What types of employers can establish an HRA?

An HRA may be established for any single employer or certain “related” employers. The employer installing an HRA may be of any ownership form (sole-proprietor, corporation, partnership, etc.). However, only owners of a “C” corporation may benefit directly from the plan. Certain individuals within the company, however, are prohibited from participating in the plan. Owners: Only owners who are also employees of a “C” corporation may participate in an HRA. Sole proprietors, partners within a partnership, owners of an LLC (filing as an S or a partnership), owners of an LLP and more than 2% owners of an S-Corporation are prohibited from participating. Owners’ Family Members: Rules of attribution apply to S corporations, thus more than 2% owner’s spouses, parents, children and grandchildren may not participate. Family members of C corporations, sole proprietors and partners in a partnership may participate in the plan.