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HEALTH REIMBURSEMENT ARRANGEMENT (HRA) PLAN


While there is no requirement that you use a third party administrator, it is important that your Health Reimbursement Arrangement complies with all IRS, DOL, and ERISA guidelines. For this reason, most tax professionals encourage their clients to use a company that specializes in this type of employee benefit plan.

This Health Reimbursement Arrangement (HRA) Plan (the Plan) is made and effective [DATE],


BETWEEN:  [YOUR COMPANY NAME] (the "Company"), a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at:

  [YOUR COMPLETE ADDRESS]


AND:  [EMPLOYEE NAME] (the "Employee"), an individual having his/her main residence located at:

  [COMPLETE ADDRESS] 


RECITALS

WHEREAS, [YOUR COMPANY NAME] desires to provide medical care benefits relating to expenses not covered under a medical policy; 

RESOLVED, Health Reimbursement accounts shall be maintained for each full-time employee from which covered expenses (as defined in Section 213 of the Internal Revenue Code) for the employee or their dependents shall be reimbursed. [YOUR COMPANY NAME]-funded reimbursements to an employee shall not exceed [AMOUNT] during one calendar year. [YOUR COMPANY NAME]-funded reimbursements to an employee with dependents shall not exceed [AMOUNT] during one calendar year. 

RESOLVED, the submission of medical expenses must be in a form and in sufficient detail to meet the requirements of the [YOUR COMPANY NAME]. Expenses may be submitted until [DATE] for the previous calendar year. 

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

RESOLVED, the plan shall reimburse former employees for medical care expenses up to an amount equal to the unused reimbursement amount remaining at retirement or other termination of employment. 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto, intending, to be legally bound, agree as follows:


PURPOSE

Effective as of [DATE PLAN GOES INTO EFFECT], [YOUR COMPANY NAME] establishes a Health Reimbursement Arrangement Plan effective [DATE] for the benefit of all full-time employees (working at least [NUMBER] hours or more per week) and their dependents (employee's spouse and minor children) under Section 105(b), (e) of the Internal Revenue Code as from time to time amended.

The provisions of the Plan, as set forth herein, shall only apply to an eligible employee who is in the active employ of the Employer on or after [DATE OF ELIGIBILITY].


DEFINITIONS AND CONSTRUCTION

Definitions
Where the following words and phrases appear in this Plan, they shall have the respective meanings set forth in this Article, unless the context clearly indicates to the contrary.

Principal Entities

Plan: The HRA Plan for Employees working for [YOUR COMPANY NAME], the Plan set forth herein, as amended from time to time.

Employer: [YOUR COMPANY NAME], a [LEGAL STATUS (I.E., A CORPORATION)] organized and existing under the laws of the State of [NAME OF STATE], or its successor or successors.

Committee: The person or persons appointed pursuant to Section 6 to assist the Employer with Plan Administration in accordance with said Section.

Employee: Any person who, on or after the Effective Date, is receiving remuneration for personal services rendered to the Employer.

Participant: An Employee participating in the Plan in accordance with the provisions of Section 3.1.

Fiduciaries: The Employer and the Committee, but only with respect to the specific responsibilities of each for Plan administration, all as described in Section 6.1.

2.3 Determination of Contribution and Other Definitions

Participation: The period or periods during which an Employee participates in this Plan as determined in accordance with Section 3.1.

Compensation: The total of all amounts paid to a Participant for a given Year by the Employer for personal services and reported as wages for purposes of income tax, or substitute, less (1) amounts paid while covered by a collective bargaining agreement which does not provide for inclusion hereunder, (2) the cost of providing group term life insurance in excess of the statutory amount, (3) reimbursed moving expenses, (4) any other amount required to be reported which is not direct compensation for services performed and (5) amounts in excess of [AMOUNT].

Effective Date: [THE EFFECTIVE DATE], the date on which the provisions of this Plan became effective.

Year: The 12-month period commencing on January 1 and ending on December 31.

Code: The Internal Revenue Code and any other Codes relating to issues contained in this Plan, as amended from time to time.

2.4 Construction
The masculine gender, where appearing in the Plan, shall be deemed to include the feminine gender, unless the context clearly indicates to the contrary. The words "hereof," "herein," "hereunder" and other similar compounds of the word "here" shall mean and refer to the entire Plan and not to any particular provision, Section or Article. Article and Section headings are for convenience of reference and not intended to add to or subtract from the terms of this Plan.


