A Health Reimbursement Arrangement, or HRA, is a triple tax-free benefit vehicle that helps you pay for eligible medical expenses* during retirement or active employment, using funds contributed by your employer. There is no limit on how much your employer contributes to your account, the account is in your name, and the funds never expire. Best of all, the funds can be invested for potential growth, and you’ll benefit from tax-free deposits, accumulation, and reimbursement.

The beauty of an HRA is the flexibility of plan design—there is an HRA application for the various stages of an employee’s life.

Let’s explore just how that HRA works for you if you’ve retired or separated from the employer sponsoring your HRA.

Retired or Separated from Service

Congratulations on taking this big step! You’ve worked hard for your benefits and now it’s time to let them work for you. Once you’ve retired or separated from service, you have access to your HRA funds. Whether you received a lump sum Retiree HRA (rHRA) contribution from your employer or the funds from your Defined Contribution HRA have now become available, you can start using your HRA to pay for qualified medical expenses tax-free! The rewards don’t stop there. Your HRA remains invested for potential growth so any funds in the account will continue to accrue interest.

What happens when I retire or separate from service?

Once you become claims-eligible and we receive your retirement or termination date from your employer, we’ll mail you a detailed Welcome Kit and Plan Highlights that contains additional details on how the HRA works for you now, how to submit claims and what expenses are eligible for reimbursement under your plan. Additionally, you’ll receive two debit cards** preloaded with your HRA balance. Both cards are in your name so you can keep one for yourself and offer one to an eligible spouse or dependent.

Using your HRA funds—fast facts!

  • Medical expenses must be incurred after you retire or separate from service.
    For example, if you had a doctor’s appointment or medical procedure while you were still working, that service wouldn’t be eligible for reimbursement since it was rendered before you become claims eligible. Claims are only reimbursable once you become claims eligible, which is the date you retire or separate from the employer sponsoring your HRA.
  • Use your debit card or submit claims online when possible.
    The fastest way to pay for your eligible medical expenses is with your Journey Benefits Debit Card, which eliminates out-of-pocket costs at the point-of-sale. Submitting your claim for reimbursement through myMidAmericaJourney.com or through your Journey mobile app are also two time-saving methods that can help you receive your reimbursement funds faster than ever.
  • Review claims documentation examples—and hold onto your documentation!
    Like many retirement and health care benefits, the HRA is regulated through the Internal Revenue Service (IRS). This means that, as your third-party administrator, MidAmerica must adhere to these IRS standards to make sure your plan stays protected and compliant. So, we may follow up and ask for further documentation to verify and approve your claim. The majority of benefits debit card purchases are automatically approved without additional documentation; however, in some rare cases, we may ask for documentation to complete debit card transactions as well. Visit myMidAmerica.com/hraresources for examples of different forms of accepted documentation.

Not sure if you have a Defined Contribution HRA or a Retiree HRA? Review the Plan Highlights FAQ that was included with your Welcome Letter and/or Welcome Kit. You can also call (855) 329-0095 or email us at healthaccountservices@myMidAmerica.com!

 

* Please note your employer will determine which medical expenses are eligible for reimbursement, so be sure to review your custom Plan Highlight FAQs.

**Please note if you have a defined contribution Health Reimbursement Arrangement (HRA) and are still actively employed, you will not receive a debit card until you retire or separate from service and become claims eligible. If you have a limited purpose HRA that only allows the reimbursement of deductibles, post-deductible expenses or coinsurance you will not receive debit cards but will have access to the online portal and mobile app to submit claims. Not sure what type of HRA you have? Contact our Participant Services team at healthaccountservices@myMidAmerica.com or (855) 329-0095.

A Health Reimbursement Arrangement, or HRA, is a triple tax-free benefit vehicle that helps you pay for eligible medical expenses* during retirement or active employment, using funds contributed by your employer. There is no limit on how much your employer contributes to your account, the account is in your name, and the funds never expire. Best of all, the funds can be invested for potential growth, and you’ll benefit from tax-free deposits, accumulation, and reimbursement.

The beauty of an HRA is the flexibility of plan design—there is an HRA application for the various stages of an employee’s life.

Let’s explore just how that HRA works for you while you’re actively working for the employer sponsoring your HRA.

Actively Employed

If you’re still actively working and currently have an HRA, your employer may have enrolled you in either an Integrated HRA (iHRA) or a Defined Contribution HRA (dcHRA).

