HRA (Health Reimbursement Arrangement)

A Health Reimbursement Arrangement (HRA) is an employer-funded account that reimburses you for qualified medical expenses. Unlike an FSA or HSA, only the employer puts money in. You cannot contribute your own dollars. The account stays with the employer if you leave the job.

The three main types

Several HRA flavors exist, each designed for a different employer situation:

• ICHRA (Individual Coverage HRA): introduced in 2020. The employer gives you a monthly allowance to buy your own individual Marketplace plan. You pick the plan, the employer reimburses the premium up to the allowance.
• QSEHRA (Qualified Small Employer HRA): for employers with fewer than 50 full-time employees who do not offer group health insurance. 2026 caps: $6,350 self-only / $12,800 family.
• Traditional HRA (integrated): paired with the employer’s group health plan to reimburse out-of-pocket costs like deductibles or copays.

The ICHRA is the most relevant for people shopping the Marketplace because it directly interacts with how you buy coverage.

ICHRA and APTC eligibility

This is the trap to watch. If your employer offers you an ICHRA and the ICHRA is considered “affordable” under IRS rules, you cannot also receive APTC for that Marketplace plan. You have to pick one:

• Accept the ICHRA and use the employer money to buy the plan, no APTC.
• Decline the ICHRA in writing and use APTC, no employer reimbursement.

“Affordable” for ICHRA purposes means the employee’s monthly cost for the lowest-cost Silver self-only plan after the ICHRA allowance is less than 9.02% of household income (2026 threshold). If the ICHRA is offered but NOT affordable, you can still take APTC, just not for the same months you take the ICHRA reimbursement.

How it differs from HSA and FSA

Feature	HRA	HSA	FSA
Funded by	Employer only	Employee + employer	Employee + employer
Requires HDHP	No	Yes	No
Portable when you leave	No	Yes	No
Tax treatment	Reimbursements tax-free	Triple tax benefit	Pre-tax contributions
Carryover	Employer choice	Always carries	Mostly use-or-lose

Example

A 35-year-old graphic designer in Florida joins a 20-person startup. The startup offers an ICHRA of $500/month. She finds a Silver Marketplace plan with a $580/month premium:

• ICHRA pays $500 directly toward the premium
• She pays the remaining $80/month out of pocket
• She cannot also receive APTC for those months because she accepted the ICHRA
• She tells the Marketplace she has an ICHRA so the APTC does not get applied

If the same designer was offered an ICHRA of only $150/month and her Silver plan cost $580, the ICHRA would likely be classified as unaffordable, and she could decline it in writing and use APTC instead.

2026 notes

ICHRA allowances vary widely by employer. Small employers may offer $200–$400/month; larger employers offering ICHRA in lieu of group coverage may offer $600–$1,000+. There is no IRS-set maximum on ICHRA contributions. QSEHRA caps are inflation-adjusted each year (2026: $6,350 self / $12,800 family).

Related terms

• HSA (Health Savings Account)
• FSA (Flexible Spending Account)
• APTC
• Premium

If your employer offers an ICHRA, run the calculator to see whether the ICHRA or APTC route saves you more.