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Health Reimbursement Arrangements (HRAs) Toolkit
Practical Law Toolkit w-038-7244 (Approx. 7 pages)
Health Reimbursement Arrangements (HRAs) Toolkit
by Practical Law Employee Benefits & Executive Compensation
| Maintained • USA (National/Federal) |
A collection of resources to help employers and their advisors comply with requirements applicable to health reimbursement arrangements (HRAs). HRAs have been the topic of extensive regulatory guidance, including final regulations issued by the Departments of Labor (DOL), Health and Human Services (HHS), and Treasury in June 2019.
Health reimbursement arrangements (HRAs) are tax-advantaged, account-based group health plans that:
- Are funded exclusively by employer contributions.
- Reimburse employees for medical care expenses, as defined by Section 213(d) of the Internal Revenue Code (Code), incurred by employees and their covered dependents up to a maximum dollar amount for a coverage period (26 U.S.C. § 213(d)).
Regarding the tax treatment of HRAs:
- An employer's contributions to HRAs are excluded from employees' gross incomes and wages (meaning that these amounts are not subject to employment taxes (see Practice Note, Payroll (FICA) Taxes)).
- Distributions from HRAs for qualified medical expenses are tax-free.
There are various types of HRAs (aside from traditional group health plan HRAs), each of which includes specific features and related plan design limitations. These types of HRAs include:
- Limited-purpose HRAs.
- Retiree-only HRAs.
- Individual coverage HRAs (ICHRAs).
- Excepted benefit HRAs (EBHRAs).
- Qualified small employer HRAs (QSEHRAs).
For more information on each of these HRA types, some of which are addressed in extensive final regulations issued in June 2019, see HRA Comparison Charts (84 Fed. Reg. 28888 (June 20, 2019)).
Employers that offer HRAs to their employees must understand the differences in the various types of arrangements, especially regarding:
- Employee eligibility and coverage requirements.
- Permitted contributions and distributions.
- How remaining unused balances are handled.
This Toolkit contains resources to help employers and their advisors comply with the statutory and regulatory requirements governing the various types of HRAs.