HRA

[Idnar7]

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.

 

[pb4uski]

See Publication 969 (2013), Health Savings Accounts and Other Tax-Favored Health Plans

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.

 

[kaneohe]

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..........

 

[Idnar7]

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.

 

[kaneohe]

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?

 

[Idnar7]

"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.