Introduction to HSAs and HRAs—Course Outline

I. Introduction to HSAs

1. What are HSAs?
2. What requirements apply to HSAs?
3. What are HRAs?
4. What requirements apply to HRAs?
5. How are HSAs and HRAs similar?
6. How are HSAs and HRAs different?
7. How do HSAs and HRAs compare with Flexible Spending Accounts?
8. Is employer involvement required fro HSAs and HRAs?
9. Can HSAs and HRAs be used with a cafeteria plan?
10. Are HSAs and HRAs subject to ERISA?

II. Eligibility Rules for HSAs

1. Who is eligible to make or receive HAS contributions?
2. What is a high-deductible health plan as described in Code section 223?
3. What rules apply to the minimum annual deductible?
4. What other rules apply to the minimum annual deductible?
5. May an HDHP determine minimum annual deductibles over periods greater than a year?
6. Are preventive care benefits subject to the minimum annual deductible?
7. What other benefits are treated as preventive care benefits?
8. What about state law preventive care mandates?
9. May an HDHP determine minimum annual deductibles over periods longer than a year?
10. What rules apply to the maximum out-of-pocket limits?
11. What other rules apply to the maximum out-of-pocket limits?
12. Can large deductibles cause a plan to fail to satisfy the maximum out-ofpocket limits?
13. Does permitted coverage or permitted insurance disqualify a person from making or receiving HSA contributions?
14. What is permitted coverage?
15. What is permitted insurance?
16. What types of coverage disqualify a person from making or receiving HSA contributions?
17. Is separate prescription drug coverage treated as disqualifying coverage?
18. Are employee assistance programs, disease management programs and wellness programs treated as disqualifying coverage
19. Are discount cards treated as disqualifying coverage?
20. Are Health FSA and HRA coverage treated as disqualifying coverage?
21. What is a limited purpose Health FSA and/or HRA?
22. What is a suspended HRA?
23. What is a post-deductible Health FSA and/or HRA?
24. What is a retirement HRA?

III. Contributions to HSAs

1. Who can make contributions to an HSA?
2. What is the tax treatment of HSA contributions?
3. What is the maximum contribution limit?
4. What is the maximum contribution limit if an HDHP determines deductibles over periods greater than 12 months?
5. What are the limits for catch-up contributions?
6. How does the maximum contribution limit apply to spouses?
7. Are the special HSA contribution rules for spouses difficult to apply?
8. How does the maximum contribution limit apply to plans with embedded individual deductibles?
9. What is the comparability rule for employer contributions to employee HSAs?
10. Who are comparable participating employees?
11. What is a comparable contribution?
12. How is the comparability rule applied?
13. Is the comparability rule applied separately to different groups of employees?
14. When can an employer make comparable contributions?
15. Does the comparability rule apply to cafeteria plan contributions or to rollovers?
16. What happens if HSA contributions exceed the maximum contribution limit?

IV. Distribution from HSAs

1. When can an HSA account holder receive HSA distributions?
2. What is the tax treatment of HSA distributions?
3. What is a qualified medical expense?
4. Are insurance premiums treated as qualified medical expenses?
5. Does an HSA distribution need to occur in the same year in which a qualified medical expense is incurred?
6. Can HSA distributions be rolled over or transferred to another HSA taxfree?
7. What happens to HSA distributions upon the divorce of the HSA account holder?
8. What happens to HSA distributions upon the death of the HSA account holder?
9. Is it possible to correct mistaken HSA distributions?
10. Is anyone required to substantiate HSA distributions?

V. Administrative Requirements for HSAs

1. What organizational requirements apply to an HSA?
2. Are HSA earnings subject to federal income tax?
3. What entities can serve as an HSA trustee or custodian?
4. May an individual have multiple HSAs?
5. What are permissible investment options for an HSA?
6. What are prohibited investment options for an HSA?
7. What are permissible account features for an HSA?
8. What are prohibited account features for an HSA?
9. How can HSA administrative fees be paid?
10. Can HSAs engage in prohibited transactions?
11. Do the COBRA requirements apply to an HSA?
12. What are the HSA reporting requirements for HSA trustees and custodians?
13. What are the HSA reporting requirements for employers?
14. What are the HSA reporting requirements for HSA account holders?
15. What are the HSA reporting requirements for HDHP sponsors?

