If you've been researching health reimbursement arrangements, you've probably noticed that the concept itself is pretty straightforward: an employer sets a budget, employees spend money on health insurance or medical care, and the employer pays them back. Simple enough. But the HRA account rules and regulations that govern how these benefits work? Those require a closer look. Whether you're exploring HRAs for the first time or updating your existing plan for the new year, here's what employers and employees need to know about HRA rules in 2026.
What are HRA Account Rules?
Health reimbursement account rules are the regulatory guidelines that dictate how HRAs must be structured, offered, and administered. They exist to make sure these benefits are delivered consistently and equitably across an organization.
The specifics of those rules depend heavily on which type of HRA you're working with. The two most common options today are the Individual Coverage HRA (ICHRA) and the Qualified Small Employer HRA (QSEHRA), and each comes with its own set of IRS HRA rules and guidelines. Not sure which fits your business? Take Command's small business tax strategy guide is a good place to start.
One thing worth clarifying upfront: while HRAs have some surface-level similarities to flexible spending accounts, they work differently in important ways. Most notably, HRA funds can be used to pay health insurance premiums directly, which FSAs cannot. And unlike FSAs, any unused HRA funds stay with the employer at year-end unless the employer specifically chooses to allow rollover.
→ Deep dive into common HRA compliance issues.
What are health reimbursement account rules designed to do?
At their core, HRA rules for employers are about fairness and compliance. They ensure employees receive benefits in a consistent, legally sound way, and that employers aren't inadvertently running afoul of IRS or ACA requirements.
Before getting into the specific rules, here's a quick overview of the HRA types referenced throughout this post.
Integrated HRAs are paired with traditional group health insurance and help cover out-of-pocket costs like deductibles, co-pays, and co-insurance. ICHRAs fall into this category and are notable for their flexibility across employer sizes. Excepted Benefit HRAs (EBHRAs) cover a narrower range of benefits such as vision, dental, long-term care, or COBRA continuation. Standalone HRAs like QSEHRAs, created by Congress in 2017, serve small businesses that don't offer a group plan and want to provide tax-free health benefits to their teams. Spousal, retiree, and Medicare HRAs round out the landscape for more specific coverage situations
Have HRA questions?
12 HRA account rules to know in 2026
1. Company size
ICHRA is open to employers of any size, making it one of the most versatile health benefit tools available. QSEHRA, by contrast, is reserved for organizations with fewer than 50 full-time equivalent employees that are not subject to the ACA's employer mandate and do not offer a group health plan. If your business has grown past that threshold, ICHRA is likely the right path.
2. Contribution limits
This is one of the key differences between the two HRA types. ICHRA carries no maximum contribution limit, giving employers full flexibility in setting reimbursement amounts. QSEHRA is capped by the IRS each year. For 2026, the maximum QSEHRA contribution is $6,450 annually for self-only employees and $13,100 annually for employees with families, reflecting a modest increase over 2025 limits. These figures are adjusted each year using the chained Consumer Price Index under IRS Revenue Procedure 2025-32.¹
3. Owner eligibility
This one comes down to how your business is structured. To participate in a QSEHRA, a business owner must be classified as a W-2 employee of the company. C-corp owners meet that standard and can generally participate, as can their dependents. S-corp owners, who are not treated as employees for this purpose, typically cannot. Sole proprietors and partners face a middle path: if their spouse is a W-2 employee of the business, the owner may be able to participate as the spouse's dependent. The details vary, so reviewing your specific business setup is important before making assumptions.
4. Class eligibility
Both HRA types require that benefits be offered fairly, but they approach that requirement differently. QSEHRA can only vary reimbursement amounts based on age or family size. ICHRA is far more flexible, allowing employers to segment their workforce into distinct employee classes, each with its own reimbursement level. Classes are defined by bona fide job-based distinctions such as full-time vs. part-time status, salaried vs. hourly, geographic location, seasonal employment, or non-resident alien status.² One firm rule: if you offer an ICHRA to one class of employees, you cannot simultaneously offer a traditional group health plan to those same employees. The two can coexist across different classes, but not within the same class.
5. Affordability and premium tax credits
For applicable large employers using an ICHRA, affordability matters. An ICHRA is considered affordable when the employee's remaining out-of-pocket cost for the lowest-cost Silver plan in their area, after the employer's contribution, does not exceed a set percentage of their household income.³ For plan years beginning in 2026, the IRS has established that threshold at 9.96%, up from 9.02% in 2025.⁴ When an ICHRA is affordable, the employee is not eligible for premium tax credits through the ACA marketplace. When it falls short of that standard, the employee has the option to opt out of the ICHRA and pursue marketplace coverage with tax credit eligibility instead.
Wondering how you could design your HRA? Talk to a Take Command expert today.
