Traditional group health plan
Start here when you want an employer-selected plan lineup and coordinated enrollment. Compare networks, participation, contributions, dependent costs, and payroll administration.
Employer benefits account guide
Choose the right benefits account for your workforce.
Compare HSA, FSA, HRA, ICHRA, QSEHRA, and Section 125 rules before payroll deductions or reimbursements begin.
Start with the purpose
Do not start with the acronym. Start with what the employer wants to accomplish.
These arrangements can work together, but they are not interchangeable. Ownership, funding, health-plan compatibility, and payroll treatment determine the right starting point.
Group coverage or reimbursement: where should you start?
Compare the employee experience and administration—not only the company’s monthly allowance. These are options to evaluate, not a recommendation or a promise that Skyline administers an HRA.
ICHRA
Evaluate when individual coverage may fit eligible employee classes. Employees need qualifying individual coverage or Medicare. Review local plan access, affordability, tax-credit effects, class rules, notices, and reimbursement administration; group coverage and ICHRA cannot be offered as a choice to the same class.
QSEHRA
Evaluate for an eligible employer generally below 50 full-time employees and equivalents that does not offer a group health plan. Annual reimbursement limits, coverage verification, notices, and tax-credit coordination apply.
Do not informally reimburse individual premiums and assume they are tax-free. Confirm the written arrangement, administrator, employee impact, and tax/legal requirements before making an offer.
HealthCare.gov: compare group coverage and HRAs
Source check: September 2026. Verify current requirements before acting.
Interactive comparison
Compare one arrangement at a time.
Select an account or plan to compare its ownership, funding, coverage connection, unused-balance treatment, and payroll role.
Health Savings Account
An employee-owned account paired with qualifying health coverage and designed for current or future eligible medical expenses.
- Who owns it
- The individual employee or account holder.
- Who may fund it
- The employer, the eligible individual, or both—within the combined annual limit.
- Coverage connection
- The individual generally needs HSA-eligible high-deductible health coverage and no disqualifying other coverage.
- Unused money
- The balance carries forward and stays with the individual after employment ends.
- Payroll role
- Employee contributions may be made through payroll when the employer’s written arrangement supports them.
Watch for
A general-purpose health FSA, certain HRAs, or Medicare enrollment can affect HSA contribution eligibility. Confirm the individual’s full coverage picture before funding.
Health Flexible Spending Arrangement
An employer-sponsored arrangement that reimburses eligible medical expenses during the plan’s coverage period.
- Who owns it
- The employer establishes and maintains the arrangement under the written plan.
- Who may fund it
- Employees commonly elect salary reductions; the employer may also contribute.
- Coverage connection
- A general-purpose health FSA can interfere with HSA eligibility unless it is designed as a limited-purpose or post-deductible arrangement.
- Unused money
- Use-or-lose rules apply, subject to any permitted carryover or grace period adopted by the plan.
- Payroll role
- Elections, deductions, reimbursements, and substantiation must follow the written plan and plan year.
Watch for
A plan may permit a carryover or a grace period when allowed, but not both for the same health FSA plan year. Confirm the current limit and document terms.
Health Reimbursement Arrangement
An employer-established reimbursement plan whose eligible expenses, limits, and carryover rules come from the plan design.
- Who owns it
- The employer establishes the arrangement; it is not an employee-owned bank account.
- Who may fund it
- Only the employer. Employee salary reductions cannot fund an HRA.
- Coverage connection
- Integration and eligibility depend on the HRA design and any other health coverage offered.
- Unused money
- The written plan determines whether unused amounts carry forward; unused balances are not generally employee cash.
- Payroll role
- Payroll may coordinate eligibility, but reimbursements require proper claims and substantiation administration.
Watch for
An HRA that reimburses general medical expenses can affect HSA contribution eligibility. Coordinate the health plan and reimbursement design before enrollment.
Individual Coverage HRA
An employer-funded arrangement that can reimburse eligible individual health coverage and medical expenses under detailed federal rules.
- Who owns it
- The employer sponsors the arrangement for eligible employee classes.
- Who may fund it
- Only the employer funds the ICHRA reimbursement allowance.
- Coverage connection
- Participants generally must enroll in individual health coverage or Medicare and satisfy the arrangement’s substantiation rules.
- Unused money
- The employer’s written plan controls carryover; unused amounts do not become unrestricted employee cash.
- Payroll role
- Employee classes, notices, affordability, opt-out rules, and reimbursement administration must be coordinated.