Integrated HRA
You’re eligible for reimbursement while you are actively working.

  • What it is: With the iHRA, your employer deposits a fixed dollar amount into your HRA to offset the cost of group medical coverage. While you must be enrolled in group health coverage, you’ll have the advantage of benefit dollars available to you while you’re working and a MidAmerica Journey Benefits Card to use for point-of-sale transactions, simplifying the claims process for you and your eligible dependents.
  • How it works for you now: Since you’re eligible for reimbursement while you actively work, you can use your HRA to offset eligible health care costs for you, your spouse and any eligible dependents! To learn more about eligible expenses, how to submit claims and more, visit myMidAmerica.com/hraresources.

Defined Contribution HRA
You receive deposits into your HRA while actively working but are not eligible for reimbursement until you retire or separate from service.

  • What it is: The Defined Contribution HRA operates according to the same parameters as the Integrated HRA, with your employer contributing a “defined” amount at a set frequency. However, these funds are not accessible until you retire or separate from service, continuing to accumulate year after year, along with any (tax-free!) earnings that may be generated by your funds’ underlying investments.
  • How it works for you now: While you won’t be able to use your HRA funds while you’re still working, you can monitor the growth of your HRA knowing you’ll have a benefit you can count on when you leave the workplace. It’s important to note that once you become eligible for claims reimbursement, the claims submitted must be incurred after you retire or separate from service. For example, if you had a doctor’s appointment or medical procedure while you were still working, that service wouldn’t be eligible for reimbursement since it was rendered before you become claims eligible.

Not sure if you have an Integrated HRA or a Defined Contribution HRA? Review the Plan Highlights FAQ that was included with your Welcome Letter and/or Welcome Kit. You can also call (855) 329-0095 or email us at healthaccountservices@myMidAmerica.com!

 

* Please note your employer will determine which medical expenses are eligible for reimbursement, so be sure to review your custom Plan Highlight FAQs.

The Internal Revenue Service (IRS) recently released the 2022 annual contribution limits for Health Flexible Spending Accounts as well as IRC Section 403(b) and Section 457(b) plans.

Health Flexible Spending Accounts

The annual limit on voluntary employee salary reductions for contributions to a health flexible spending account will be $2,850 in 2022, which represents an increase over the contribution limit for 2021.

Health Flexible Spending Accounts Contribution Limits
Tax Year Annual Limit
2022 $2,850
2021 $2,750
2020 $2,750

For more information on Health FSA limits, review Revenue Procedure 2021-45.

 

403(b) Retirement Plans

The annual salary deferral limit will be $20,500 in 2022, which represents an increase over the contribution limit for 2021.

The following limits also apply for 2022:

  • If you qualify for the full amount of the lifetime catch-up, the catch-up contribution limit remains unchanged at $3,000. This brings the annual total limit for employees who qualify for the lifetime catch-up to $23,500.
  • The catch-up contribution limit for employees who are age 50 or over remains unchanged at $6,500. This brings the annual total limit for employees who qualify for the age 50+ catch-up to $27,000.
403(b) Plan Contribution Limits
Tax Year Basic Deferral Limit for All Employees Annual Limit if you Qualify for the Full Amount of the Lifetime Catch-Up (15 Years of Service). Total Lifetime Catch-Up Max of $15,000 Annual Limit if You Qualify for the Age 50+ Catch-Up Maximum Annual Contribution if You Qualify for Both the Age 50+ and Lifetime Catch-Ups
2022 $20,500 $23,500 $27,000 $30,000
2021 $19,500 $22,500 $26,000 $29,000
2020 $19,500 $22,500 $26,000 $29,000

For more information on the current 403(b) limits, review the IRS article, IRS Announces 401(k) Limit Increases to $20,500.

 

457(b) Retirement Plans

The annual salary deferral limit will be $20,500 in 2022, which represents an increase over the contribution limit for 2021.

The following limits also apply for 2022:

  • The catch-up contribution limit for employees who are age 50 or over remains unchanged at $6,500. This brings the annual total limit for employees who qualify for the age 50+ catch-up to $27,000.
457(b) Plan Contribution Limits
Tax Year Basic Deferral Limit for All Employees Annual Limit if You Qualify for the Age 50+ Catch-Up
2022 $20,500 $27,000
2021 $19,500 $26,000
2020 $19,500 $26,000

For more information on the current 457(b) limits, review the IRS article, IRS Announces 401(k) Limit Increases to $20,500.

