Types of HRA, explained

ICHRA (Individual Coverage HRA)

Reimburses employees for individual health insurance and, optionally, medical expenses. Available to any company size, with no contribution cap and support for 11 employee classes. It''s the flexible modern default for employers going without a group plan, and an affordable ICHRA can satisfy the ACA employer mandate.

QSEHRA (Qualified Small Employer HRA)

For employers with fewer than 50 employees that don''t offer a group plan. Simple to run, capped at an annual IRS limit, and offered on the same terms to all eligible employees. It can preserve a reduced ACA subsidy, making it attractive for very small teams that want simplicity.

Integrated / Group-Coverage HRA (GCHRA)

Pairs with a traditional group health plan to reimburse out-of-pocket costs — deductibles, copays, coinsurance — rather than premiums. It''s for employers who keep their group plan but want to soften the cost-sharing for employees. Employees must be enrolled in the group plan to use it.

Excepted-Benefit HRA (EBHRA)

A limited-dollar HRA offered alongside a group plan, capped at an annual IRS limit. It reimburses out-of-pocket costs and certain excepted benefits like dental, vision, and short-term coverage — and employees can use it even if they decline the group plan.

Retiree HRA

Offered to former employees to reimburse retirees tax-free for medical expenses and Medicare premiums. A retiree-only HRA is exempt from some of the rules that apply to HRAs for active employees, which makes it simpler to administer.

How the types compare

• Premiums vs. expenses: ICHRA/QSEHRA reimburse premiums; integrated/EBHRA focus on out-of-pocket costs.
• Group plan: integrated and EBHRA require one; ICHRA and QSEHRA replace it.
• Cap: QSEHRA and EBHRA are capped; ICHRA has none.
• Size: QSEHRA is under-50 only; ICHRA is any size.
• Audience: most are for active employees; the retiree HRA serves former ones.

How to choose

Start with two questions: are you keeping a group plan, and how many employees do you have? Keeping a group plan and want to help with out-of-pocket costs — integrated HRA (or EBHRA for a limited add-on). Going without a group plan — ICHRA (any size, no cap) or QSEHRA (under 50, simple, capped). Supporting retirees — a retiree HRA. A broker matches the type to your situation.

Common mistakes choosing a type

• Picking QSEHRA when you''ll soon exceed 50 employees or the cap.
• Choosing an integrated HRA when you actually want to drop the group plan (ICHRA fits better).
• Assuming all HRAs reimburse premiums — integrated and EBHRA generally don''t.
• Not checking owner eligibility for your entity type.

The Section 105 umbrella

All of these HRAs share the same tax foundation: they are medical expense reimbursement plans under Section 105 of the tax code. The type — ICHRA, QSEHRA, GCHRA, EBHRA, or retiree HRA — simply determines which rules, limits, and coverage requirements apply on top of that shared base.

Matching the type to your situation

A quick guide to point you in the right direction.

• Replace or avoid a group plan, any size — ICHRA.
• Under 50 employees and want simple with a cap — QSEHRA.
• Keep a group plan but help with out-of-pocket costs — GCHRA.
• Add a small supplemental benefit — EBHRA.
• Support former employees — retiree HRA.