Watch for
An ICHRA offer can affect Marketplace premium-tax-credit eligibility. Employees need clear affordability and opt-out information before choosing coverage.
Qualified Small Employer HRA
A reimbursement option for an eligible small employer that does not offer a group health plan to its employees.
- Who owns it
- The eligible small employer establishes and maintains the arrangement.
- Who may fund it
- Only the employer; employee salary reductions are not permitted.
- Coverage connection
- The employer generally must have fewer than 50 full-time employees and equivalents and cannot offer a group health plan.
- Unused money
- The annual benefit is capped and prorated as required; unused amounts cannot be cashed out to employees.
- Payroll role
- Written notice, proof of coverage, reimbursement substantiation, and annual reporting require coordination.
Watch for
Minimum essential coverage affects whether reimbursements are tax-free, and the QSEHRA can affect an employee’s Marketplace premium tax credit.
Section 125 Cafeteria Plan
A separate written employer plan that can let employees choose between taxable compensation and qualified benefits on a pre-tax basis.
- Who owns it
- The employer adopts and maintains the written cafeteria plan.
- Who may fund it
- Employee salary reductions, employer flex credits, or both may be used as the written plan permits.
- Coverage connection
- It can support eligible premium deductions, health FSA elections, HSA payroll contributions, and other qualified benefits.
- Unused money
- Section 125 is the election and payroll framework—not an employee account balance by itself.
- Payroll role
- Eligibility, elections, permitted changes, deductions, plan year, and nondiscrimination administration must match the document.
Watch for
Adopt the written plan and establish election procedures before treating employee deductions as pre-tax. Coordinate the document with payroll and qualified tax or legal advisers.
How the pieces connect
Section 125 is the payroll framework—not another medical account.
A cafeteria plan can support eligible pre-tax elections. The medical plan and the selected account or reimbursement arrangement still need their own eligibility, funding, and administration rules.
- Choose the medical plan
- Adopt Section 125 elections when appropriate
- Coordinate premium deductions, HSA, or Health FSA
- Define the expense or coverage to reimburse
- Select the correct HRA, ICHRA, or QSEHRA design
- Administer notices, substantiation, and reimbursements
Implementation checklist
Organize the decision before the first deduction or reimbursement.
Use this planning checklist with your broker, payroll provider, administrator, tax adviser, and legal or ERISA counsel. Your selections stay in this browser and are not submitted.
0 of 5 planning steps marked complete
Educational insurance guidance only. Tax, payroll, ERISA, ACA, and legal requirements depend on the employer and the written arrangement. Confirm implementation with qualified advisers and current official guidance.
Official resources
Confirm current requirements with the responsible agencies.
Rules and annual limits can change. Use these primary sources with your plan documents and qualified professional advice.
Primary source
IRS Publication 969: HSAs and other tax-favored plans
Open official guidance ↗ Primary sourceIRS: Cafeteria plan questions and answers
Open official guidance ↗ Primary sourceIRS: Qualified Small Employer HRAs
Open official guidance ↗ Primary sourceIRS: ICHRA and Premium Tax Credit guidance
Open official guidance ↗From our clients
Trusted employer benefit guidance from a local team.
FAQ
Frequently asked group health questions
What is the main difference between an HSA and a health FSA?
An HSA is owned by the individual, requires qualifying coverage, and remains with the person. A health FSA is an employer-sponsored arrangement governed by the written plan and generally reimburses eligible expenses for the applicable coverage period.
Can employees pay their group health premium pre-tax?
Employers commonly use a properly adopted Section 125 cafeteria plan for eligible pre-tax employee premium deductions. The written document, eligibility, election, nondiscrimination, and payroll administration should be reviewed by qualified advisers.
Can a small employer reimburse individual health premiums instead of offering group insurance?
Only through an arrangement that satisfies the applicable federal requirements, such as a properly designed ICHRA or QSEHRA. Informal reimbursements can create tax and ACA compliance problems.
Who should administer these arrangements?
The employer should coordinate its broker, payroll provider, benefits administrator or TPA, tax adviser, and ERISA counsel. Skyline Benefit can help compare the insurance context, while the appropriate advisers confirm plan documents and tax compliance.
Benefits account planning
Coordinate the plan, payroll, and administration before launch.
Skyline Benefit can help organize the insurance decision and connect it to the questions your payroll, benefits administrator, tax adviser, or ERISA counsel should confirm.