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HEALTH REIMBURSEMENT ARRANGEMENTS HRA’s TAX TREATMENT OF CONTRIBUTIONS Coverage and reimbursements of medical care expenses of an employee and the employee’s spouse and dependents are generally excludable from the employee’s gross income under IRC §§ 105 and 106. Notice 2002-45, Sec. I, 2002-28 IRB 93. CATCH UP CONTRIBUTIONS NOT APPLICABLE. COORDINATION OF CONTRIBUTION LAWS WITH RESPECT TO OTHER ACCOUNTS OR ARRANGEMENTS NONE. NON-DISCRIMINATION RULE Where an HRA is self-insured, the HRA is subject to the non-discrimination rules for self-insured medical expense reimbursement plans under IRC § 105(h). The non-discrimination rules of IRC § 105(h) prohibit discrimination in favor of highly compensated employees with respect to eligibility to participate and benefits. PERMISSIBLE ACCOUNT BENEFITS Reimbursement of qualified medical expenses (as defined in § 213(d) of the IRC (including OTC drugs) pertaining to the account holder, spouse, or any qualifying dependents. An HRA may not reimburse a medical expense that is attributable to a deduction allowed under IRC § 213 for any prior taxable year. Reimbursements for insurance covering medical expenses as defined in § 213(d)(I)(D) may be permissible under an HRA (including amounts paid for premiums for accident or health coverage for current employees, retirees, and COBRA qualified beneficiaries) (but note HIPAA issue). Notice 2002-45, Sec. II, 2002-28 IRB 93. An HRA may not permit the participant to cash out credits or use credits for other benefits. | ||
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