Zane Benefits Publishes New Information on Health Reimbursement Arrangements

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IRS Notice 2002-45 Provides Rules and Guidance for Health Reimbursement Arrangements (HRAs)

Today, Zane Benefits, Inc. published new information on Health Reimbursement Arrangements. Zane Benefits, which provides comprehensive and flexible alternatives to traditional employer sponsored health benefits, is the leader in defined contribution and health reimbursement arrangements.

According to Zane Benefits’ website, IRS Notice 2002-45, which was written in 2002, provides rules and guidance for Health Reimbursement Arrangements (HRAs). The notice is divided into eight parts:

Part I: Tax Treatment of Health Reimbursement Arrangements

According to Zane Benefits’ website, part one of the notice provides a simple, straightforward explanation of Health Reimbursement Arrangements (HRAs). In summary, an HRA is an arrangement that:

  • Is paid for solely by the employer and not provided pursuant to salary reduction election or otherwise under a Section 125 cafeteria plan.
  • Reimburses the employee for medical care expenses (as defined by Section 213(d) of the Internal Revenue Code) incurred by the employee and the employee’s spouse and dependents (as defined in Section 152).
  • Provides reimbursements up to a maximum dollar amount for a coverage period and any unused portion of the maximum dollar amount at the end of a coverage period is carried forward to increase the maximum reimbursement amount in subsequent coverage periods.
  • Reimbursements are generally excludable from the employee's gross income under Internal Revenue Code Sections 106 and 105.
  • And, assuming that the maximum amount of reimbursement which is reasonably available to a participant under an HRA is not substantially in excess of the value of coverage under the HRA, an HRA is a flexible spending arrangement (FSA) as defined in § 106(c)(2). If an HRA is an FSA, reimbursable medical care expenses may not include expenses for qualified long-term care services as defined in Section 7702B(c).

Part 2: Benefits under a Health Reimbursement Arrangement

According to Zane Benefits’ website, section two outlines rules for reimbursement under an HRA. In summary:

  • An HRA may only reimburse for medical care as defined in IRC Section 213(d).
  • Each medical care expense must be substantiated.
  • An HRA may only reimburse employees during their effective dates in the HRA plan.
  • An HRA can reimburse for eligible health insurance premium amounts, as defined in IRC Section 213(d)(1)(D).

Part 3: Coverage under a Health Reimbursement Arrangement

According to Zane Benefits’ website, section three outlines coverage and eligibility under an HRA. In summary:

  • An HRA can be made available to current and former employees (including retirees), their spouses and qualified dependents, and the spouses and dependents of deceased employees.
  • An HRA may continue to reimburse former or retired employees after termination or retirement, even if the employee does not elect COBRA.

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About Zane Benefits

Zane Benefits was founded in 2006 to provide a revolutionized SaaS (Software-as-a-Service) administration platform ("ZaneHRA") for Health Reimbursement Arrangements (HRAs) and defined contribution health care. The flagship software provides a 100% paperless administration experience to employers and insurance professionals that want to offer better health benefits without a traditional group health insurance plan at lower costs. For more information about ZaneHRA, visit

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Christina Merhar
Zane Benefits
800-391-9209 6725
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