In Part 1 of this series, we looked at why traditional group health insurance creates so many headaches for manufacturing companies: premiums that spike at renewal, coverage that treats a night-shift machine operator the same as a salaried plant manager, participation requirements that limit flexibility, and an administrative burden that lands on HR teams already stretched thin.
Manufacturing is not a one-size-fits-all industry, and your health benefits should not be either.
Health Reimbursement Arrangements (HRAs) take a fundamentally different approach. Rather than locking your company into a group policy with unpredictable costs and rigid plan options, an HRA lets you set a fixed monthly allowance per employee class. A production worker in Alabama, a skilled technician in Ohio, and a shift supervisor in California can each choose individual coverage that fits their own situation, and you reimburse them up to your set amount, tax-free. Your costs are fixed. Their coverage is portable. And the administrative complexity of managing a group plan largely disappears.
In this guide, we will walk through how HRAs work in a manufacturing context, break down the differences between ICHRA and QSEHRA, and cover what to think about before making the switch.
Understanding HRAs: A different approach to manufacturing industry health insurance
Health Reimbursement Arrangements change how manufacturing companies provide health benefits. Instead of purchasing a group policy, you give employees a monthly allowance to purchase individual health insurance coverage that fits their specific needs.
There are two primary types of HRAs relevant to manufacturing companies:
QSEHRA (Qualified Small Employer HRA): Designed for companies with fewer than 50 employees. As of 2025, the maximum reimbursement is $6,150 for single employee coverage and $12,450 for family coverage. All full-time employees must be offered the same benefit amount.
ICHRA (Individual Coverage HRA): Available to companies of any size with no contribution limits. Allows employers to create different employee classes, such as salaried vs. hourly, different facilities, different divisions, or different shifts, and offer different reimbursement amounts to each class.
Learn more about ICHRA employee classes
The mechanics are straightforward for both types: you set a monthly reimbursement amount, employees purchase individual health insurance on the ACA marketplace or through private carriers, and you reimburse them tax-free for their premiums up to your set amount. Employees maintain their individual coverage even if they change jobs, and you maintain complete cost predictability.
How HRAs solve manufacturing industry health insurance challenges
HRAs are not just a different way to provide health benefits for manufacturing employees. They are specifically designed to address the problems that make group insurance difficult.
Fixed, predictable costs
With an HRA, you decide exactly how much to contribute per employee or employee class. That number does not change unless you choose to change it. If you set a $500 monthly allowance for production workers and $600 for skilled technicians, those are the exact amounts you will spend per employee each month.
This transforms health benefits from a variable expense into a fixed cost, similar to wages. You can project your benefits costs for the next three to five years with complete confidence. When negotiating supply contracts or bidding on manufacturing projects, you know precisely what your labor and benefits costs will be.
Flexibility for diverse workforces and locations
ICHRA’s class-based structure solves the one-size-fits-all problem. You can offer different reimbursement amounts based on employment status (full-time vs. part-time), geographic location (different facilities or states), job category (production vs. skilled trades vs. management), salary vs. hourly status, division or business unit, and union vs. non-union status.
A manufacturing company with facilities in multiple states can offer different reimbursement amounts per location, reflecting the different insurance costs in each market. This ensures employees in all locations can access quality coverage without overpaying in low-cost areas.
Similarly, you might offer production workers one reimbursement level, skilled technicians another, and salaried management a third, aligning benefits with compensation levels and competitive market pressures for different roles.
Better access for shift workers
Individual health insurance creates more flexibility for shift workers. Employees can choose plans with telemedicine benefits for after-hours care, select providers with extended hours, or prioritize plans with urgent care networks that match their schedules.
The enrollment process is also simpler for shift workers. Instead of requiring everyone to attend group meetings during specific hours, employees can enroll in individual coverage online at any time during the open enrollment period (November 1 through January 15) or during qualifying life events. They can research plans, compare options, and make decisions on their own schedule without coordinating with HR’s availability.
Minimal administrative burden
HRA administration is dramatically simpler than managing group health insurance. Instead of coordinating enrollment across multiple shifts, managing COBRA, answering detailed coverage questions, and serving as the intermediary with insurance carriers, you work with an HRA administrator who handles the operational complexity.
With Take Command as your HRA administrator, we manage the plan document setup, compliance notices, employee education, reimbursement processing, and ongoing support. Your role is limited to strategic decisions: determining reimbursement amounts for each employee class and funding the HRA through your regular payroll process.
Employees enroll in individual coverage during open enrollment or qualifying life events. Take Command provides personalized guidance to help them navigate the marketplace, compare plans, and enroll in coverage that fits their needs and budget. Once enrolled, employees submit proof of coverage and reimbursements process automatically each month.
For most manufacturing companies, this reduces internal benefits administration time significantly, freeing up HR capacity for recruiting, safety programs, employee development, and other operational priorities.
No participation requirements
With an HRA, there is no minimum participation threshold. Whether 40% of your employees or 100% choose to enroll in individual coverage and claim reimbursements does not affect your ability to offer the benefit.
This is particularly valuable for manufacturing companies with diverse workforces. Employees covered under a spouse’s plan can decline individual coverage. Young employees on their parents’ plans can opt out. Part-time workers can choose whether to participate based on their needs.
You offer a valuable benefit to everyone eligible, but you are not forced to manipulate plan design or subsidize premiums just to hit participation targets. This allows for more efficient benefits spending focused on employees who actually need employer-sponsored coverage.
Employee choice improves satisfaction
When employees shop for individual coverage, they choose plans that fit their specific situations. A production worker in good health might select a high-deductible plan with lower premiums and contribute the savings to an HSA. An employee with ongoing medical needs can prioritize a plan with their current doctors in-network. Families can choose coverage with strong pediatric and maternity benefits.
