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

• Potential tax savings on eligible childcare using the applicable plan-year limit
• May reduce FICA for both employer and employee on eligible payroll deductions
• Can be administered alongside other Section 125 benefits with proper setup
• Can coordinate with other benefit types, subject to plan rules

Cons

• 2026 limit and effective-date communications should be verified against current guidance
• 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

Can coordinate with FSA, HSA, HRA, POP, and qualified transportation benefits, subject to plan rules. DCAP is specifically for dependent care and should not overlap with medical benefits.

Eligibility

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

Pros

• Simplest Section 125 plan to administer
• Lower administration burden than many account-based benefits
• Potential FICA savings for employer and employee
• Foundation for adding FSA, DCAP, or HSA later
• Often lower 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, administration, and professional review
• Mid-year changes limited to qualifying events

Compatibility

POP can coordinate with many benefit programs. FSA, DCAP, and certain HSA payroll contributions may use the cafeteria-plan framework. Qualified transportation fringe benefits should be documented separately under IRC Section 132(f).

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 the applicable monthly limit for transit and parking; verify current IRS limits
• Employer can subsidize or fund entirely
• Election can change monthly (flexible)
• May reduce FICA for both parties on eligible deductions
• 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

Can be offered alongside other benefits, but Transit/Parking is governed by IRC 132(f), separate from medical/dependent care benefits under Section 125.