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10/26/20 Update: Updated for the 2021 EBHRA limit, 2021 Health FSA limit, and 2021 QSE HRA limit.
In June 2019, the Department of the Treasury (Treasury), Department of Labor (DOL), and Department of Health and Human Services (HHS) (collectively, the Departments) published their final rules regarding health reimbursement arrangements (HRAs) and other account-based group health plans. These final rules expand the use of HRAs by removing the prohibition against integrating an HRA with individual health insurance coverage (individual coverage HRA) and expanding the definition of limited excepted benefits to recognize certain HRAs as limited excepted benefits if certain conditions are met (excepted benefit HRA).
The final rules were effective on August 19, 2019, and generally apply for plan years beginning on or after January 1, 2020.
In September 2019, the Internal Revenue Service (IRS) published proposed rules to clarify the way the employer shared responsibility provisions and Section 105(h) nondiscrimination rules apply to HRAs that are integrated with individual health insurance coverage or Medicare.
The chart that follows is designed to help employers understand the differences between a “traditional” HRA, limited purpose HRA, retiree only HRA, Qualified Small Employer HRA, and the two new types of HRAs: the individual coverage HRA and the excepted benefit HRA. It has been updated to include the applicable 2021 limitations that have been released.