Running a restaurant means making financial decisions with very little margin for error. Health insurance has historically been one of the most difficult of those decisions, with traditional group plans presenting restaurant owners with a choice between absorbing unpredictable premium increases, limiting coverage to only a portion of the workforce, or forgoing a health benefit altogether.
In Part 1 of this series, we examined why that difficulty is structural rather than incidental, covering the specific pain points that make traditional group health insurance a poor fit for the restaurant environment: premium volatility, eligibility gaps, participation minimums, one-size-fits-all plan design, administrative burden, and the compounding effect of high turnover.
Health Reimbursement Arrangements (HRAs) take a different approach to each of those problems. Rather than locking your operation into a group policy with unpredictable renewal costs and rigid plan requirements, an HRA lets you set a defined monthly reimbursement amount by employee class. Your kitchen leadership, your part-time front-of-house staff, and your salaried managers can each access coverage that fits their individual situation, and you reimburse them up to your set amount, tax-free. Your costs are fixed at the outset. Their coverage is portable. And the administrative overhead that consumes so much time under a group plan is largely eliminated.
In this guide, we will walk through how HRAs work in a restaurant context, the differences between ICHRA and QSEHRA, what to think through before making the switch, and how to determine which structure is right for your operation.
How HRAs work for restaurant employee wellness and benefits
Health Reimbursement Arrangements change the fundamental structure of how restaurant owners provide health benefits. Rather than purchasing a group policy and managing it on behalf of your employees, you set a fixed monthly reimbursement amount and employees use it toward the cost of individual health insurance coverage they select themselves. You reimburse them tax-free, up to your designated amount, after they provide proof of coverage. Your costs are defined in advance. Employees choose plans that fit their own situations. And the administrative complexity of managing a group policy is largely removed from your operation.
There are two types of HRAs most applicable to restaurant owners and operators:
QSEHRA (Qualified Small Employer HRA): Designed for restaurants with fewer than 50 full-time equivalent employees. As of 2025, annual reimbursement limits are $6,450 for single coverage and $13,100 for family coverage. All eligible full-time employees must be offered the same reimbursement amount, keeping the structure simple and consistent.
Learn more about QSEHRA limits in 2026
ICHRA (Individual Coverage HRA): Available to restaurant groups of any size with no cap on reimbursement amounts. ICHRA allows you to establish different employee classes and offer different reimbursement amounts to each, making it well suited to the layered compensation structure of a multi-concept or multi-location operation.
How HRAs address the specific challenges restaurant owners face
You know your costs before the year begins
With an HRA, the reimbursement amount you set is the cost you carry. It does not adjust based on your employees’ claims history. It does not increase at renewal because a kitchen employee had a costly hospitalization. You determine a fixed monthly amount per employee class at the start of the plan year, and that figure holds.
For restaurant owners who are managing food cost percentages, labor ratios, and revenue variability on a daily basis, having a health benefits line item that behaves predictably is a meaningful operational improvement. You can build that number into your budget and your unit economics with confidence, which makes multi-year financial planning considerably more straightforward.
More of your workforce can be covered
HRAs are not subject to the participation minimums that put group coverage at risk. You can offer the benefit across your workforce without the anxiety of hitting an enrollment threshold. Under ICHRA, you can extend coverage to part-time employees who would not qualify under a group plan. Employees who might have declined group coverage due to premium costs may qualify for ACA marketplace subsidies that bring their individual premiums down significantly, making the benefit more accessible at every compensation level on your team.
Broader access to health coverage strengthens restaurant employee wellness and has a measurable effect on retention. Employees who have access to meaningful health benefits tend to remain with an employer longer, which carries real value in an industry where turnover costs are substantial.
Benefits can reflect the actual structure of your operation
ICHRA’s class-based design gives restaurant owners and operators a level of flexibility that group plans simply do not offer. You can set different reimbursement amounts for full-time versus part-time employees, for salaried managers versus hourly staff, and for employees across different locations if you operate multiple concepts. For a restaurant group managing several properties, this means you can align benefit levels with compensation structures and local market conditions rather than applying a single standard across operations that may look quite different from one another.
It also gives you a targeted tool for addressing retention challenges in specific roles. If you are consistently struggling to retain experienced kitchen leadership, you can structure a more competitive reimbursement for that employee class without extending the same level of benefit to every part-time hire across your portfolio.
No enrollment threshold to maintain
There is no minimum participation requirement with an HRA. Employees who are already covered through a spouse’s employer plan, a parent’s plan, or a government program simply will not claim the reimbursement. You extend the benefit to everyone in the eligible class, and those who need it use it. Your ability to offer and maintain the benefit is not dependent on how many employees opt in, which eliminates one of the more unpredictable risks associated with running group coverage in a high-turnover environment.
Day-to-day administration is manageable
Once an HRA is established through an administrator like Take Command, the ongoing administrative requirements are minimal. Employees enroll in individual coverage during the marketplace open enrollment period, which runs from November 1 through January 15, or during a qualifying life event. They submit proof of coverage, and reimbursements process automatically on a monthly basis.
