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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

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Bank account for HRA

originally posted: 11/22/2006  reposted: 2/18/2011

Q: : I asked First American Bank if they would accommodate an HRA account. They said no, that they serve HSAs only. The seemed unfamiliar with HRAs. I wonder if First American just needs some coaching in order to become willing to also take HRA deposits? Do you know of a Pennsylvania bank which will pay interest on HRA deposits, since First American is not amenable, and since we are a Pennsylvania business (in Chester County, Valley Forge area)?

A: You might misunderstand how an HRA typically works in a small business. Most small business HRA plans do not use a separate bank account for the plan. The word "account" is used in the accounting sense (i.e. the phone expense account, the rent account, the office supply account); not usually held as a separate bank account.

If you do decide to use a separate bank account then any regular bank will accommodate it; the obvious choice is to use the same account as the business's other bank account. Just remember to keep the money in the employer's tax ID number (the same as any other business bank account) or else it ceases to be a tax-qualified health plan. As far as administration, there is no comparison  between administrative requirements of HRAs vs. HSAs.

First American Bank serves a trustee to Health Savings Accounts. HRAs do not use trust accounts. 

Unlike Health Savings Accounts (HSAs), Health Reimbursement Arrangements (HRAs) do not require a separate bank account.

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