Quick answer: A Health Reimbursement Arrangement (HRA) is an employer-funded account that reimburses employees tax-free for qualified medical expenses or health insurance premiums. Unlike an FSA or HSA, the employer owns and funds an HRA entirely, and the specific rules depend on which type of HRA a company offers.
How does an HRA work?
An employer sets aside a fixed allowance, and employees submit qualifying medical expenses for tax-free reimbursement up to that amount. There's no employee payroll contribution involved, since the employer funds it directly, and unused funds typically stay with the employer if the design doesn't allow rollover.
Types of HRAs
- QSEHRA (Qualified Small Employer HRA) — for employers with fewer than 50 full-time equivalent employees who don't offer a group health plan. 2026 limits: $6,450 for self-only coverage, $13,100 for family coverage.
- ICHRA (Individual Coverage HRA) — available to employers of any size, with no IRS-set contribution cap. Employers can vary allowances by employee class.
- EBHRA (Excepted Benefit HRA) — a limited-dollar HRA offered alongside a group health plan. 2026 limit: $2,200 per employee.
- GCHRA (Group Coverage HRA) — paired with a traditional group health plan to reimburse out-of-pocket costs like deductibles and copays.
HRA vs. FSA vs. HSA
| |
HRA
|
FSA
|
HSA
|
|
Who funds it
|
Employer only
|
Mostly employee
|
Employee (employer can contribute)
|
|
Requires HDHP
|
Depends on type
|
No
|
Yes
|
|
Rolls over
|
Depends on employer design
|
Limited ($680 for 2026)
|
Yes, fully
|
|
Portable if you leave your job
|
No
|
No
|
Yes
|
|
2026 limits
|
QSEHRA $6,450/$13,100, EBHRA $2,200, ICHRA no cap
|
$3,400 (health care FSA)
|
$4,400 self-only / $8,750 family
|
Which HRA is right for a small business?
Companies under 50 full-time equivalent employees that don't offer a group plan often start with a QSEHRA because of its simplicity and predictable IRS caps. As a company grows past that threshold, or wants more flexibility to vary allowances by employee class, an ICHRA becomes the more common path, since it has no contribution ceiling.
FAQ
What does HRA stand for? HRA stands for Health Reimbursement Arrangement, an employer-funded account that reimburses employees for qualified medical expenses.
What is the 2026 QSEHRA limit? For 2026, employers can offer up to $6,450 for self-only coverage and $13,100 for family coverage through a QSEHRA.
Is there a contribution limit for an ICHRA? No. Unlike a QSEHRA, an ICHRA has no IRS-set contribution cap, and employers can vary the allowance by employee class.
Can an employee use an HRA and an FSA at the same time? It depends on the HRA type and plan design. Some HRAs, like an EBHRA, can be paired with an FSA, while others cannot. Employers should confirm compatibility rules before offering both.
We help employers figure out which HRA structure actually fits their size, budget, and goals, not just the one that's easiest to set up. Curious what fits your team? Let's talk.
About Bennie
Bennie is a modern employee benefits firm dedicated to transforming how employers design, manage, and deliver benefits. By combining world-class brokerage services with user-friendly technology, Bennie helps organizations lower costs and streamline administration while giving employees a centralized platform to navigate their healthcare. Headquartered in New York City, Bennie is licensed in all 50 states.
