Inflation-adjusted limit for 2021 HRAs issued

By Sally P. Schreiber, J.D.

The IRS on Friday provided the maximum amount allowed to be newly made available to participants of excepted benefit health reimbursement arrangements (HRAs) under Regs. Sec. 54.9831-1(c)(3)(viii) for plan years beginning after Dec. 31, 2020, and before Jan. 1, 2022 (Rev. Proc. 2020-43). The maximum amount, which is indexed under the Chained Consumer Price Index for All Urban Consumers, is unchanged for plan years beginning after Dec. 31, 2020, and before Jan. 1, 2022, and remains $1,800.

Under Regs. Sec. 54.9831-1(c)(3), certain group health plans qualify as limited excepted benefits that are not subject to the special requirements for group health plans in Chapter 100 of the Code. Regs. Sec. 54.9831-1(c)(3)(viii) provides rules for HRAs and other account-based group health plans to qualify as limited excepted benefits. Under Regs. Sec. 54.9831-1(c)(3)(viii)(B), for an HRA or other account-based group health plan to qualify as an excepted benefit HRA, the amounts newly made available for each plan year under an HRA or other plan may not exceed $1,800, indexed for inflation.

Coverage that consists of excepted benefits (as defined in Sec. 9832) does not qualify as minimum essential coverage. An individual offered or covered by an excepted benefit is not thereby ineligible for the premium tax credit (PTC). And an offer of an excepted benefit by an employer is not considered to be an offer of minimum essential coverage for purposes of Sec. 4980H (requiring applicable large employers to offer minimum essential coverage to full-time employees and their dependents).

To be recognized as an excepted benefit HRA, the HRA must not be an integral part of a health insurance plan; must provide benefits that are limited in amount; cannot provide reimbursement for certain health insurance premiums; and must be made available under the same terms to all similarly situated individuals.

Sally P. Schreiber, J.D., ( is a JofA senior editor.


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