA
Old 02-22-2015, 08:17 AM   #1
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HRA

Megacorp cancelled Retiree Health Care coverage at the end of 2014. We had been paying $266/mo in 2014. Now for 2015, they are providing a Health Reimbursement Arrangement for us at no cost. I will turn 65 this year and they also provide the HRA for reimbursement for Medicare Advantage or Medigap insurance. It not only covers premium reimbursement but out-of-pocket expenses as week. Both DW and I have a stated total amount. While the benefit is only for 2015, any unused amount will carry over to 2016. I assume this will be considered income on our 2015 taxes. That will be an additional $12k or so income with no withholding. Wondering if anyone else has such a plan, if it is indeed income which I will need to cover by increasing our withholding?

Not that I don't appreciate the benefit, just trying to prepare so as not to have a big tax bill for 2015.
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Old 02-22-2015, 08:39 AM   #2
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See Publication 969 (2013), Health Savings Accounts and Other Tax-Favored Health Plans

Quote:
What are the benefits of an HRA? You may enjoy several benefits from having an HRA.
  • Contributions made by your employer can be excluded from your gross income.
  • Reimbursements may be tax free if you pay qualified medical expenses. See Qualified medical expenses , later.
  • Any unused amounts in the HRA can be carried forward for reimbursements in later years.
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Old 02-22-2015, 09:20 AM   #3
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Sounds like HRAs can be designed differently so probably good to check w/ your HR dept. In my case, mega reimburses only for medical insurance premiums (including medicare B) and reimbursements are not taxable.
I didn't think extra funds could be carried over in our case but maybe I wasn't paying enough attention since I use them all up during the yr..........
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Old 02-22-2015, 10:59 AM   #4
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Thanks for the quick responses. For 2014 they made a small contribution to my HSA and that I received a W2 for that, so I thought the HRA might be the same way.
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Old 02-22-2015, 11:38 AM   #5
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Are you paying taxes on their HSA contribution or is it just to keep track of the contributions so that when you take distributions, you aren't taxed ? or to make sure there is no overcontribution?
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Old 02-23-2015, 08:39 AM   #6
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"Are you paying taxes on their HSA contribution or is it just to keep track of the contributions so that when you take distributions, you aren't taxed ? or to make sure there is no overcontribution? "

I believe we are paying taxes on it, but it may also be to make sure we didn't over-contribute. DW used all her HSA in 2014, so she would have taken out more than she contributed, if they didn't account for Mega's contribution.
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