This site is an independent educational resource. We are not a tax advisor, financial advisor, insurance broker, HSA administrator, or HRA administrator. Contribution limits and eligibility rules are sourced from IRS Publication 969, IRS Revenue Procedure 2025-19, IRS Notice 2026-05, and Healthcare.gov. Verified April 2026. Nothing here is personalised tax, financial, or medical advice. Consult a qualified tax professional or licensed insurance agent before making decisions about your health benefits.

HSA vs HRA

Updated April 2026

ICHRA in 2026: the no-cap individual coverage HRA, and how it changes the HSA decision

ICHRA is growing fast as small and mid-size employers drop group health plans. If your employer uses ICHRA, your HSA eligibility depends entirely on how the ICHRA is structured.

ICHRA basics

No IRS contribution cap

Unlike QSEHRA ($6,450 / $13,100 for 2026), ICHRA has no maximum dollar amount. The employer sets the reimbursement amount. It can be $100/month or $1,500/month - whatever the employer decides per employee class.

Available to any employer

Any employer size can offer ICHRA - from a 1-person company to a 50,000-person corporation. Large employers can use ICHRA to satisfy the ACA employer mandate (if the ICHRA is 'affordable' for each employee's location and income).

Employees buy individual coverage

ICHRA employees use the reimbursement to buy their own plan on healthcare.gov or off-exchange. The employer does not manage a group plan. Employees choose their own network and coverage level.

Must have minimum essential coverage

Employees must be enrolled in minimum essential coverage (a marketplace plan, COBRA, spouse's employer plan, etc.) to receive ICHRA reimbursements tax-free. Without qualifying coverage, the reimbursements become taxable income.

Different amounts for different classes

Unlike QSEHRA, ICHRA can offer different reimbursement amounts to different classes of employees: full-time vs part-time, geographic location, seniority, age (up to 3:1 ratio). This allows large employers to tailor benefits.

ICHRA and HSA compatibility

Standard ICHRA = HSA disqualified

A general-purpose ICHRA that reimburses any medical expenses disqualifies HSA contributions. This is the default for most ICHRA designs. Reason: ICHRA constitutes other health coverage that is not limited to dental, vision, or HDHP-compatible designs.

Premium-only ICHRA + HDHP = HSA possibly compatible

If the ICHRA is structured to reimburse only health insurance premiums (not out-of-pocket medical claims), and the employee's underlying plan is an HDHP, HSA contributions may be permitted. This design requires careful plan documentation and is not common.

Excepted Benefit ICHRA = sometimes compatible

A separate ICHRA type capped at the EBHRA limit ($2,200 in 2026) and limited to excepted benefits (dental, vision, COBRA, etc.) can in some configurations be compatible with an HSA. Ask your employer's benefits administrator for the exact plan terms.

Complex area. Consult a tax professional or benefits advisor before combining ICHRA and HSA contributions.

The 2026 Bronze expansion and ICHRA

Starting in 2026, all ACA Bronze and Catastrophic plans are treated as HSA-eligible. For employees on ICHRA who happen to buy a Bronze plan on the marketplace, this is potentially relevant: if their ICHRA is structured as premium-only, they could use the Bronze plan + a separate HSA. The specifics depend entirely on the ICHRA plan documents. This is an area where the 2026 rule change intersects with ICHRA design in a way that most benefits administrators have not yet processed.

FAQ

What is an ICHRA?+
An ICHRA (Individual Coverage Health Reimbursement Arrangement) is a type of HRA that allows employers of any size to reimburse employees for individual health insurance premiums and qualified medical expenses, with no IRS-set contribution cap. The employer sets the dollar amount for each employee class. Unlike QSEHRA, ICHRA is available to employers of any size and can offer different benefit amounts to different classes of employees (full-time, part-time, seasonal, remote, etc.).
Can I have an ICHRA and contribute to an HSA?+
A standard ICHRA disqualifies HSA contributions because it constitutes other health coverage. However, there is an exception: an ICHRA limited to reimbursing only health insurance premiums (not medical expenses directly) - sometimes called an 'integrated ICHRA' or 'premium-only ICHRA' - may preserve HSA eligibility if the underlying plan is an HDHP. A separate category called the Excepted Benefit ICHRA, when structured carefully, may also allow HSA contributions. This is a complex area; consult a benefits advisor before combining.
What is the ICHRA affordability rule in 2026?+
For Applicable Large Employers (50+ FTE), an ICHRA must be 'affordable' to satisfy ACA employer mandate requirements. For 2026, the affordability percentage is 9.02% - meaning the employee's lowest-cost self-only silver plan premium on their local marketplace must not exceed 9.02% of their household income after the ICHRA contribution. If the ICHRA is affordable, the employee cannot claim ACA premium tax credits. If it is unaffordable, they can opt out of the ICHRA and claim marketplace subsidies.
How does ICHRA differ from a traditional group health plan?+
A traditional group health plan covers all employees under the same plan, with premiums partly or fully paid by the employer. An ICHRA instead gives each employee a tax-free dollar allowance to buy their own individual plan on the marketplace or off-exchange. This gives employees choice of plan and provider network, and eliminates the employer's administrative complexity of managing a group plan. The tradeoff is that employees must actively shop and manage their own coverage, and the employer loses the group purchasing power that can sometimes produce lower premiums.
Related:QSEHRA guideHSA/HRA stacking rulesSelf-employed pathEmployer decision framework