House Passes Legislation on Health Reimbursement Arrangements

November 13, 2009

Legislation that will provide tax parity to non-spouse/non-dependent individuals who qualify for and receive employer-provided health plan benefits passed in the House this week.

Provisions in the Tax Equity for Health Plan Beneficiaries Act of 2009 (H.R. 2625) reverse the Treasury’s revenue ruling on Health Reimbursement Arrangement (HRA) beneficiaries. Essentially, they direct the Treasury to issue rules that allow employees to elect to have their HRAs reimburse the uninsured medical expenses of a non-spouse, non-dependent designated beneficiary.

The act was included as part of the House’s comprehensive health care reform bill (H.R. 3962).

Currently, the provisions are not a part of the Senate health bill, but there is some cause for optimism that they will be included in the final agreement between the House and Senate before it is sent to the President. If they are included, a likely effective date would be in 2011.

The bills have strong bipartisan support and have the backing of the Business Coalition for Benefits Tax Equity, a coalition of companies and trade associations that support eliminating the federal tax inequities that result when businesses voluntarily provide health care coverage to the domestic partners (and other non-spouse, non-dependent beneficiaries) of their employees. ICMA-RC is a member of the coalition.