Health Reimbursement Arrangements (HRAs) for Houston Employers
Health Reimbursement Arrangements
Set Your Budget for Employee Health Costs. A health reimbursement arrangement (HRA) is an employer-funded benefit that reimburses eligible medical expenses under written plan rules. Employees do not fund it through salary deductions. Houston employers should choose the HRA type first because coverage requirements, contribution limits and HSA compatibility differ.
An HRA is funded solely by the employer, not by employee salary reductions. It reimburses substantiated eligible expenses up to the plan’s allowance; it is not an employee-owned savings account. Tax treatment depends on compliant plan design and administration. Source: IRS Publication 969.
How it works
What an HRA Is, in Plain Terms
- 1
Choose the arrangement
Decide whether a group-integrated HRA, ICHRA, QSEHRA or excepted-benefit HRA fits the employer and employees before setting allowances.
- 2
Set employer funding
Document eligible employees, reimbursable expenses, allowance limits and any permitted carryover. Include administration fees in the budget; statutory limits apply to some HRA types.
- 3
Substantiate claims
Employees submit documentation for eligible expenses. The administrator verifies expenses and required coverage before reimbursement under the plan; the same expense cannot be reimbursed twice.
- 4
Check tax and HSA rules
Qualified reimbursements generally are excluded from employee income. A general-purpose HRA can prevent HSA contributions, even with an HDHP; confirm any limited-purpose, post-deductible or suspended design with the administrator.
Why employers use an HRA
Choose the HRA Type Before the Budget
Coverage, eligibility and funding limits differ by arrangement. These are distinct designs, not interchangeable labels.
Group-integrated HRA
Generally supplements qualifying group health coverage under integration rules. Participation requires enrollment in the coverage required by the design; it is not a general method for reimbursing individual-policy premiums.
Individual coverage HRA (ICHRA)
Available to employers of any size, subject to employee-class and other rules. Participants need qualifying individual insurance or Medicare. An employer cannot offer the same employee a choice between ICHRA and traditional group coverage.
See moreQualified small employer HRA (QSEHRA)
For eligible employers that are not ALEs and do not offer a group health plan. Annual statutory reimbursement limits apply; employees need minimum essential coverage for tax-free reimbursements.
Excepted-benefit HRA
Must be offered alongside traditional group coverage, but employees need not enroll in that coverage. Annual limits apply. It cannot reimburse individual major-medical, ordinary group-plan or Medicare premiums; permitted expenses differ from ICHRA.
HSA compatibility
HDHP enrollment alone does not establish HSA eligibility. General-purpose HRA coverage generally disqualifies HSA contributions; certain limited-purpose, post-deductible and suspended HRAs can preserve eligibility if all other HSA rules are met.
Budget reimbursements and administration
Compare employer reimbursement commitments separately from setup, documents, claims administration and recurring fees. Ask how unused allowances and employee departures are handled; an HRA does not guarantee lower total costs.
Why PCIS
Why Houston Employers Set Up Their HRA with Us
Primary Care Insurance Solutions (PCIS) is a Houston agency. We help compare the HRA designs that fit your workforce, then coordinate plan setup and ongoing support with the administrator.
Local Expertise
We work with Houston businesses every day and understand the needs specific to this market.
A Design Made for You
We tailor the HRA to your company culture and your budget instead of fitting you into a template.
Tax treatment, checked before launch
We coordinate with your administrator and legal or tax advisers to review eligible expenses, employer funding and HSA interaction. Tax advantages depend on meeting the applicable rules, not simply labeling a benefit an HRA.
Support Past the Signature
Our team guides you through the entire process and stays available to you and your employees.
Supporting reading for your decision
Where can you verify coverage and HSA rules?
IRS Publication 969 explains employer-only funding and HRA compatibility with HSA contributions. General-purpose HRA coverage generally prevents HSA contributions; certain limited-purpose, post-deductible or suspended designs may preserve eligibility. The CMS Individual Coverage and Excepted Benefit HRA FAQs explain their coverage requirements. Check these sources and confirm the design with the administrator before combining benefits.
FAQ
Frequently Asked Questions
What are the eligibility requirements for an HRA?
Eligibility depends on the HRA type and written plan terms. Group-integrated HRAs require qualifying group coverage; ICHRAs require qualifying individual insurance or Medicare. QSEHRAs are for eligible non-ALE employers that offer no group health plan, with minimum essential coverage needed for tax-free reimbursements. Excepted-benefit HRAs require an offer of traditional group coverage but not enrollment in it. Self-employed persons generally cannot participate. Sources: IRS Publication 969; CMS, Individual Coverage and Excepted Benefit HRA FAQs; HealthCare.gov, QSEHRA guidance.
Can I offer an HRA alongside other health benefits?
It depends on the arrangement. Group-integrated HRAs supplement qualifying group coverage; ICHRA and QSEHRA follow different coverage and employer rules. An HSA-qualified HDHP alone does not make an HRA compatible with HSA contributions. General-purpose HRA coverage generally prevents contributions; certain limited-purpose, post-deductible or suspended designs may preserve eligibility. Confirm the combination and all other HSA eligibility requirements before employees contribute. Source: IRS Publication 969; CMS, Individual Coverage and Excepted Benefit HRA FAQs.
How much does it cost to set up an HRA?
HRA cost has two parts: reimbursements the employer agrees to fund and fees for plan documents, administration and claims substantiation. Request an itemized proposal showing setup charges, recurring fees, minimum charges and what happens to unused allowances. The total depends on the arrangement, eligible employees and reimbursement use; some types have statutory annual limits. Compare administration separately from reimbursements rather than assuming every allowance will be spent.
Reviews
What Our Clients Are Saying
Decide Your Budget. We Will Build the HRA Around It.
Tell us what you want to spend and who you cover. We will show you what an HRA can do for your Houston business in a free consultation.