HRAs Archives - EMPLOYEE BENEFITS BLOG

IRS Releases 2026 Limits for HSAs and Excepted Benefit HRAs

by Evan Walters, Samuel Hamer, Edward Froelich, Michael Scarduzio and Matthew J. Blaney | Jun 10, 2025 | Employee Benefits, Health and Welfare Plans

On May 19, 2025, the Internal Revenue Service (IRS) released Internal Revenue Bulletin 2025-21. It includes Revenue Procedure 2025-19, which provides the 2026 inflation-adjusted amounts for health savings accounts (HSAs) as determined under Code § 223, as well as the maximum amount that may be made newly available for excepted benefit health reimbursement arrangements (HRAs) under Code § 54.9831-1(c)(3)(viii). Revenue Procedure 2025-19 is effective for HSAs for the 2026 calendar year and for excepted benefit HRAs beginning in 2026.

Learn more about other new IRS guidance in this Weekly IRS Roundup published by McDermott’s Tax Group.

IRS Announces Cost-of-Living Adjustments for Health and Welfare Plans

by Jacob Mattinson and Jeffrey Holdvogt | Oct 19, 2022 | Employee Benefits, Fiduciary and Investment Issues, Health and Welfare Plans

On October 18, 2022, the Internal Revenue Service (IRS) announced cost-of-living adjustments to the applicable dollar limits for certain account-based health and welfare plans (see Rev. Proc. 2022-38). The maximum salary reduction limit for a health flexible spending account (Health FSA) increased to $3,050 for 2023 (from $2,850 in 2022), and the Health FSA carryover limit for plans that have adopted that feature increased to $610 for 2023 (from $570 in 2022). In addition to these increases, the monthly limit for contributions to a qualified transportation fringe benefit and qualified parking program increased to $300 for 2023 (from $280 in 2022). The IRS previously announced (see our article here) cost-of-living adjustments to the applicable dollar limits for health savings accounts (HSAs), high-deductible health plans (HDHPs) and excepted benefit health reimbursement arrangements (HRAs) for 2023 for which we also saw substantial increases.

The Social Security Administration also recently announced that the maximum amount of earnings subject to the Social Security tax will increase to $160,200 for 2023 (from $147,000), resulting in a larger chunk of income being subject to the Social Security tax.

The IRS has yet to announce the 2023 cost-of-living adjustments for retirement plans.

These announcements are timely, if not late, given that many employers are already in the middle of open enrollment for 2023. Plan sponsors should act quickly to update payroll and plan administration, along with open enrollment communications, to account for the changes. For further information about applying the new employee benefit plan limits for 2023, contact one of the authors or your regular McDermott lawyer.

A New Day for the HRA

by Jacob Mattinson, Megan Mardy and McDermott Will & Emery | Jul 30, 2019 | Employee Benefits, Health and Welfare Plans

The Departments of Labor, Treasury, and Health and Human Services have released final rules removing the prohibition on pairing HRAs with individual health policies. The final rules also allow certain HRAs and other account-based group health plans to qualify as limited excepted benefits. These rules are generally effective for plan years beginning on or after January 1, 2020.

Access the full article.

Further Guidance on the ACA’s Cadillac Tax

by McDermott Will & Emery | Oct 6, 2015 | Benefit Controversies, Employee Benefits, Employment, Health and Welfare Plans

Effective for tax years beginning on or after January 1, 2018, an excise tax of 40 percent will be imposed on the cost of employer-sponsored health coverage that exceeds an annual limit. This tax is informally known as the “Cadillac Tax” and will impose a penalty on employers, health insurers and “persons who administer plan benefits” with regard to high-cost health care coverage.

Read the full article.

HHS Releases Guidance Exempting Existing HRAs from Applying for Restricted Annual Limit Waivers

by McDermott Will & Emery | Aug 29, 2011 | Health and Welfare Plans

by Amy M. Gordon and Jamie A. Weyeneth

Under Health Care Reform, for plan years starting on or after September 23, 2010, health plans may impose only "restricted annual limits" on essential health benefits as defined by Health and Human Services (HHS). All annual limits are prohibited for plan years starting on or after January 1, 2014. HHS issued guidance for health plans seeking a waiver of the restricted annual limit for plan years beginning before January 1, 2014. On August 19, 2011, HHS released guidance exempting all health reimbursement arrangements (HRAs) that were in effect on September 23, 2010, from applying for a restricted annual limit waiver. This guidance effectively excuses existing HRAs (including stand-alone HRAs) from complying with the restricted annual limit on essential health benefits for all plan years beginning before January 1, 2014.