Retirement Reimbursement Arrangement (RRA)
An HRA for retirees
An Aetna HealthFund® Retirement Reimbursement Arrangement is a great way for companies to play a part in the well-being of their employees after they retire. By providing employer-funded support for health care expenses, an RRA reduces unexpected health care costs and helps retirees better budget their finances. Here’s how an RRA works:
- Employers set up and pay into the fund.
- Retired employees use the fund to get reimbursed for qualified health care costs they have paid. These may include premiums and other out-of-pocket costs that have been determined by the employer.
- Any unused balance in the RRA rolls over to the next year.
Frequently asked questions about an RRA
| Question | Answer |
|---|---|
| Who is eligible? | All employees as designated by employer |
| Who can contribute? | Employer only |
| Does the balance carry over? | Yes |
| Can rollover contributions from another account be made to this account? | Yes, members can roll over funds from an HRA. |
| Is the fund or account portable? | No |
| Are there interest or investment earnings? | No |
| What are the tax advantages? | Employers may deduct reimbursed employee medical expenses as a business expense; reimbursements are excludable from the employee's gross income. |
| Are contributions taxable income to the employee? | No In addition, contributions are not subject to FICA or FUTA taxes. |
| Are distributions ⁄ reimbursements taxable income to the employee? | No |
RRAs are subject to employer-defined use and forfeiture rules.