6. Employee choices
Employees get flexibility in how they use their HRA funds, but there is one area where employer choice is off the table entirely. An employer cannot offer the same class of employees a side-by-side election between an ICHRA and a traditional group health plan. It is one or the other within a given class. Beyond that structural requirement, employers must also verify that any plans employees enroll in meet coverage standards, whether that means qualified health plans for ICHRA integration or Minimum Essential Coverage for QSEHRA.
7. Employee usability
To access ICHRA funds, employees must be actively enrolled in qualifying individual health insurance coverage. That can mean a marketplace plan, a plan purchased directly from a private insurer, or Medicare. Employees who are not enrolled in one of these options are not eligible to receive reimbursements, regardless of what their employer has budgeted. This is one of the most important things to communicate clearly during onboarding.
8. Start dates
Both ICHRA and QSEHRA can be launched at any point during the year, which makes them more flexible than traditional group plans tied to annual renewal cycles. Employees offered either type of HRA are eligible for a Special Enrollment Period, meaning they can shop for and enroll in individual coverage outside of the standard open enrollment window. ICHRA triggers its own Special Enrollment Period as well, removing one of the most common friction points employees face when transitioning away from group coverage.
9. Reimbursements
Informally paying back employees for health expenses is not the same as running a compliant HRA, and the IRS treats them very differently. Employers who reimburse employees for health insurance costs outside of a properly structured plan can face substantial penalties.⁵ Both ICHRA and QSEHRA must be established as formal health benefit plans under IRS and ACA guidelines, with proper documentation, written plan documents, and a compliant reimbursement process in place. Using an HRA administration platform is the most reliable way to stay on the right side of these requirements.
10. HSA compatibility
HRAs and health savings accounts can work together, but the rules require some careful planning. For an employee to contribute to an HSA while also participating in an ICHRA, the ICHRA must be structured to reimburse premiums only, not general medical expenses.⁶ This prevents employees from receiving double benefits for the same costs. On an ICHRA, employees can opt into this premium-only setup individually. On a QSEHRA, the employer must apply this configuration uniformly across all eligible employees. The IRS also sets the qualifying criteria for the high-deductible health plans that pair with HSAs, so plan selection matters here too.
11. Administration
Running an HRA in-house creates more compliance risk than most employers realize. Because reimbursements require verification that employees are spending on eligible expenses, having employees submit receipts directly to an employer-managed process puts protected health information in the wrong hands and creates potential HIPAA exposure. Professional HRA administration keeps that verification process at arm's length, handles documentation properly, and provides the paper trail needed for IRS compliance without putting employers in a difficult position.
12. Rollover rules
HRA funds accumulate and carry forward month to month within a plan year. At the end of the year, whether any remaining balance rolls over to the next plan year is entirely the employer's call. Most employers choose not to allow year-end rollover, meaning unused funds stay with the employer rather than accumulating in an employee's account. If you do allow rollover, that policy should be spelled out clearly in your plan documents.
Wondering how you could design your HRA?
Questions about HRA account rules? Let's talk.
HRA rules cover a lot of ground, and getting the details right from the start saves a lot of headaches later. If you are weighing your options or want to make sure your existing plan is set up correctly for 2026, talk to a Take Command expert today. Our team works through these questions every day and can help you find the right structure for your business.
For a broader overview of how HRAs work, the Take Command HRA Guide is a thorough resource covering everything from plan setup to employee communication.
This post was originally published in 2020 and has been updated for 2026 to reflect current IRS guidance, updated contribution limits, and the latest affordability thresholds.
References
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IRS Revenue Procedure 2025-32 (October 9, 2025). Provides 2026 inflation-adjusted contribution limits for QSEHRAs and other health benefit accounts. https://www.irs.gov/pub/irs-drop/rp-25-32.pdf
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Centers for Medicare and Medicaid Services. HRA Frequently Asked Questions. https://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Market-Reforms/Downloads/HRA-FAQs.pdf
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IRS. Health Reimbursement Arrangements (HRAs). https://www.irs.gov/newsroom/health-reimbursement-arrangements-hras
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IRS Revenue Procedure 2025-25. Establishes the 2026 ACA affordability percentage at 9.96%. https://www.irs.gov/pub/irs-drop/rp-25-25.pdf
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IRS. Employer Health Care Arrangements. https://www.irs.gov/affordable-care-act/employer-health-care-arrangements
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IRS Publication 969. Health Savings Accounts and Other Tax-Favored Health Plans. https://www.irs.gov/publications/p969
This post was originally written in 2020 and has been updated for 2026 to reflect the exciting changes going on in the HRA world.
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Ruth grew up in Oklahoma but now lives in Alabama. She studied journalism at the University of Missouri and is passionate about good food, books and writing. In her free time, you'll often find her reading and knitting with a glass of wine at hand.
