First Baptist Church Hugo
Healthcare Reimbursement Arrangement (HRA) - Printer Friendly

First Baptist Church desires to provide medical care benefits relating to expenses not covered under a medical insurance policy.

Therefore, the church establishes a Health Reimbursement Arrangement (HRA) effective January 1, 2005 for the benefit of all employees (working at least 16 hours or more per week) and their dependents (spouse & minor children) under Section 105(b),(e) of the Internal Revenue Code.

Health reimbursement accounts shall be maintained for each employee from which covered expenses (as defined by Section 213 of the Internal Revenue Code and Revenue Ruling 2003-102) for the employee or their dependents shall be reimbursed. Church-funded reimbursements to an employee and/or their dependents shall not exceed $1,000 plus any unused reimbursements (from previous years) during the calendar year. For example: if an employee is reimbursed $700 during the year then $300 would “roll-over” into the next year giving the employee a maximum of $1,300.

The plan shall be administered in a nondiscriminatory manner (as defined by Section 150(h) of the Internal Revenue Code) and shall remain in effect until modified or terminated by a later resolution.

The plan shall cover employees only. Former employees are not eligible for reimbursement for their unused reimbursement amount remaining at retirement or other termination of employment. Employees may not take “lump-sum” payments of their unused reimbursement amounts. Payment of funds shall be for substantiated medical expenses only.

The “out-of-pocket” medical expenses must be submitted on a health care reimbursement claim form in sufficient detail to meet the substantiation requirements. Expenses may be submitted until January 31 for the previous calendar year. Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes. They also include dental and vision expenses. Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation. Medical expenses include the premiums paid for insurance that covers the expenses of medical care, and the amounts paid for transportation to get medical care.

Refer to IRS Publication 502 (2004) for specific examples of allowable and non-allowable medical expenses.