December 19, 2014

Stories

Making Retirement Easier

Why a Southern California nurse loves her HRA

Lois Mitchell, RN

I’ve been a nurse with Kaiser Permanente for 28 years, and I’m now a charge nurse in our Family Care Center’s post-partum unit. I love the work, and really appreciate the benefits. As I plan for my retirement in two years, one benefit in particular gives me great peace of mind. It will also give me more than $20,000, tax free, to cover my out-of-pocket medical expenses when I retire.

The money will come from my Healthcare Reimbursement Account (HRA). It’s one of the most valuable benefits available to Union Coalition members. It’s also one of the least understood.

The cash value of the HRA will be different for everyone, depending on how much you make, how long you have until you retire and how many unused sick days you have banked. But almost all retirees can take advantage of it, and all employees can increase the value of their HRA simply by coming to work every day. That’s because eligible employees can cash out 80 percent of the unused annual sick days they’ve accrued since 2006 to fund their HRA. Because the money isn’t taxed, it’s worth close to 100 percent of the post-tax value of those days.

The unused sick days I’ve banked in recent years—and the additional days I plan to bank in the next two—will make a real difference. Having an HRA means I can do more of what I want in retirement—travel, spend time with my grandkids, do volunteer work and play a little bingo.

I feel fortunate to have good retirement benefits—it’s something our unions have worked hard for—and the HRA makes them that much better. When you consider the tax advantages, it is a fantastic deal. I know my unused sick days will be worth more to me in retirement than if were to use them or cash them out now. I tell my co-workers to take a few minutes to find out about the HRA, and do the math. You’re never too young, or too old, to start banking your sick leave for your future.

For more information on HRAs, talk to your union or HR rep, visit My HR or see '"Understanding the Health Reimbursement Account."