SECTION 2. BACKGROUND

Under § 54.9831-1(c)(3), certain group health plans qualify as limited excepted benefits that are not subject to the requirements of Chapter 100 of the Internal Revenue Code. Section 54.9831-1(c) (3)(viii) provides rules for health reimbursement arrangements (HRAs) and other account-based group health plans to qualify as limited excepted benefits. Section 54.9831-1(c)(3)(viii)(B) provides that amounts newly made available for each plan year under the HRA or other account-based group health plan (excepted benefit HRA) may not exceed $1,800. For plan years beginning after December 31, 2020, the $1,800 dollar amount is increased by an amount equal to $1,800 multiplied by the applicable cost-of-living adjustment.

The applicable cost-of-living adjustment for plan years beginning after December 31, 2020, and before January 1, 2022, is the percentage (if any) by which the Chained Consumer Price Index for All Urban Consumers (C-CPI-U), as published by the Bureau of Labor Statistics of the Department of Labor, for the preceding year exceeds the C-CPI-U for calendar year 2019. The C-CPI-U for any calendar year is the average of the C-CPI-U as of the close of the 12-month period ending on March 31 of that calendar year. Any increase that is not a multiple of $50 is rounded down to the next lowest multiple of $50.