Health Reimbursement Arrangements (HRA)
A Health Reimbursement Arrangement (HRA) is an employer-funded benefit in which your employer contributes money into an account which you can use to pay, or be reimbursed, for eligible out-of-pocket medical, dental and vision expenses that you incur. The HRA is available to you and your dependents. HRAs are 100% employer-funded and not taxable to you the participant.
What's on this Page:
- HRA's for Active Employees and Retirees
- Customer Service and Plan Administrator
- What can an HRA do for Employees?
- Expenses that can be Reimbursed from a HRA
- HRA Funding and Contribution Levels
- Tax Treatment and Legal Limitations
- HRA Plan Year and Rollover
- Premiums and Pre-Tax Elections
- Frequently Asked Questions
- Helpful Documents and Forms
The County Offers Two HRAs for Employees
County contributions ceased in 2016 based on the terms of the bargaining unit's MOU. The Active HRA was established for the benefit of eligible employees enrolled in a County sponsored medical plan. The County contributions varied by bargaining unit and the level of coverage (self, self +1, and self+2) you were enrolled in at the time of the contribution.
Funds in an Active HRA automatically rollover into the next calendar year and continue rolling over each year, even after employment ends, until funds in the account are exhausted.
The Retiree HRA was established for the benefit of eligible employees hired on or after January 1, 2009. In general, when a full-time employee becomes eligible after a 2 year qualification period, the County will make a one-time lump sum contribution of up to $2,400 deposited into an HRA account established in their name. The contribution for eligible part-time employees is pro-rated. Each pay period following the initial contribution, the County will contribute $.58 for every paid hour up to a maximum of 80 hours biweekly (excluding overtime).
During the qualification period, allocated contributions will be held in a trust account. If an employee separates employment before meeting the eligibility requirement, the employee shall receive no benefit.
The funds in the Retiree HRA are restricted, and can only be accessed upon; termination of employment and attainment of age 50, or retirement from SCERA, whichever is earlier, and after the participant notifies the Benefits Unit to transfer their funds to the Retiree HRA for Retirees.
Customer Service and Plan Administrator
The P&A Group is the third party administrator for the Health Reimbursement Arrangement (HRA).
Contact P&A for questions regarding eligible expenses, claim submission, documentation requirements for expenses, or the status of claims & reimbursements.
- Contact a Customer Service Representative or chat live online during P&A Group’s Customer Service hours: Monday through Friday: 5:30 a.m. to 7:00 p.m. (PST)
- 24/7 online account access www.padmin.com
- Automated account information available toll-free: (800) 688-2611
- Toll-free Fax Number: (877) 855-7105
Contact the Human Resources Benefits Unit for questions regarding enrollment eligibility or to update/change your mailing address.
What can an HRA do for Employees?
- Reimburse qualified medical expenses (pursuant to IRC Section 213(d)).
- Accumulate money to pay for both current and future health care expenses, COBRA and/or future retiree health care premiums and costs.
Expenses That Can Be Reimbursed from a HRA
Out-of-pocket medical, dental, and vision care expenses including insurance co-pays, deductibles and other expenses not usually covered by the County-sponsored health plan such as: acupuncture, chiropractic, laser eye surgery, etc.
May be used to pay premiums for long-term care insurance, and COBRA continuation of coverage for participating employee and IRS eligible dependents.
HRA Funding and Contribution Levels
HRA accounts are funded with employer contributions at rates set by the Memorandum of Understanding (collective bargaining agreement) or by the Salary Resolution.
There is no maximum limit on contributions under HRA rules.
HRA can only be funded by employer money and employer contributions cease when employment ends.
Tax Treatment and Legal Limitations of HRA
- Contributions to HRAs are not subject to income or payroll taxes at the Federal or California State level (individual state laws may vary).
- HRA reimbursements for IRS eligible medical and dental care expenses are not subject to income or payroll tax.
- HRA funds cannot pay for non-medical benefits or make cash-outs of unused amounts.
- Recent DOL regulation guidance requires HRAs for active employees (Retiree-Only HRAs exempt) to be integrated with an employer-sponsored medical plan that meets the minimum value requirements of the Affordable Care Act. The HRA and the medical plan must be provided by the same employer.
HRA Plan Year and Rollover
- Sonoma County’s HRA operates on a calendar year basis, Jan 1-Dec 31.
- Funds not used in a year may be carried over to future years allowing unused amounts to accumulate without a use-it-or-lose-it rule, remaining available even after employment ends so long as funds are available.
- If the balance in the HRA is low in one year, expenses can be accumulated and reimbursed in the following year when funds are sufficient to cover (if the person was also a participant in the HRA plan the year the expense was incurred).
- Funds can be accumulated to save to help pay a large expense (e.g. LASIK, orthodontia, retiree medical costs, etc.)
Premiums and Pre-Tax Elections
Most health care premiums paid through payroll deduction by Sonoma County employees are paid on a pre-tax basis through a Premium Conversion plan. This means your gross wages are reduced by the amounts you pay for health insurance premiums before taxes are calculated, thereby reducing your taxable wages and thus lowering the taxes due. Premiums paid with a tax benefit such as this are not eligible for HRA reimbursement.