This choice creates higher satisfaction with health benefits for manufacturing employees. Instead of being assigned a plan that may or may not work for their situation, employees actively select coverage they value. They understand what they are getting because they chose it.
“I’m just so happy that there was an option that quite frankly gave my employees a lot more options, and it’s more cost effective for me. So it’s really been a win-win,” shares Robert Carter, owner of All in One Delivery Partners LLC.
According to SHRM’s 2024 Employee Benefits Survey, 88% of employers rate health care-related benefits as either “extremely important” or “very important” to their workforces¹. When manufacturing companies compete for skilled workers in tight labor markets, the connection between health benefits satisfaction and retention becomes critically important.
Portability benefits employees and eliminates COBRA
Individual health insurance is portable. When an employee leaves your company, their health insurance does not end. They simply continue paying the premiums themselves. This continuity benefits the employee by avoiding coverage gaps and eliminates COBRA administration for your company.
COBRA compliance is particularly burdensome for manufacturing companies. You need to track former employees for 18 to 36 months, process monthly premium payments, manage coverage changes, and maintain detailed documentation. For HR teams already stretched thin, eliminating COBRA administration represents a significant operational improvement.
ICHRA vs. QSEHRA: Choosing the right fit for your manufacturing facility
For manufacturing companies with fewer than 50 employees, the choice between QSEHRA and ICHRA depends on your specific needs and goals.
Choose QSEHRA if:
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You want the simplest possible implementation
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The contribution limits ($6,450 single / $13,100 family annually) provide sufficient support for your market
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You are comfortable offering the same benefit amount to all full-time employees
- You want minimal ongoing administration
Learn more about QSEHRA limits in 2026
Choose ICHRA if:
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You want to offer different amounts to different employee groups (production vs. skilled trades vs. management)
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You operate multiple facilities and want to adjust for geographic cost differences
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The QSEHRA contribution limits feel restrictive for competitive benefits in your market
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You want flexibility to adjust contribution amounts as your company grows
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You have union and non-union employees and want to structure benefits differently
Many small manufacturing companies start with QSEHRA for its simplicity and can transition to ICHRA later as they grow or need more flexibility in plan design.
Making the decision
The decision to switch from group insurance to an HRA should be based on clear analysis of your current situation and future needs. For most manufacturing companies facing group insurance renewals with double-digit increases, the financial case for HRAs is clear. The combination of immediate cost savings, long-term predictability, administrative simplification, and employee choice makes HRAs a strategic solution for manufacturing operations.
Working with an experienced HRA administrator who understands manufacturing operations ensures a smooth transition and ongoing compliance. The administrator handles plan documents, employee education, reimbursement processing, and regulatory requirements, allowing you to focus on running your manufacturing operation while offering competitive health benefits for manufacturing employees.
Traditional manufacturing industry health insurance does not have to mean unpredictable costs and administrative headaches. HRAs provide a solution that gives you fixed budgets, simplified operations, and the competitive benefits you need to attract and retain skilled workers.
Ready to gain control over your manufacturing company’s health insurance costs? Talk to a Take Command expert to explore how ICHRA or QSEHRA can provide predictable budgets and competitive health benefits for manufacturing employees across all your facilities.
Frequently asked questions about HRAs for manufacturing companies
Can we offer different HRA amounts to union and non-union employees?
Yes. Union status is a permissible employee class under ICHRA regulations, allowing you to offer different reimbursement amounts to unionized and non-unionized workers. This can be particularly valuable for manufacturing companies with both employee groups, as it allows you to structure benefits according to collective bargaining agreements while also providing competitive benefits to non-union staff.
How do HRAs work for employees at multiple facilities in different states?
Each employee purchases individual coverage in their state of residence, so you do not need to find a group plan with adequate networks across all your locations. ICHRA allows you to create geographic classes and offer different reimbursement amounts by state or region to account for cost differences. This makes multi-facility manufacturing operations much simpler to manage than with traditional group insurance.
What happens if we acquire another manufacturing facility mid-year?
With an HRA, adding employees from an acquisition is straightforward. New employees become eligible for the HRA based on your plan rules (typically immediately or after a waiting period) and can enroll in individual coverage during a qualifying life event. You do not need to worry about whether your group plan has adequate networks in the new location or negotiate mid-year changes with insurance carriers.
Can shift workers enroll in coverage outside of normal business hours?
Yes. Individual marketplace enrollment happens online and employees can complete the process at any time that works for their schedule during the open enrollment period (November 1 through January 15) or during qualifying life events. Take Command also provides support by phone and email during extended hours to accommodate employees working different shifts.
What if an employee cannot afford the full premium even with our HRA reimbursement?
Many manufacturing employees qualify for premium tax credits on the ACA marketplace based on household income. Take Command helps employees understand whether they are eligible for these subsidies and how to apply them. In many cases, the combination of your HRA reimbursement and marketplace subsidies means employees pay very little out of pocket for quality coverage.
How do we handle seasonal workers or temporary employees?
You have complete flexibility to decide which employee classes are eligible for your HRA. Many manufacturing companies offer HRAs only to full-time permanent employees, or create a separate class for seasonal workers with different (or no) reimbursement amounts. You can structure eligibility requirements and contribution amounts based on what makes sense for your workforce and business needs.
References
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SHRM, 2024 Employee Benefits Survey Executive Summary. https://shrm-res.cloudinary.com/image/upload/v1718810601/Employee%20Benefits/2024_Annual_Benefits_Survey_Executive_Summary.pdf