 

Questions?

We’re here to help. If you have questions about the recent IRS updates or the impact they may have on your plan, call us at (800) 430-7999 or email us at accountservices@myMidAmerica.com.

Open Enrollment Tips and Tricks

Posted on October 27, 2021

It’s that time of year again! Open enrollment is the yearly period when employees can enroll in a health insurance plan and voluntary benefit funding plans like Flexible Spending Accounts (FSA) and Health Savings Accounts (HSA). For employers, it is a time of year that serves as an opportunity to help their employees navigate through decisions that will significantly impact them and their families. It’s important that this period goes smoothly so that employees make the right choices for their unique situation. To that end, here are some tried-and-true tips to make the most of this crucial time.

Start Education Early

The annual benefits-election process should start well before any forms are filled out. The earlier you can get information and materials out to your employees, the better. This allows time for employees to review their options and formulate any questions before enrollment begins. Plan to answer some of the most common open enrollment questions for each program, such as:

  • Why do I need this benefit?
  • Which features fit my needs?
  • What value does the program provide?
  • How much is this going to cost me per paycheck?

If you offer an FSA through MidAmerica, we have several open enrollment and benefit education resources you can leverage. Simply reach out to your Account Manager!

Remember the Basics

Many employees don’t fully understand health insurance or benefit funding plan basics. With health insurance options changing, employees may need education on definitions and examples of co-payments, deductibles, co-insurance, and out-of-pocket maximums. Avoid using confusing jargon in your marketing collateral so that solutions are easy to understand.

Communicate Your Plan and Level of Coverage

Prepare to share information about your company’s benefits coverage and health benefit funding plans, including the different plans that you offer and their perspective coverage, and any changes you are making or considering. Be sure to clearly communicate cost information so employees understand what they will need to pay and how their benefit is changing. Prepare handouts outlining the major changes to the benefits and hold informational meetings, including new IRS guidelines and plan maximums. Anticipate questions and have FAQs ready for distribution.

Avoid Information Overload

Some employers make the mistake of handing out pages and pages of text, jamming a year’s worth of communication into a few weeks. Instead, communicate the technical details of your various benefits over time. Don’t assume employees will weed through all your materials to make sense of the benefits offered to them.

Give Employees a Generous Time Frame

While many people may wait until the last minute to fill out their forms, others consider their options with their family members for weeks. Giving them just a few days will not be enough. Be sure to build in a time frame that gives HR staff and employees the time they need. A recommended time frame is three weeks.

Although open enrollment can seem like a stressful time, it doesn’t have to be that way. By following the tips above, you can ensure that your organization has a successful open enrollment.

If you are contemplating retirement, one of your foremost concerns is probably the issue of medical insurance. How will you pay for it when you are no longer receiving a regular paycheck? If remaining on your employer’s medical plan is an option, this may be something to consider. However, the retiree health care benefit sponsored by your employer may be a Health Reimbursement Arrangement (HRA) rather than a full-fledged medical plan.

What is an HRA?

A Health Reimbursement Arrangement is an interest-bearing, employer-funded account created in your name. Deposits can be made completely tax-free¹, meaning that you receive 100% of the value of each benefit dollar.

The HRA account is designed to reimburse retirees for their eligible medical expenses and/or premiums to offset their out-of-pocket costs. Your employer determines which qualified medical expenses are eligible for reimbursement under the plan. Your employer may also decide to fund the HRA using your accumulated leave, such as unused sick leave, unused vacation pay, severance, or other retirement incentives.

What are my HRA Options?

There are two HRA options designed to benefit retirees: a Defined Contribution HRA or a Retiree HRA.

  • With a Defined Contribution HRA, funds are deposited while you are still actively working, growing over time, and becoming available for use upon retirement or separation of service.
  • With a Retiree HRA, funds are deposited in a lump sum upon retirement/separation of service. The funds are invested once deposited and can be used immediately upon deposit.

For both types of HRA, account balances roll over year to year, qualified expenses are reimbursed tax-free1, and funds can be used to reimburse eligible medical expenses incurred by you, your spouse, and any qualifying dependents.

Is an HRA really right for me?