VI. IRS Requirements for HRAs

1. How does an employer establish an HRA?
2. What is the tax treatment of an HRA?
3. What IRS requirements apply to an HRA?
4. What benefits can be provided by an HRA?
5. Can an HRA provide benefits other than qualified medical expenses?
6. Which employees may be covered by an HRA?
7. Can an employee cover her non-dependent domestic partner under an HRA?
8. Do the COBRA requirements apply to an HRA?
9. May an HRA continue coverage after termination of employment or retirement?
10. Is an HRA subject to the rules that apply to Health FSAs?
11. How does an HRA coordinate with a Health FSA?
12. Are employees covered by an HRA required to participate in a highdeductible health plan?
13. Is an HRA a funded account?
14. Are employees vested in their HRA account balances?

VII. Cafeteria Plans and HSAs/HRAs

1. Can an employer offer HSAs as a cafeteria plan option?
2. Can an employer offer an HSA-compatible HDHP as a cafeteria plan option?
3. Can an employer offer an HRA as a cafeteria plan option?
4. Can an employer with an HRA offer a high-deductible health plan as a cafeteria plan option?
5. How is an HSA option added to a cafeteria plan?
6. If an HSA option is added to a cafeteria plan, can the employer prepay an employee’s expected salary reduction contributions?
7. Do the cafeteria plan rules apply to an HSA that is offered as part of a cafeteria plan?
8. How do the cafeteria plan rules limiting mid-year elections apply to an HSA option?
9. How do the cafeteria plan rules prohibiting deferred compensation apply to an HSA option?
10. How do the cafeteria plan rules prohibiting discrimination apply to an HSA option?

VIII. Application of ERISA to HSAs and HRAs

1. Does ERISA apply to HSAs and HRAs?
2. What are the requirements of ERISA?
3. What is an employee welfare benefit plan?
4. What is a group health plan?
5. Are some employee welfare benefit plans exempt from ERISA?
6. Is an HRA an employee welfare benefit plan subject to ERISA?
7. Is an HSA an employee welfare benefit plan subject to ERISA?
8. What does DOL mean when they say that an employer’s involvement must be limited?
9. Is an employer’s involvement still limited if the employer establishes HDHPs and makes arrangements for HSA vendors?
10. What if an employer wants to be more involved? In that case, won’t the HSAs be subject to ERISA?
11. What reporting and disclosure issues might arise if HSAs are subject to ERISA?
12. What fiduciary issues might arise if HSAs are subject to ERISA?
13. What administrative issues might arise if HSAs are subject to ERISA?
14. Would ERISA’s group health plan requirements apply if HSAs are subject to ERISA?
15. Do the ERISA requirements apply to an HDHP established in conjunction with HSAs and to a high-deductible plan established in conjunction with an HRA?

IX. Comparing HSAs, HRAs and Health FSAs

1. What is a Health FSA?
2. What are some of the comparative differences between HSAs, HRAs and Health FSAs?
   1. Employer involvement
   2. Eligibility
   3. High-deductible health plan coverage
   4. Carryover of unused funds
   5. Vesting
   6. Portability
   7. Sources of contributions
   8. Contribution limits
   9. Distributions for medical expenses
   10. Distributions for non-medical expenses
   11. Cafeteria plan options
   12. Nondiscrimination rules
   13. COBRA
   14. Substantiation
   15. Reporting
   16. ERISA
   17. Use-it-or-lose-it and uniform coverage rules
3. Comparison chart
4. What are the pros and cons of HSAs vs. HRAs vs. Health FSAs from an employee’s perspective?
5. What are the pros and cons of HSAs vs. HRAs vs. Health FSAs from an employer’s perspective?

X. Integrating HSAs and HRAs With Employer-Sponsored Health Plans

1. How are HSAs and HRAs integrated with existing health plans?
2. What are the design issues for HSAs?
3. What options do employers have for implementing HSAs?
   1. Option 1 – HDHP with no employee HSAs
   2. Option 2 – HDHP with employee HSAs
   3. Option 3 – HSA option under a cafeteria plan
   4. Option 4 – Contributions to employee HSAs
4. What are the design issues for HRAs?
   1. Exclusivity
   2. Contributions
   3. Carryovers
   4. Termination of coverage
   5. Vesting
   6. Coordination with Health FSAs
5. e. How can HSAs coordinate with Health FSAs and HRAs?
   1. Possible Approaches
      1. Eliminate Health FSA and/or HRA arrangements
      2. Mutually exclusive Health FSA and/or HRA arrangements
      3. Limited scope Health FSA and/or HRA
      4. Post-deductible Health FSA and/or HRA
6. What about employees who may be covered under a spouse’s Health FSA?
7. Can multiple design options be offered by employees?
8. What are the administrative issues associated with implementing HSAs or HRAs?
9. What steps are necessary to formally document HSA and HRA designs?