Agencies issue final regulations expanding use of HRAs

The IRS, DOL, and HHS have jointly issued final regulations that expand the availability and permitted use of HRAs, finalizing proposed regulations that were originally issued in 2018. The final regulations are generally applicable for plan years beginning on or after January 1, 2020 and offer the following:

- Individual Coverage HRAs: an alternative to traditional group health plan coverage, subject to certain conditions. Among other medical care expenses, Individual Coverage HRAs can be used to reimburse premiums for individual health insurance chosen by the employee, promoting employee and employer flexibility, while also maintaining the same tax-favored status for employer contributions towards a traditional group health plan.

- Excepted Benefit HRAs: permit employers to finance additional medical care (for example to help cover the cost of copays, deductibles, or other expenses not covered by the primary plan) even if the employee declines enrollment in the traditional group health plan.

News Release:https://home.treasury.gov/news/press-releases/sm708
IRS Fact Sheet:https://www.irs.gov/pub/irs-utl/health_reimbursement_arrangements_faqs.pdf

Lifetime Benefit Solutions, Inc. is not a law firm, has not reviewed that information for legal sufficiency, and does not give legal or tax advice. The sponsoring employer should have this information reviewed by its own legal counsel for compliance with ERISA, tax requirements, and other applicable laws and regulations.

 

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