Glossary

Health reimbursement arrangement (HRA)

An employer-funded plan that reimburses employees tax-free for medical expenses and, in some versions, individual health insurance premiums.

Also called: HRA, health reimbursement account, employer HRA

A health reimbursement arrangement is a notional account the employer funds and the employee draws on to be reimbursed for qualifying medical costs. Reimbursements are tax-free to the employee and deductible to the employer. Employees cannot contribute through salary reduction, and the account belongs to the employer, so it does not travel with the worker. Unused balances roll over only if the plan says so.

There are several types:

  • QSEHRA: for employers with fewer than 50 full-time equivalent employees and no group plan. The 2026 cap is $6,450 self-only and $13,100 family (IRS Rev. Proc. 2025-32).
  • ICHRA: no dollar cap, reimburses individual coverage premiums, and can vary by employee class.
  • Integrated HRA: paired with a group health plan to cover deductibles or copays.
  • Excepted benefit HRA: up to $2,200 for plan years beginning in 2026 (Rev. Proc. 2025-19).

An HRA differs from a health savings account in ownership and rules. An HSA belongs to the individual, needs an eligible high-deductible plan and is portable. An HRA needs no particular plan, but the employer controls it. Because HRAs are usually group health plans under ERISA, expect plan documents and notices. The guides on QSEHRA explained: the small employer HRA, 2026 limits and rules and ICHRA explained: individual coverage HRAs for employers cover the two stand-alone versions, and the QSEHRA and ICHRA allowance calculator sizes an allowance.

Last reviewed October 10, 2026

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Related terms

QSEHRA An employer-funded account for businesses under 50 full-time equivalent employees that reimburses workers for premiums and medical costs up to an annual cap. ICHRA An employer-funded account that reimburses employees tax-free for individual health insurance premiums they buy themselves, with no federal dollar cap. Health savings account (HSA) A tax-advantaged personal account for medical costs that is open only to people enrolled in a qualifying high-deductible health plan. Section 125 plan An employer cafeteria plan under IRC section 125 that lets employees pay for benefits such as health premiums with pre-tax pay instead of taxable cash.

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Related tools

Group health insurance cost and affordability calculator Totals what a group health plan costs you and your employees, then tests employee-only affordability against the ACA safe harbors for 2026 or 2027. QSEHRA and ICHRA allowance calculator Prices a QSEHRA against the 2026 IRS maximums and an ICHRA by employee class, then sets both beside the cost of a group health plan.