Pension & Benefits News No increase in excepted benefit HRA maximum amount for 2021
Tuesday, October 27, 2020

No increase in excepted benefit HRA maximum amount for 2021

By Pension and Benefits Editorial Staff

The maximum amount allowed to be newly made available for excepted benefit health reimbursement arrangements (excepted benefit HRA) will remain at $1,800 for plan years beginning after December 31, 2020.

Under IRS Reg. §54.9831-1(c)(3), certain group health plans qualify as limited excepted benefits that are not subject to the requirements of Chapter 100 of the Internal Revenue Code. Section 54.9831-1(c)(3)(viii) provides rules for health reimbursement arrangements (HRAs) and other account-based group health plans to qualify as limited excepted benefits. Section 54.9831-1(c)(3)(viii)(B) provides that amounts newly made available for each plan year under an excepted benefit HRA may not exceed $1,800.

For plan years beginning after December 31, 2020, the $1,800 dollar amount is increased by an amount equal to $1,800 multiplied by the applicable cost-of-living adjustment. Due to indexing methodology requiring rounding down to the nearest $50 increment, this amount remains $1,800 for the 2021 plan year.

The Department of the Treasury and the Internal Revenue Service intend to publish, by June 1, 2021, the adjusted amount for the 2022 plan year.

SOURCE: Rev. Proc. 2020-43, I.R.B. 2020-45, November 2, 2020.

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