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Using a Health Reimbursement Arrangement for Life Insurance Premiums

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Can an HRA Cover Life Insurance?

An HRA can reimburse life insurance premiums only if the policy is a qualified group-term life insurance plan and the premiums are paid as part of an employer‑sponsored benefit. Otherwise, the HRA is limited to medical expenses and certain related costs.

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Qualified Group‑Term Life Insurance

To be eligible, the life policy must meet IRS requirements: a maximum face value of $50,000, coverage of at least 10 years, and no cash value. The employer must provide the coverage, and the employee cannot purchase the policy separately.

Limits on Reimbursement

Even for qualified policies, the HRA can reimburse only the portion of premiums that the employee pays out of pocket. The employer's contribution is not reimbursable. Additionally, the total HRA distribution cannot exceed the annual HRA limit set by the plan.

Non‑Qualified Life Insurance

Policies that exceed $50,000, have a cash value, or are purchased individually do not qualify. Premiums for these policies cannot be reimbursed through an HRA under current IRS rules.

Practical Steps to Verify Eligibility

1. Check the policy's face value and term length. 2. Confirm the policy is offered by the employer as a group benefit. 3. Review the HRA plan document for a list of reimbursable expenses. 4. Submit a claim with proof of payment and the policy documentation.

Alternative Reimbursement Options

If the HRA cannot cover the life insurance premiums, consider a Health Savings Account (HSA) or Flexible Spending Account (FSA) if the policy qualifies as a medical expense under those plans. Some employers offer a separate "life insurance" benefit that may include a stipend or direct payment.

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