While HRAs have been around since 2002, this type of benefit may be uncharted territory for you. One of the most common misunderstandings that retirees have about the HRA is that they’re not receiving their full benefit simply because they’re not collecting a cash payout. In reality, you would receive more money because there is no liability for FICA, Federal, or State income taxes, resulting in a “triple tax-free” benefit for you. That means deposits made into your account, any earnings on your account balance, and any reimbursements made from the account are tax-free1, ensuring that you receive dollar for dollar the benefit amount you were promised.

The HRA is a valuable vehicle for bridging the gap between retirement and Medicare eligibility. Given this financial incentive from your employer, you may consider retiring earlier than planned, and you may choose to seek an alternative health care option, rather than remaining on your employer’s plan. To learn more about the long-term benefits of an HRA solution and about what an HRA is—as well as what it’s not—click here to download our educational piece, Common HRA Misconceptions.

 

¹Not subject to FICA, Federal or State income taxes

Most of us look forward to the day we can retire from our jobs—maybe kick back, relax and take it easy for a change. Or, for those who can’t sit still, maybe this is a time to check off bucket list items.

No matter how you plan on spending your golden years, you’ll likely need to save some money for when it’s time to cash in. With some careful planning, you can find ways to enjoy this time—without the constant worry of finances.

5 Money-Saving Tips for the Dream-Chasing Retiree

  1. Don’t be afraid to ask for the senior discount!

    It only costs $16 a year to be a member of AARP or American Seniors Association, which will grant you access to a world of discounts. Apps like Senior Discounts Club or Flipp can help you easily discover savings at your favorite restaurants, travel, and stores like Target, Walgreens, and Walmart.

  2. Declutter or downsize your home!

    Retirement is the perfect time to take on new projects. Get rid of unwanted items in your garage or storage unit, then have a yard sale or donate it to a family in need. If your kids have moved out, look at the empty nest phase as an opportunity to start fresh with a smaller home. Consider the savings you could generate—lower property taxes, utility bills, maintenance costs and homeowner’s insurance premiums—just to name a few!

  3. Consider donating or selling an extra vehicle.

    Now that you’re no longer commuting to work, perhaps you can get by with just one car instead of two. Sell the car for extra cash or donate the vehicle to a charity. Plus, it will save you on car insurance bills, maintenance and gasoline expenses.

  4. Keep doing what you enjoy, but less frequently.

    If you’re in the habit of eating out five times a week, try cutting back to three. It’s not a dramatic change, but you will notice the savings to your wallet. Think of the other ways you could cut back. How about golfing two days a week instead of four?

  5. Treat your Special Pay Plan or Health Reimbursement Arrangement as a rainy day fund.

    If you currently have retirement benefits through MidAmerica, it makes sense to hold off on distribution or reimbursement requests until necessary. Why? Because your benefit funds are invested for potential tax-free or tax-deferred growth. This means the longer your funds stay in your account, the more money you could potentially end up with down the road. Your 403(b)/401(a) Special Pay Plan and Health Reimbursement Arrangement is there when you need it, but it has the potential to keep growing when you don’t.

These are just a few simple ways to save money as a retiree, which we hope make you realize that saving money doesn’t need to be difficult. Living the happy retirement you deserve can be as simple as sticking to your budget, keeping track of what you spend, and appraising your spending for any savings opportunities. If you have questions about financial planning or need personalized advice, please consult your financial advisor.

If you’re like most people, preparing for retirement is an exciting time. You may find yourself daydreaming about kicking back, relaxing, and taking it easy for a change. For those who can’t sit still, perhaps it’s time to start pursuing that bucket list you’ve been working on your whole life. No matter how you decide to spend your golden years, taking some steps now to ensure that you are well-prepared for what lies ahead—emotionally and financially—can help you to retire with peace of mind.

For best results, you’ll want to allow 12 months of careful financial planning and research before you collect those goodbye hugs. Below is an outline of the scenarios you should consider as you plan your path to retirement, and a suggested timeframe in which to approach each step.

12 Months Before Retiring

If you haven’t already considered what your finances may look like once you leave your job, now is the time to take a serious look at your investment portfolio, your health care expenses, and any other financial obligations you may have. To plan a realistic retirement budget:

  • Make a list of your expenses, both fixed and discretionary. Financial Mentor offers a wide selection of resources, topics, and calculators to help you get a snapshot of your financial situation and where you want to be.
  • Determine your anticipated income, identifying how much money will be coming in and from what sources. Try retirement income calculators like the one available at OneAmerica to establish a safe level of spending based on your age and the size of your savings. If the budget numbers don’t work in your favor, you may need to delay retirement by a year or two and continue saving.
  • Get familiar with the retirement benefits available to you. If you have a retirement plan with MidAmerica that is funded while you actively work, you can log into your account anytime to review plan details. If the plan is not funded until you retire or separate from service, contact your Human Resources representative for a copy of the Plan Highlights which will explain what benefit is available to you upon retirement.

