Does HRA money roll over?

Healthcare reimbursement accounts (HRAs) are a popular benefit offered by many employers to help employees cover medical expenses. One common question that arises among employees is whether the money in their HRA account can roll over from one year to the next. The answer to this question varies depending on the type of HRA plan your employer offers.

There are three main types of HRAs: the integrated HRA, the stand-alone HRA, and the qualified small employer HRA. Each type has its own rules when it comes to rollover of funds.

For integrated HRAs, the money in your account typically does not roll over from one year to the next. Instead, any unused funds are forfeited at the end of the plan year. Integrated HRAs are usually paired with high-deductible health plans (HDHPs), and the employer often contributes funds to the HRA to help offset the high deductibles employees must meet before their insurance coverage kicks in. Since these funds are intended to cover current-year medical expenses, they are not designed to accumulate from year to year.

In contrast, stand-alone HRAs and qualified small employer HRAs may allow for rollover of funds. Stand-alone HRAs are not paired with a specific health insurance plan, so the funds in these accounts can often roll over from one year to the next. Qualified small employer HRAs, which are available to small businesses with fewer than 50 employees, also typically allow for rollover of funds.

If your employer offers a stand-alone HRA or a qualified small employer HRA, it’s important to check with your plan administrator to understand the specific rollover rules that apply to your account. Some plans may allow a portion of the funds to roll over, while others may have a “use it or lose it” policy where any unused funds are forfeited at the end of the plan year.

In summary, whether or not HRA money rolls over depends on the type of HRA plan your employer offers. Integrated HRAs typically do not allow for rollover of funds, while stand-alone HRAs and qualified small employer HRAs may offer this benefit. It’s important to review your plan documents and speak with your plan administrator to understand the rollover rules that apply to your specific HRA account.

FAQs about HRA rollover:

1. Can I roll over unused HRA funds from one year to the next?

Yes, depending on the type of HRA plan your employer offers. Stand-alone HRAs and qualified small employer HRAs often allow for rollover of funds.

2. How much money can I roll over in my HRA account?

The amount of money that can roll over varies depending on your plan. Some plans may allow for full rollover of unused funds, while others may have a cap on the amount that can be carried over.

3. Do I need to use all of my HRA funds by the end of the plan year?

For integrated HRAs, any unused funds are typically forfeited at the end of the plan year. Stand-alone HRAs and qualified small employer HRAs may allow for rollover of funds.

4. Can I use rollover funds for any qualified medical expenses?

Yes, rollover funds in your HRA account can generally be used for any qualified medical expenses as defined by the IRS.

5. Do I need to notify my plan administrator if I want to roll over unused funds?

Typically, rollover of funds in your HRA account is done automatically by the plan administrator. Be sure to review your plan documents for specific details.

6. Can I withdraw rollover funds as cash?

Rollover funds in your HRA account are meant to be used for qualified medical expenses. They cannot typically be withdrawn as cash.

7. Will my employer match rollover funds in my HRA account?

Employer contributions to your HRA account are determined by your specific plan. Some employers may choose to match rollover funds, while others may not.

8. Are rollover funds in my HRA account taxable?

Rollover funds in your HRA account are not typically taxable as long as they are used for qualified medical expenses.

9. Can I roll over funds from my HRA account into a different type of account?

Rollover funds in your HRA account are meant to be used for qualified medical expenses and cannot typically be transferred to a different type of account.

10. What happens to rollover funds if I leave my job?

If you leave your job, the rules regarding rollover of funds in your HRA account will depend on your plan. Some plans may allow for continued use of rollover funds, while others may require forfeiture of any unused funds.

11. Can rollover funds be used to pay for premiums or non-medical expenses?

Rollover funds in your HRA account are generally intended to be used for qualified medical expenses. Using these funds for premiums or non-medical expenses may not be allowed.

12. How can I track rollover funds in my HRA account?

Your plan administrator should provide you with regular updates on the status of your HRA account, including any rollover funds that may be available for use. Be sure to keep track of your expenses and receipts for any reimbursements from your HRA account.

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