News alert: HRA limit will not increase for 2021

On Oct. 16, 2020, the IRS released IRS Procedure 2020-43, which states that the maximum annual contribution amount for health reimbursement arrangements (HRAs) will remain at $1,800 for 2021. This amount will not be adjusted for inflation for plan years beginning after December 31, 2020, and before January 1, 2022.

HRAs are considered an excepted benefit and not subject to the provisions of the Affordable Care Act (ACA). To maintain this status, HRAs cannot exceed an annual contribution limit of $1,800, save for an annual adjustment for inflation.