Under the Health Reimbursement Arrangement benefit, who may qualify for a Section 105 Health Reimbursement Arrangement?

In the context of Health Reimbursement Arrangements (HRAs), a Section 105 HRA specifically allows employers to reimburse employees for qualifying medical expenses. However, the eligibility under this arrangement can be nuanced.

Self-employed sole proprietors without any employees can establish an HRA, as they are treated differently than larger businesses. This option aligns with the rules that allow them to deduct their health insurance premiums and reimburse themselves through the HRA for out-of-pocket medical expenses. This setup provides flexibility for sole proprietors who do not have any employees and enables them to benefit from tax-free reimbursements for qualifying medical costs.

Other categories of individuals or entities have different considerations when it comes to HRAs. For instance, sole proprietors with employees would typically need to structure their HRA differently and might face additional requirements to ensure compliance with healthcare reform laws. Similarly, self-employed individuals who do not fall into the specific categories allowed under the HRA guidelines may not qualify for an HRA. Thus, the specificity of the arrangement for sole proprietors without employees emphasizes why this option is indeed the correct answer.