Dan B., a Take Command customer, shares his experience:
“In a complex area of administration, Take Command has provided us with a valuable benefit for our employees. They’re responsive and knowledgeable when we have questions. We have appreciated the value of their QSEHRA plan for our employees for the past three years.”
For restaurant owners, this means no group enrollment meetings to coordinate across morning and evening shifts. No carrier communications to manage. No COBRA administration to track for every employee who leaves. The ongoing workload associated with a traditional group plan is largely replaced by a straightforward reimbursement process that runs with minimal intervention.
Coverage is not tied to continued employment
Because employees own their individual health insurance policies, their coverage is not contingent on staying with your restaurant. When an employee departs, they keep their plan and assume responsibility for the premiums going forward. There is no COBRA obligation for you to administer, no gap in coverage for the employee to navigate, and no paperwork trail to maintain.
In an industry where turnover is a structural reality, this simplifies offboarding considerably. It also means that the employees who remain are doing so because they choose to, not because leaving would mean losing their health coverage.
ICHRA vs. QSEHRA: Choosing the right structure for your operation
For independent restaurant owners with fewer than 50 employees, QSEHRA offers a straightforward entry point. The contribution limits are sufficient for many markets, the structure is simple, and the administrative requirements are minimal. If your primary goal is to offer a meaningful health benefit without building out a complex plan design, QSEHRA is worth serious consideration.
For restaurant groups operating at larger scale, managing multiple locations, or working with a workforce that spans meaningfully different compensation levels and employment types, ICHRA offers the flexibility to build a benefit structure that actually reflects how your business is organized. The ability to create distinct employee classes, set different reimbursement amounts by location or role, and operate without contribution caps makes ICHRA a better fit as operational complexity increases.
Learn more about ICHRA employee classes
Many operators begin with QSEHRA and transition to ICHRA as their workforce grows or their benefit strategy becomes more sophisticated.
Is an HRA the right fit for your restaurant?
Health insurance in the restaurant industry has always been a difficult problem to solve, and traditional group plans have not solved it. This is true across the board, from fast food and QSR operators dealing with high turnover and hourly workforces, to upscale restaurants where retaining experienced front- and back-of-house staff is a competitive priority. The financial structure is misaligned with thin-margin operations. The eligibility and participation requirements do not fit a variable workforce. The administrative demands fall on owners and managers who are already carrying significant operational responsibility.
HRAs address those structural problems directly. They convert an unpredictable expense into a fixed cost, extend flexibility across different employee classes and locations, eliminate participation risk, and reduce the ongoing administrative burden to something a lean operation can realistically manage.
According to SHRM’s 2025 Employee Benefits Survey, 88% of employers rate health care benefits as either extremely or very important to their workforces.3 For restaurant owners competing for experienced staff in a tight labor market, offering a credible and sustainable health benefit is an increasingly important part of the overall compensation conversation.
If you are ready to explore whether an HRA is the right structure for your operation, talk to a Take Command expert about your specific situation.
FAQs
Can restaurant owners offer an HRA if they have both full-time and part-time employees?
Yes, and this is one of the areas where HRAs are particularly well suited to the restaurant industry. Under ICHRA, you can establish separate employee classes for full-time and part-time staff and offer different reimbursement amounts to each. You are not required to offer the same benefit to every employee, which gives you flexibility that a traditional group plan simply does not provide.
How do HRAs work for tipped employees whose income varies week to week?
Tipped employees participate in an HRA the same way any other employee does. Their reimbursement amount is fixed regardless of what they earn in tips in a given week. Where income variability does matter is in marketplace subsidy eligibility, since premium tax credits are based on projected annual household income. Take Command helps tipped employees estimate their income and understand what subsidies they may qualify for before they enroll.
Can a restaurant group use an HRA across multiple locations in different states?
Yes. Because each employee purchases individual coverage in their own state of residence, there is no need to find a group plan with adequate provider networks across every market you operate in. ICHRA also allows you to set different reimbursement amounts by location, which lets you account for the significant variation in insurance costs from one state to another.
Are HRAs a viable option for restaurants that have never offered health benefits before?
Yes, and in some ways an HRA is a more practical starting point than a group plan for operators who are offering health benefits for the first time. There is no minimum contribution requirement, the cost is defined in advance, and the administrative infrastructure is handled by your HRA administrator rather than internally. It allows you to enter the benefits space without taking on the full complexity of managing a group policy.
What happens to an employee’s coverage if the restaurant closes or changes ownership?
Because employees own their individual health insurance policies, their coverage is not tied to the restaurant’s operational status. If a location closes or the business changes hands, employees keep their plans and simply pay the premiums themselves going forward. This is a meaningful distinction from group coverage, where a business closure or ownership change can leave employees scrambling to find replacement coverage on short notice.
References
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SHRM, 2025 Employee Benefits Survey Executive Summary. https://www.shrm.org/content/dam/en/shrm/topics-tools/research/employee-benefits/2025_annual_benefits_survey_executive_summary.pdf
