TPA Services

Health Reimbursement Accounts & ICHRA

Employer-funded reimbursement with predictable budgets and employee choice.

HRA Videos

  • HRAs: What Employers Should Know

    For employers: how an HRA reimburses employees and what NWGS administers.

  • ICHRAs: What Employers Should Know

    For employers: allowances for individual coverage and what NWGS administers.

Northwest Group Services administers flexible Health Reimbursement Arrangements (HRA), including Individual Coverage Health Reimbursement Arrangements (ICHRA). Employers can provide defined reimbursement benefits while supporting predictable budgets and employee choice. Plan terms, eligibility, substantiation, and tax treatment depend on the plan document.

Traditional HRA. An employer funds each eligible employee’s reimbursement account and determines allowable uses, which may include deductibles, co-pays, coinsurance, and other qualified medical expenses. NWGS supports documentation, reimbursement workflows, and ongoing administration.

ICHRA. An employer provides a defined allowance for qualifying individual health coverage and, depending on plan design, other qualified expenses. Employees submit documentation and receive approved reimbursements up to the allowance. NWGS assists with setup, enrollment support, reimbursement processing, and ongoing administration.

How it generally works: the employer designs classes and allowances; eligible employees enroll in qualifying coverage; employees submit premiums or expenses; approved amounts are reimbursed up to the allowance.

Qualified Small Employer HRA (QSEHRA)

A Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) lets a small employer that does not offer a group health plan reimburse employees, tax-free, for individual health insurance premiums and other qualified medical expenses. Northwest Group Services administers QSEHRAs alongside traditional HRAs and ICHRAs.

  • Who can offer it. Employers with fewer than 50 full-time employees, including full-time equivalents, that do not offer a group health plan to any employee.
  • Employer-funded only. Employees cannot contribute through salary reduction.
  • Tax-free reimbursements. Reimbursements are generally excluded from income when the employee has minimum essential coverage and provides proof of it.
  • Same terms for everyone. The QSEHRA must be offered on the same terms to all eligible employees. Allowances may vary only as the IRS permits, such as by age or family size based on the price of an individual policy.
  • Annual notice. Employers generally must give eligible employees a written notice at least 90 days before the start of each plan year (or by the date an employee first becomes eligible).
  • 2026 annual limits. Up to $6,450 for self-only coverage and $13,100 for family coverage, prorated for employees eligible for only part of the year.

QSEHRA vs. ICHRA at a Glance

QSEHRAICHRA
Employer sizeFewer than 50 full-time employees (incl. FTEs)Any size
Annual dollar limitYes: $6,450 self-only / $13,100 family (2026)No federal limit
Employee classesSame terms for all eligible employeesAllowances can vary by employee class
Group health plan alongsideNot allowedAllowed, but not to the same class of employees

Not sure which arrangement fits your business? Call NWGS at (888) 808-3008.

HRA Paper Claim Form

Can’t use the app or the member portal? Download the HRA Claim Form (PDF), fill it out, attach your itemized receipts or Explanation of Benefits, and mail or fax it to NWGS. The mailing address and fax number are on the form.

Frequently Asked Questions

What's the difference between an HRA, an FSA, and an HSA?

A Health Reimbursement Arrangement (HRA) is funded only by the employer, and employees can't contribute. A Health FSA is mostly funded by employee pretax contributions, and an HSA is an employee-owned account paired with a high-deductible plan that stays with the employee. HRA money can only reimburse qualified medical expenses; it can't be paid out in cash.

What is an Individual Coverage HRA (ICHRA)?

An Individual Coverage HRA (ICHRA) lets employers reimburse employees, without income tax, for qualified medical expenses up to a set annual amount, including individual health insurance premiums. Employees must be enrolled in their own individual health insurance coverage, and employers can offer it to all employees or to certain classes, such as full-time or part-time.

Can an employer offer an ICHRA and a group health plan at the same time?

Not to the same class of employees. An employer can offer an ICHRA to one class, such as part-time employees, and a traditional group health plan to another, but it can't offer both to the same employee.

Do employers have to notify employees about an ICHRA?

Yes. Employers generally must give eligible employees a written notice at least 90 days before the start of each plan year. Employees who become eligible later, such as new hires, get the notice no later than the date their ICHRA coverage can begin.

What is an Excepted Benefit HRA (spend-down), and what is the 2026 limit?

An Excepted Benefit HRA lets an employer that offers a traditional group health plan also offer a limited HRA, even to an employee who declines the group plan. For plan years beginning in 2026, the maximum amount newly made available each year is $2,200.

Are HRA reimbursements taxable to employees?

No, as long as they reimburse qualified medical expenses under the plan's terms and the plan meets the IRS rules. Employer HRA contributions aren't included in the employee's income.

What is a QSEHRA?

A Qualified Small Employer HRA (QSEHRA) is an employer-funded arrangement for employers with fewer than 50 full-time employees, including full-time equivalents, that do not offer a group health plan. It reimburses employees tax-free for individual health insurance premiums and other qualified medical expenses, as long as the employee has minimum essential coverage.

How much can a QSEHRA reimburse in 2026?

For 2026, a QSEHRA can reimburse up to $6,450 for self-only coverage and $13,100 for family coverage (IRS Revenue Procedure 2025-32). The limits are prorated for employees who are eligible for only part of the year.

Should a small employer choose a QSEHRA or an ICHRA?

A QSEHRA is limited to employers with fewer than 50 full-time employees, has annual dollar limits, and must be offered on the same terms to all eligible employees. An ICHRA is available to employers of any size, has no federal dollar limit, and allows different allowances by employee class. NWGS administers both and can walk you through them at (888) 808-3008.

Watch "HRAs: What Employers Should Know" and the ICHRA video above, or call NWGS at (888) 808-3008.

Sources

General information only; not tax or legal advice.

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