PARTICIPATION AND NOTIFICATIONS

Participation
Except for an Employee who, for the entire Year was covered by a collective bargaining agreement which does not provide for his inclusion hereunder, an Employee shall participate in the Plan for any Year in which he meets the following requirements:

He/she has performed services for the Employer at some time during the Year

His/her Compensation for the Year is [AMOUNT] or greater, and

the given Year is preceded by a [NUMBER]-year period that includes at least three Years in each of which he/she has performed services for the Employer at some time during the Year

Notifications
[YOUR COMPANY NAME] shall notify an Employee in writing when he first becomes a Participant. Such notification shall include information required to be furnished by [GOVERNMENT AGENCY]. Such notification shall also advise the Participant that he should establish a Health Reimbursement Arrangement and the date by which the establishment should be accomplished. If the Participant fails to notify the Committee of the establishment of a HRA as of the prescribed date, the Committee shall choose a Health Reimbursement Arrangement Plan for such Participant and execute such forms and documents as may be necessary to establish a Health Reimbursement Arrangement Plan for and on behalf of such Participant.


CONTRIBUTIONS

NOTE: The following Section 4.1 incorporates the requirements of [CODE] regarding the permitted disparity in plan contributions. The contribution percentage for compensation above a certain level cannot exceed the contribution percentage on compensation below a certain level by more than the lesser of:

the contribution percentage on compensation below a certain level, or

the greater of:

[%], or

the percentage equal to the portion of the rate under Internal Revenue Code

Employer Contributions On and After [DATE]
Each Year the Employer shall determine whether or not a contribution will be made under the Plan for that Year. If the Employer determines that a contribution will be made for a Year, then, subject to the provisions of Section 4.4, the contribution made on behalf of each Employee who is a Participant for that Year shall be equal to:

a percentage of Compensation, as determined by the Employer, payable to all Participants;

to the extent any contribution has not been allocated under (a) above, an additional allocation shall be made to all Participants considering only their compensation in excess of the social security wage base for the Year. The percentage for any additional allocation under this Section 4.1(b) shall not exceed the lesser of:

the percentage used under Section 4.1(a) above, or

the greater of:

[%], or

the percentage equal to the portion of the rate under Internal Revenue Code (in effect as of the beginning of the Year).

to the extent any contribution remains after the allocations under Sections 4.1(a) and (b) above, the remainder shall be allocated to all Participants based on their Compensation for the Year.

However, the contribution made on behalf of any Participant for any Year may not exceed [AMOUNT] (*minus any Employer contribution made on the Employee's behalf pursuant to Section 4.2). Except to the extent provided in this Section 4.1, contributions to any one Participant shall bear a uniform relationship to the Compensation of each Participant receiving a contribution under this Plan.

The [AMOUNT] limitation referred to above shall be increased in accordance with the increases made to the limit defined under [CODE].

The contributions of the Employer made on behalf of each Participant shall be paid directly to, and deposited in, the Bank Account of each such Participant and shall be paid no later than [NUMBER] months after the close of the Year.

Contributions by Participants
Participants are permitted to make contributions under this Plan but are subject to the [AMOUNT] limitation defined under the Internal Revenue Code.


ADMINISTRATION

Fiduciary Responsibility
The Fiduciaries shall have only those specific powers, duties, responsibilities and obligations as are specifically given them under this Plan. The Employer shall have the sole responsibility for making the contributions provided for under Section 4.1 and Section 4.2, and shall have the sole authority to appoint and remove members of the Committee, to choose the Health Reimbursement Arrangement Plan that will be utilized for Participants who either fail to choose their own or choose a Health Reimbursement Arrangement Plan that will not accept certain contributions made hereunder, and to amend or terminate this Plan. The Committee shall have the sole responsibility for the administration of this Plan, which responsibility is specifically described in this Plan.

Appointment of Committee
The Plan shall be administered by a Committee consisting of at least one person who shall be appointed by and serve at the pleasure of the Board of Directors of the Employer. All usual and reasonable expenses of the Committee shall be paid by the Employer. Any members of the Committee who are Employees shall not receive compensation with respect to their services for the Committee.

Claims Procedure
The Committee shall make all determinations as to the eligibility of any Employee for Plan Participation or an Employer contribution. Any denial by the Committee of the claim for benefits under the Plan by an Employee shall be stated in writing by the Committee and delivered or mailed to the Employee; and such notice shall set forth the specific reasons for the denial, written to the best of the Committee's ability in a manner that may be understood without legal or actuarial counsel. In addition, the Committee shall afford a reasonable opportunity to any Employee whose claim for benefits has been denied for a review of the decision denying the claim.

Records and Reports
The Committee shall exercise such authority and responsibility as it deems appropriate in order to comply with governmental regulations relating to records of Employer contributions made hereunder, notifications to Participants, and reports, if any, to the [GOVERNMENT AGENCY] or to the [LABOR DEPARTMENT].

Other Committee Powers and Duties
The Committee shall have such duties and powers as may be necessary to discharge its duties hereunder, including, but not by way of limitation, the following:

to construe and interpret the Plan and decide all questions of eligibility;

to prepare and distribute, in such manner as the Committee determines to be appropriate, information explaining the Plan;

to receive from the Employer and from Participants such information as shall be necessary for the proper administration of the Plan;

to furnish the Employer, upon request, such annual reports with respect to the administration of the Plan as are reasonable and appropriate;

to appoint or employ individuals to assist in the administration of the Plan and any other agents it deems advisable, including legal counsel;

to follow the Employer's choice of Health Reimbursement Arrangement Plan when it is the responsibility of the Committee hereunder to establish a Health Reimbursement Arrangement Plan for a Participant.

