If you and your spouse have been offered a small business HRA (QSEHRA) through your employers, you may be wondering if you both can participate in the plans. The good news is that yes, you can. You are both entitled to receiving the full designated family amount for each of your plans, even if you work for the same employer!
What is an HRA?
HRAs are employer paid benefits that reimburse health insurance premiums and medical expenses tax-free. With an HRA, employees are free to choose a health insurance plan that best fits their needs (doctors, prescriptions, etc). Your employer has set a monthly maximum allowance for your HRA reimbursements. If you are unable to use your entire allowance one month, the remaining balance will be carried forward to the next month. At the beginning of the year your account resets with a zero balance.
Develop a plan for reimbursements
To maximize reimbursements and avoid unnecessary tax complication you need to develop a plan with your partner for submitting qualified medical expenses for reimbursement. Whenever an expense is incurred only one spouse should submit the expense for reimbursement. It is important to note that if both spouses submit the same expense it will result in an improper reimbursement and the couple would be responsible for returning the excess payment.
For example: Tom and Mary work at two different small businesses. They recently found out that their employers will be offering HRAs. Tom’s employer has set up the HRA to reimburse premiums only at $450/ month. Mary’s employer set up her HRA to reimburse premiums and medical expenses at $400/month.
During the month, Tom and Mary visit the doctor, chiropractor, fill prescriptions, and pay their insurance premiums. Since Tom’s HRA is only for premiums, Mary will expense the various medical expenses, including their daughter’s monthly braces payment.
In this example, Tom maximized his reimbursement amount for the month and Mary did not. Mary will have $35 carried forward to the next month and will have a total of $435 available for reimbursements.
Want to learn more? Check out the reimbursement rules chapter in our handy new QSEHRA Guide or click on the orange button below to talk to an expert.
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I wrote this blog because I love helping people decode confusing insurance jargon and understand the fine print. I'm a licensed health insurance professional and specialize in simplifying health insurance for individuals and small businesses. My QSEHRA articles have been featured regularly on Accounting Today, Accounting Web, HRWeb, and other industry publications. I'm also a member of Take Command Health's client success team and a full-time mom. Learn more about me and connect with me on our about us page. Thanks!