1. Health Reimbursement Arrangements Accounting for an HRA Plan For DPI Purposes March 2009

2. General Information HRA  Funded by the district with contributions.  Contributions are available to eligible employees for the reimbursement of medical care expenses incurred.  Plan document defines the contribution, the medical care expenses covered and carryover of unused funds to subsequent periods.

3. General Information What makes the accounting complicated is that each individual district determines the type of arrangement.  The proper accounting of an HRA plan for DPI purposes is dependent on the type of arrangement the district has.

4. Questions you need to answer  Is any part of the HRA a lump-sum contribution at retirement?  This is an OPEB benefit  Is so, has your district established a post employment benefit trust reported in fund 73?  Is this HRA lump-sum contribution being funded separately in the fund 73 trust?

5. OPEB benefit  If your district has established a trust and is funding this OPEB benefit in the trust Follow the DPI requirements for funding a fund 73 trust

6. OPEB benefit  If your district has not established a trust but rather will pay the benefit from operating funds when it comes due Follow the DPI requirements for pay as you go. Expenditure when retiree payment is made.  Function 290000, Object 290

7. Questions you need to answer  Is the HRA a benefit that is earned in the year that the district contribution is made? May be available:  During employment  After employment  Both

8. Non-OPEB Benefit  Are District contributions held in a trust account (i.e. bank account)?  Is the trust account an irrevocable trust?  When employment is terminated, are the accumulated funds applied against the next year’s district contribution or allocated to remaining individuals?

9. Non-OPEB Benefit – Irrevocable Trust  All questions are yes  Example: District Contribution  10B711000-Trust$30,000  XXE XXXXXX 249$30,000 10B 815200 (NEW ACCT)$30,000 10B 711000-District$30,000 Payment of costs  10B 815200 (NEW ACCT) $21,200 10B-711000-Trust$21,200

10. Non-OPEB Benefit – Not an Irrevocable Trust  If the trust account is not an irrevocable trust OR accumulated funds go back to the district  Example: Payment of costs  XXE XXXXXX 249$20,200  10E 290000 290$ 1,000 10B-711000$21,200

11. Questions you need to answer  Are contributions held as assets of the district until payment is made to Administrator for claims?  Reported as an expenditure when the benefits are paid NOT when the District contribution is made

12. Non-OPEB Benefit – Not an Irrevocable Trust  Example: Payment of costs  XXE XXXXXX 249$20,200  10E 290000 290$ 1,000 10B-711000$21,200

13. How are Investment Earnings Reported?  Are investment earnings used to pay medical claims? Irrevocable Trust  10B 711000-Trust 10B 815200 (NEW ACCT) Asset-held  XXE XXXXXX 249  10E 290000 290 10R 280

14. How are Investment Earnings Reported?  Are investment earnings used to reduce the subsequent year contribution? Irrevocable Trust  10B 711000 10B 815200 (NEW ACCT) Asset-held  10B 711000 10R 280

15. How are Investment Earnings Reported?  Are investment earnings used to pay administrative fees of the trust? Irrevocable Trust  10E 290000 940 10R 280