6 Months Before Retiring

  • Research Social Security scenarios to estimate the best time to begin claiming benefits. Holding off until age 70 will mean your Social Security check will be 76% larger than if you had signed on at the minimum eligibility age of 62. If you’re considering taking on a part-time job in retirement, those earnings will impact the amount of Social Security you receive. Postponing part-time work until you reach the full retirement age of 66 will enable you to earn as much as you want, and your benefit won’t be affected. FinancialEngines.com offers a Social Security Income Planner to help you determine your best strategy.
  • Do the math on healthcare costs. Analyze your current healthcare needs and project your potential future needs based on your own health history and that of your family. Find out what your employer offers to retirees in the way of medical, life insurance, long-term care, and any other types of insurance coverage. Your employer may provide coverage that is more attractive than anything you could purchase on your own. If your employer offers a Health Reimbursement Arrangement (HRA) through MidAmerica, you’ll have access to money—tax-free—to cover eligible medical expenses during retirement.

3 Months Before Retiring

  • Tell your employer. Employers may require a minimum notification time or permit retirement only at specific times of the year, so you’ll need to be aware of these rules.
  • Review your investments. If you have a pension plan, understand how it works and what it will pay you. Find out if it pays out in a lump sum or if it’s an annuity and think about rollover options like an IRA. Move investments from volatile stocks into more stable options, such as annuities. You’ll have time to work out any tax implications if you know in advance what your options are. Be sure to note the name of the plan, who the manager is, and how to contact them with questions, since your Human Resource contacts may no longer be an option after you retire.
  • Develop a strategy for withdrawals. It’s important to take all sources of income into consideration to ensure that you’re drawing down your assets in the correct order and not creating unnecessary tax liabilities. A financial advisor can help determine how much you should withdraw and from what sources, and then establish a monthly disbursement schedule. A good example is the Special Pay Plan or the Employer-Sponsored Plan, both of which are tax-deferred accounts, meaning you are not taxed until you withdraw the funds. If your tax bracket is lower after retirement, you could potentially save on tax when you withdraw funds from these types of accounts. They allow you to control the timing of your cash distributions as well as the timing of your tax obligations.
  • Make plans for your post-career life. Now that business is out of the way, let’s talk about what you’re going to do with your free time! You should have a plan here as well. Perhaps there is a volunteer project you’d like to join, family you want to spend more time with, an exercise routine you want to begin or relaunch, or a dream trip you’ll now have time to take. Find activities that make you feel energized, fulfilled, and appreciative of all those years you worked so hard to get to this point.

Upon Retirement

You’ve been working hard all these years and now it’s time that your hard-earned benefit dollars work for you. If you have a benefit with MidAmerica, here are some quick tips to get you started.

“JUST RETIRED!” CHECKLIST

  • Review your Welcome Kit and Plan Highlights. Once you have officially retired from your employer, we’ll send you a welcome kit and a copy of your Plan Highlights filled with information about your benefit plan. You’ll want to keep this welcome kit. Don’t be tempted to toss it out with the slew of junk mail you receive! This handy piece of knowledge will instruct you on how to access your account online, where to find important forms, how to designate a beneficiary, and how to get in touch with MidAmerica.
  • Access Your Account Online. If you haven’t done so already, create an online user account so you can log in and check your account balance, review your investments and transaction history, move and rebalance your funds (if applicable to your plan), and download forms.
  • Update Your Contact Information. While you’re logged into your account, you can update your mailing address, email address, and telephone number. Why is this important? We don’t want to lose touch with you just because you’re not working any longer! We may have important information to share about your account, and we’d hate for you to miss out on the educational pieces MidAmerica develops to keep our participants in-the-know about the benefits they have.

For even more help transitioning into retirement, download the full “Just Retired” Checklist by clicking here!

Retirement should be an exciting milestone for you. Fortunately, you have MidAmerica on your side to ensure that this next chapter of your life is fulfilling and maximizes the retirement and health care benefits you have been working towards and can now enjoy. Keep your “Just Retired!” checklist handy at all times

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