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Participation in Both HRA and HSA May Be Allowed

Feb 15, 2017

HR360, Inc.
​February 13, 2017

IRS: Participation in Both an HRA and an HSA is Permissible in Certain Circumstances 

IRS Guidance Outlines Permissible Arrangements 

IRS guidance clarifies that participation in both a health reimbursement arrangement (HRA) and a health savings account (HSA) is permissible in certain circumstances. Such permissible arrangements are outlined below. 

Background 

An HRA is an arrangement funded solely by an employer that reimburses employees for qualified medical expenses up to a maximum dollar amount for a coverage period. An HSA is a tax-exempt trust or custodial account established by an employee to pay and save for qualified medical expenses on a tax-free basis. The employee, the employer, or both may contribute to an employee’s HSA up to a maximum annual dollar amount. 

Permissible Arrangements 

An employee's participation in an HRA generally disqualifies the employee (and employer) from making contributions to his or her HSA. However, an employee can make contributions to an HSA while covered under a high deductible health plan (HDHP) and one or more of the following arrangements

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