IRS Announces Maximum Amounts for Excepted Benefit Health Reimbursement Arrangements

On October 16, 2020, the IRS released Revenue Procedure 2020-43 announcing the maximum benefit amount for excepted benefit health reimbursement arrangements (EBHRAs) for plan years beginning after December 31, 2020, and before January 1, 2022. In brief, the maximum amount is unchanged and remains at $1,800.

As background, EBHRAs are non-integrated HRAs that were first available for plan years beginning after January 1, 2020. Employers of any size can now offer an EBHRA that is not integrated with any health coverage, as long as certain conditions are met. Specifically, the employer must ensure that they offer other traditional coverage; limit the benefit to $1,800 per plan year (indexed for inflation); not reimburse premiums for individual health coverage, Medicare or non-COBRA group coverage; and make the EBHRA uniformly available, among other requirements. For reference, an EBHRA may generally reimburse out-of-pocket Code §213(d) medical expenses, premiums for coverage consisting solely of excepted benefits and premiums for short-term limited-duration insurance coverage. While the benefit limit is indexed each year for inflation, any increase that is not a multiple of $50 is rounded down to the next lowest multiple of $50.

This recent guidance confirms that the benefit amount for plan years beginning after December 31, 2020, and before January 1, 2022, will remain $1,800. Further, the IRS announced that it intends to publish the adjusted amount for plan years beginning after December 31, 2021, by June 1, 2021.

Employers, especially those sponsoring an EBHRA, should be aware of these developments.

Revenue Procedure 2020-43 »