In addition there are “some employers giving HRA holders who have no spouses or dependents a chance to pass HRA funds on to other beneficiaries.” Unfortunately the IRS is no longer allowing “single, childless workers to designate beneficiaries for HRA funds” because it “violates the requirements of Section 105(b) of the Internal Revenue Code.”
Shoshanna Tanner, an IRS official, wrote in the revenue ruling, “If a plan lets dead workers’ designated beneficiaries receive reimbursement for medical expenses from an HRA, none of the payments made from the reimbursement plan during the plan year to any person, including amounts paid to reimburse the medical expenses of an employee or the employee’s spouse or dependents, is excludable from the gross income.”
This ruling will take effect starting December, 2008 for all HRA plan designated beneficiary provisions.
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