HSA’s & HRA’s

Submitted by Jed Stander on Fri, 2017-01-27 08:51

I am aware that I can distribute funds from my TIRA to my HSA, but not to an HRA. From a tax implication standpoint, are there IRS restrictions that prohibit the following from occurring in the following scenarios:

A. An employee who is age 62, and not covered by Medicare, has an employer sponsored HSA with a High Deductible Healthcare Plan (HDHP). The employee has a family plan under which their spouse, who is age 66, who also has Medicare, is covered under the HSA HDHP family plan. Because it is an employee sponsored plan, is the spouse covered under the HSA for receiving distributions for authorized healthcare expenses even though she has Medicare?

B. If the scenario in A. above was altered in that the employee lost their job, elected to continue the same HDHP and its HSA under COBRA as a family plan,

1. Is COBRA still considered an employer sponsored plan?

2. Is the 66 year old spouse still eligible to receive HSA benefits under COBRA?

3. If not, even though it is classified as a family HDHP under COBRA, would the allowable monthly pro-rata contribution to the HSA, in effect, revert to a single plan or remain at the monthly pro-rata family plan contribution ceiling level?

C. If the scenario in A. above was altered in that the employee retired from the company, elected to continue with another HDHP with an HRA (not HSA), is the 66 year old spouse still eligible to receive HSA benefits under HRA?

IRS Publications 509 and 962 don’t quite appear in my search to address the scenarios above, and would appreciate your guidance, if possible.

Thank you.



Submitted by William Tuttle on Fri, 2017-01-27 16:38

You have a one time option to rollover funds from a traditional IRA to an HSA. It takes up HSA contribution space just like any other contribution.

  • A. Regardless if it is an employer sponsored plan or and individual plan, HSA distributions are always allowed for the qualified medical expenses of the account holder, their spouse and dependents for services that occur after the opening of the HSA. What other insurance the spouse and dependents have (including Medicare) have no bearing on whether the expense is qualifed.
  • B. Regardless if it is an employer sponsored plan, COBRA or individual plan does not matter.
  1. Irrelevant
  2. As the spouse of an HSA eligible individual, yes. See above.
  3. The determination of individul vs. family plan is purley based on coverage of the HDHP
  • C. An HSA can always be used to remiburse the unreimbursed qualifed expenses of the account owner, their spouse and dependents. Other converages do not matter, except that you can not double-dip for anything covered under another insurance or reimbursment plan. This will also be true when the 62 year old enrolls in Medicare. They will no longer be able to make HSA contributions, but still make quaiified distributions as above.
  • The only thing that the spouse having Medicare does. Is that it makes them an HSA ineligible individual. This means they can not open their own HSA and contribute their own $1000 catch-up contribution.

Submitted by Jed Stander on Wed, 2017-02-01 02:07

Thank you for your expert and thorough answers.  It was extreemly helpful in my sorting out the issues and answers.  If you don’t mind, I have a follow-up question for you.  It is, if the individual who is 62 years old in the three scenarios above also was enrolled and received Social Security at that time, would that alter any of the answers that you provided to me regarding either that person or their spouse’s ability to contribute to or receive benefits from the HSA and HRA?  In short, the only variance is that the 62 year would be on Social Security.

Submitted by William Tuttle on Wed, 2017-02-01 15:41

Social Security in and of itself has no effect on HSAs. An HSA account owner can still make qualfied withdrawals for a spouse enrolled in SS regardless of whether they are or are not enrolled in Medicare. Also, provided they are covered by a QHDHP family plan and not otherwise disqualified by other non-QHDHP coverage (e.g. Medicare), they are themselves an HSA eligible individual. This would alow them to open their own HSA and make their own catch-up contribution.

Submitted by Jed Stander on Wed, 2017-02-01 22:04

Thank you so very much for your expert reply.  I appreciate your going to the lengths to answer my questions!  It is very, very helpful!!!

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