The information provided is a summary of your benefits under the County offered Health Reimbursement Arrangement. For more detailed information review the plan document, your Memorandum of Understanding, and/or the Salary Resolution as applicable.
In the case of conflict between the information presented in this summary and the plan document or MOU/Salary Resolution, the plan document and/or MOU/Salary Resolution determines the coverage.
The County makes no representations or warranties in regard to the tax treatment of the HRA, including whether any portion of the HRA is taxable by the Internal Revenue Service or the Franchise Tax Board.
Frequently Asked Questions
- Which of my dependents are eligible?
Pursuant to IRS regulations eligible dependents are as follows: your spouse, your own child, your stepchild, adopted child, child lawfully placed for adoption, or eligible foster child, regardless of the child’s marital or student status or whether or not the child is claimed as a dependent on your taxes (up to age 26).
- Are domestic partner’s or their children’s expenses eligible for reimbursement?
No, unless the domestic partner and/or their child(ren) are also a qualified dependent as defined by IRS Code Section 152. To be an IRS Qualified Dependent a dependent must fall into one of two categories defined by the IRS. They must either be a Qualifying Child, or a Qualifying Relative. There are specific tests that must be met under both categories for them to be considered IRS Qualified Dependents. Refer to the Overview of the Rules for Claiming an Exemption for a Dependent in IRS Publication 17 on the IRS website.
- What contributions will be made to my HRA if I have declined or waived my county medical benefit?
Affordable Care Act regulations require employees to be enrolled in their employer’s medical plan to be eligible for an HRA. Refer to your Memorandum of Understanding for details about your eligibility.
- When am I eligible to access the HRA balance and start receiving reimbursements?
Employees are immediately vested 100% in the employee HRA and can begin using it as soon as there are funds in your account. Only eligible expenses incurred (based on date service was received) on or after 1/1/2013, are eligible for reimbursement.
- I’m in a bargaining unit that was eligible for an employee HRA contribution before 6/1/2013. What happened to the contributions earned before 6/1/2013?
Contributions have been made retroactively for all pay periods after 3/19/2013, per the SEIU MOU and Salary Resolution.
- Is there a “use it or lose it” provision to an HRA if I have funds left over at the end of the year?
No, funds in an HRA automatically roll over into the next calendar year and continue rolling over each year until funds in account are exhausted, even after employment ends.
- What happens to the funds in my HRA if I have funds left over and pass away?
Survivor benefits are as specified in the plan document. In general, spouses and eligible dependent children or dependent adults that are disabled may continue to access account balances after the death of the retiree subject to the limitations and maximums as stipulated by law.
Domestic partners are not permitted access to the account balances of the participant at this time by virtue of restrictions in the federal regulations that govern these types of accounts.
- What if I also have a Health Flexible Spending Account (FSA)?
The list of health expenses that are eligible for reimbursement from an HRA and Health FSA are almost identical. The only difference is that you can be reimbursed from your HRA for your non-employment related health plan premium costs paid on an after tax basis, such as, COBRA premiums, retiree medical plan premiums, and Medicare Part B premiums. However these expenses are not eligible for reimbursement from your FSA. Since your FSA has a “use it or lose it” provision that does not exist in your HRA, submit your eligible health expenses (excluding premiums) to your FSA first to help ensure you don’t have money left in your account and “lose it” at year end. You may only be reimbursed from one account or the other for each expense, not both. However, you can submit qualified expenses for reimbursement from your HRA once your FSA funds have been fully exhausted and for eligible health plan premium expenses.
- How does the HRA debit card work?
Once becoming eligible to access your HRA balance, the HRA vendor will issue you a debit card. Additional debit cards for your spouse and dependents over age 18 can be requested after you receive your card. Your debit card is automatically activated upon first use. The cards are good for three years from the date of issue. This card is a limited access card. The HRA administrator, P&A, controls where the debit card can be used through Merchant Category Codes (MCCs) and the Inventory Information Approval System (IIAS) so that only eligible expenses can be charged at pre-approved locations such as doctor’s offices, hospitals, pharmacies, dentists, opticians, and general merchants that sell eligible items. The card will not work if you attempt to purchase an ineligible item or swipe the card for more than the available balance. If your card is lost or stolen please notify P&A so they can deactivate the card and issue you a new one.
- How do I request a manual reimbursement when I can’t use my debit card?
To submit a claim you have three options:
- Log into your P&A account at www.padmin.com. You can submit a claim electronically from your mobile phone, tablet or computer. Please note you will need to either upload a picture of your receipt or upload electronic copies of your receipt in order to submit your claim.
- Fax a claim form (available at www.padmin.com) and copies of receipts to (877) 855-7105.
- Mail a claim form and copies of receipts to: P&A Group, 17 Court St. Suite 500, Buffalo, NY 14202
Please note manual claims take 3-5 business days to process. When submitting a manual claim you will have the option of receiving a check or direct deposit. If you would like direct deposit please visit the website at www.padmin.com and log on to your account to enroll. Or you can print the direct deposit authorization form on the website and submit it with your claim. Please note enrolling in direct deposit is the fastest way to receive your reimbursement.