IRS releases adjusted maximum amount for excepted benefit HRAs in 2021
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Monday, October 26, 2020

IRS releases adjusted maximum amount for excepted benefit HRAs in 2021

By Payroll and Entitlements Editorial Staff

The IRS has released the inflation adjustment for the maximum amount allowed to be newly made available for 2021 plan years for excepted benefit health reimbursement arrangements provided under Reg. §54.9831-1(c)(3)(viii). The maximum amount for plan years beginning after December 31, 2020, and before January 1, 2022 remains $1,800.

Certain group health plans qualify as limited excepted benefits that are not subject to the requirements of Chapter 100 of the Internal Revenue Code. Health reimbursement arrangements (HRAs) and other account-based group health plans may qualify as limited excepted benefits. After December 31, 2020, the original $1,800 dollar amount was to be multiplied by the applicable cost-of-living adjustment. For plan years beginning after December 31, 2020, and before January 1, 2022, the maximum amount that may be made newly available for the plan year for an excepted benefit HRA remains $1,800. The IRS will publish the adjusted amount for the 2022 plan year by June 1, 2021. (Rev. Proc. 2020-43, I.R.B. 2020-45, November 9, 2020).

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