Benefits Comparison Tool

HRA Types

• ICHRA. No limit. Employees buy individual coverage.
• QSEHRA. $6,150 individual / $12,450 family (2026). For employers with <50 employees.
• Group Coverage HRA. Supplements group health plan.
• Excepted Benefit HRA. $2,150/year (2026). Works alongside group plan.

Eligibility

Varies by HRA type. ICHRA requires individual coverage. QSEHRA available to small employers only. Employer defines eligible expenses.

Rollover Rules

Employer chooses whether unused funds roll over. Funds typically forfeit upon termination (employer-owned).

Pros

• 100% employer-funded. No cost to employees.
• Employer controls budget with defined contribution
• Tax-deductible for employer, tax-free for employee
• ICHRA has no cap. Great flexibility.
• Can design around specific expense categories

Cons

• Employer-funded only. More cost for the business.
• Multiple HRA types create complexity
• Funds typically not portable
• Administrative overhead for reimbursement claims
• ICHRA requires employees to find individual coverage

Compatibility

Depends on HRA type. ICHRA cannot be offered alongside group health to same class of employees. Excepted Benefit HRA works with FSA and HSA. QSEHRA cannot coexist with group health plan.

Eligibility

Dependents under 13, or a spouse/dependent who is physically or mentally unable to care for themselves. Care must enable the employee to work.

Rollover Rules

Strict use-it-or-lose-it. Employer may offer a 2.5-month grace period after the plan year ends. No carryover option.

Pros

• Significant tax savings on childcare (up to $5,000 pre-tax)
• Reduces FICA for both employer and employee
• Easy to administer alongside other Section 125 benefits
• Compatible with all other benefit types

Cons

• $5,000 limit hasn't increased since 1986
• Use-it-or-lose-it. Must estimate carefully.
• Only reimburses after expenses are incurred
• May conflict with Child and Dependent Care Tax Credit
• Non-discrimination testing required

Compatibility

Compatible with all other benefits: FSA, HSA, HRA, POP, and Transit/Parking. DCAP is specifically for dependent care. No overlap with medical benefits.

Eligibility

Any employee contributing to employer-sponsored insurance premiums (health, dental, vision, etc.).

Pros

• Simplest Section 125 plan to administer
• Minimal compliance burden
• Immediate FICA savings for employer and employee
• Foundation for adding FSA, DCAP, or HSA later
• Low cost to establish and maintain

Cons

• Only covers premiums, not out-of-pocket expenses
• Pre-tax election may reduce Social Security wage base
• Requires plan document and compliance
• Mid-year changes limited to qualifying events

Compatibility

Compatible with everything. POP is the base Section 125 framework. FSA, DCAP, HSA, and Transit/Parking are typically added on top of a POP.

Eligibility

Any employee with qualifying commuting expenses: transit passes, vanpool fares, or paid parking at or near the workplace or a transit stop.

Rollover Rules

Monthly benefit. Use it or lose it each month. No annual accumulation. Can change election monthly.

Pros

• Up to $650/month in combined pre-tax benefits
• Employer can subsidize or fund entirely
• Election can change monthly (flexible)
• Reduces FICA for both parties
• Supports sustainability/green commuting

Cons

• Only for commuting. Not general transportation.
• Employer-provided parking subsidy is not deductible (post-TCJA)
• Does not cover bicycle commuting (currently)
• Remote/hybrid employees may not benefit

Compatibility

Compatible with all other benefit types. Transit/Parking is governed by IRC 132(f), separate from the medical/dependent care benefits under Section 125.