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HHS expands health reimbursement account use

June 19, 2019

By Jennifer Garvin

Washington — The U.S. departments of Health and Human Services, Labor and Treasury issued a final regulation June 13 that will expand the use of health reimbursement arrangements.

Under the new regulation, health reimbursement accounts, called HRAs, can be offered as limited excepted benefits, which means individuals who don't enroll in traditional group health plans can still be reimbursed for qualified medical expenses, including dental and vision, according to an HHS fact sheet.

HRAs are accounts set up and funded by employers to help pay for employee health care expenses. Unlike health savings accounts, which are employee funded, HRAs are fully funded by the employers. The reimbursements are excludable from the employee's income and wages for tax purposes.

The ADA commented formally on the proposed regulation in December 2018.

"As an organization dedicated to assisting its members in advancing the overall oral health of the public, the ADA recognizes that these accounts play an important role in ensuring that consumers can afford care," wrote ADA President Jeffery M. Cole and Executive Director Kathleen T. O'Loughlin in a letter to IRS Commissioner Charles P. Rettig.

The ADA supported the rule's provisions recognizing HRAs as limited excepted benefits if the following conditions are met:

  • HRAs must not be an integral part of a group health plan.
  • The annual HRA contribution must be limited to $1,800 per year (indexed for inflation beginning in 2021).
  • HRAs must be made available under the same terms to all similarly situated individuals.

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