The Committee shall have no power to add to, subtract from or modify any of the terms of the Plan, or to change or add to any benefits provided by the Plan, or to waive or fail to apply any requirements of eligibility under the Plan.

Rules and Decisions
The Committee may adopt such rules as it deems necessary, desirable or appropriate. All rules and decisions of the Committee shall be uniformly and consistently applied to all Participants in similar circumstances. When making a determination or calculation, the Committee shall be entitled to rely upon information furnished by a Participant, the Employer or the legal counsel of the Employer.

Notifications and Forms
The Committee may require a Participant to complete and file with the Committee any and all forms approved by the Committee, and to furnish all pertinent information requested by the Committee. The Committee may rely upon all such information so furnished it, including the Participant's current mailing address.

Indemnification of the Committee
The Committee and the individual members thereof shall be indemnified by the Employer against any and all liabilities arising by reason of any act or failure to act made in good faith pursuant to the provisions of the Plan, including expenses reasonably incurred in the defense of any claim relating thereto.


EMPLOYER RIGHTS

Non-guarantee of Employment
Nothing contained in this Plan shall be construed as a contract of employment between the Employer and any Employee, or as a right of any Employee to be continued in the employment of the Employer, or as a limitation of the right of the Employer to discharge any of its Employees, with or without cause.

Action by Employer
Any action by the Employer under this Plan may be by any person or persons duly authorized to take such action.

Amendments
The Employer reserves the right to make from time to time any amendment or amendments to this Plan which do not cause any part of Employer contributions hereunder to be used for, or diverted to, any purpose other than the exclusive benefit of Participants, provided however, that the Employer may make any amendment it determines necessary or desirable, with or without retroactive effect, to comply with the Code or any other federal law and regulations issued pursuant thereto.

Successor Employer
In the event of the dissolution, merger, consolidation or reorganization of the Employer, provision may be made by which the Plan will be continued by the successor; and, in that event, such successor shall be substituted for the Employer under the Plan. The substitution of the successor shall constitute an assumption of Plan liabilities by the successor and the successor shall have all of the powers, duties and responsibilities of the Employer under the Plan.

Right to Terminate
The Plan is intended to be permanent but the Employer reserves the right to terminate the Plan at any time. In the event of the dissolution, merger, consolidation, or reorganization of the Employer, the Plan shall terminate unless it is continued by a successor to the Employer in accordance with Section 6.4.


IN WITNESS WHEREOF, the parties have executed this Agreement at [DESIGNATE PLACE OF EXECUTION], with full knowledge of its content and significance and intending to be legally bound by the terms hereof the day and year first above written.



COMPANY            EMPLOYEE



                          
Authorized Signature  Authorized Signature

                          
Print Name and Title  Print Name and Title
ENROLLMENT FORM
(Please Print All Information)

Participant Name:              Social Security Number:     

Address:                Date of Birth:         

Phone Number:               Email Address:           

Pay Period      ( Weekly    ( Bi-Weekly       ( Semi-Monthly    ( Monthly  

( New Hire (Hire date:        /      /       )       ( Key Employee (Officer or Owner)     ( Open Enrollment

Change in Status Explanation:                     


PREMIUM CONTRIBUTIONS

I elect to participate in the HRA Plan   (Yes   ( No

The amount of salary reduction needed to pay premiums under the insured portions of the Plan will be determined by my employer. This amount will be changed as necessary, if premium charged by the insurance company changes.

Check all that apply:
( Health Insurance    ( Group Life Insurance       ( Disability Insurance      ( Dental Insurance
( Other(s)                 


MEDICAL REIMUBURSEMENT ACCOUNT

I elect to participate in the HRA Plan  (Yes   ( No    (not to exceed Employer Limit $    )

$   per pay x    (# of pays) = $     Annually


DEPENDENT CARE ACCOUNT

I elect to participate in the HRA Plan   (Yes   ( No    (not to exceed [$], [$] if married filing separately)

$   per pay x    (# of pays) = $     Annually

I request that my periodic paychecks for the plan year [YEAR] be reduced on a pro rata pro-tax basis by the sum of my medical reimbursement, dependent care and premium contributions to the plan, such amount to be allocated among the benefits I selected above. I understand this election form cannot be revoked or changed during the plan year unless there is a change in my status (e.g. marriage, divorce, death of spouse or child, birth or adoption of child, and change of employment of spouse) which justifies the revocation or change. I understand I can be reimbursed only for qualified expenses incurred during the plan year and that unused amounts may not be carried over into future plan years. I understand any unused dollars remaining in my account(s) at the end of the plan year will be forfeited. I have examined this agreement and to the best of my knowledge, it is true, correct and complete. 

Employee Signature:                Date:           

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