IRS Creates New Excepted Benefit HRAs in Final HRA Regulations, July 3, 2019

In addition to expanding the use of HRAs to purchase individual health insurance coverage, the newly released regulations create a new "excepted benefit" HRA structure. Unlike with individual coverage HRAs, employers can offer both the excepted benefit HRA and group health insurance coverage to the same employee, but the employee is not required to actually enroll in the group health coverage. Excepted benefit HRAs can be used to pay co-pays, dental or vision coverage, short-term health insurance premiums and other medical expenses not covered under the group health plan, but cannot be used by pay individual health insurance premiums or Medicare premiums. The excepted benefit HRA is funded solely by the employer, and the contribution limit is currently $1,800 per year. For more information on the new HRA rules, visit Tax Facts Online.