HRA for Small Businesses: A Smart Solution for Tax-Free Employee Benefits

Small businesses often face challenges when it comes to offering comprehensive employee benefits. Balancing competitive packages with limited budgets can be tricky. However, a HRA for small businesses presents an ideal solution—offering flexibility, cost control, and tax advantages for both employers and employees.

With rising healthcare costs and growing expectations from job seekers, it's essential for small business owners to explore innovative benefit solutions like HRAs. Let's break down what an HRA is, why it works so well for small businesses, and how you can implement it with ease using one of the nine HRA plan designs available from Core Documents.

What is an HRA?

An HRA is a tax-advantaged plan that allows employers to reimburse employees for qualified medical expenses and/or health insurance premiums. Unlike traditional group health plans, HRAs provide more flexibility and control, especially for businesses with fewer than 50 full-time employees.

Employees receive reimbursements tax-free, and employers get tax deductions on the benefits paid—making HRAs a win-win for both parties.

Why HRAs Are Perfect for Small Businesses

Affordability

Traditional group insurance can be prohibitively expensive for small businesses. HRAs enable employers to set a budget and only pay for what employees use. This can lead to significant savings while still offering valuable benefits.

Flexibility

HRAs can be tailored to meet the needs of your workforce. For example, you can choose to cover only premiums, out-of-pocket expenses, or both. Plans can also vary by employee class, offering even more customization.

Tax Advantages

Contributions made by employers are 100% tax-deductible, and reimbursements received by employees are tax-free—provided the expenses meet IRS guidelines.

Employee Satisfaction

Providing healthcare benefits—even through a more flexible model—can boost morale, improve retention, and attract better talent. Employees appreciate having help with medical expenses, even if it's not a traditional health insurance plan.

Core Documents: Your HRA Partner

To help small businesses design and implement HRAs effectively, Core Documents offers nine distinct HRA plan designs. These plans allow employers to offer tax-free reimbursements in ways that suit their team structure and budget.

Some popular options include:

• Qualified Small Employer HRA (QSEHRA) – Ideal for businesses with fewer than 50 employees and no group health plan.

• Individual Coverage HRA (ICHRA) – Allows businesses of any size to reimburse employees for individual insurance premiums.

• Integrated HRA – Works alongside group insurance plans to reimburse out-of-pocket costs.

With Core Documents, setup is straightforward, compliance is managed, and your small business can quickly start offering robust benefits without the high cost of traditional insurance.

Take the Next Step

An HRA for small businesses is more than just a cost-saving tool—it's a strategic advantage in today's competitive hiring market. Whether you're looking to support your team's health, lower benefit costs, or simplify your HR process, Core Documents has a plan that fits.

Explore the full list of options here: 9 HRA Plan Designs from Core Documents and take the first step toward a smarter benefits strategy today.