Fort Lauderdale anchors one of Florida's most dynamic real estate submarkets. Broward County's blend of luxury waterfront properties along the Intracoastal and New River — Fort Lauderdale has more miles of navigable waterways than Venice, Italy — and a strong mid-market inland inventory creates demand for specialized brokerages catering to both international buyers and domestic relocation clients. Managing brokers in this market can earn well into six figures, while their administrative and transaction staff earn more modest salaries. That income gap has direct implications for health plan compliance.
When a Fort Lauderdale real estate brokerage installs a self-insured health arrangement — such as a Health Reimbursement Arrangement (HRA) or a self-funded plan — to cover its W-2 employees, IRC Section 105(h) requires that the plan not favor highly compensated individuals (HCIs) over lower-paid staff. Understanding these rules and building a compliant plan design is essential before the first benefit dollar is distributed.
A typical Fort Lauderdale luxury brokerage might have a principal broker earning $250,000+, one or two buyer's agents on W-2 salaries, and several transaction coordinators and administrative staff. The 1099 contract agents — often the numerical majority — are invisible to 105(h) testing. Only W-2 employees count.
This structure commonly produces a testing population of 4–8 W-2 employees with the principal broker as the clear HCI and the remaining staff as non-HCIs. The plan must cover all non-HCI W-2 employees on the same terms as the principal to pass both the eligibility and benefits tests.
The Eligibility Test. A self-insured plan satisfies the eligibility test if it benefits at least 70% of all non-HCI employees, or benefits at least 80% of all eligible employees when at least 70% of all employees are eligible. For a 6-employee brokerage with 1 HCI and 5 non-HCIs, the plan must cover at least 4 of the 5 non-HCIs (80%) to satisfy the 70% safe harbor. Covering all 5 is the simplest approach.
The Benefits Test. The plan must provide to non-HCI employees all benefits that are provided to any HCI under the plan. This means the plan document cannot contain any provision that restricts richer benefits (higher reimbursement limits, more comprehensive coverage tiers, lower deductibles) to employees above a certain salary or holding certain positions. The principal broker and the transaction coordinator must have access to identical plan options.
Fort Lauderdale brokerages with fewer than 50 employees that do not sponsor a traditional group health plan may use a Qualified Small Employer HRA (QSEHRA) to reimburse employees' individual health insurance premiums and out-of-pocket costs on a tax-favored basis. QSEHRAs are popular with lean brokerage operations because they eliminate the need to select and manage a group plan.
However, QSEHRA contributions are subject to 105(h). The IRS requires that the same maximum annual benefit amount be offered to all eligible employees — with only two permitted variations: higher amounts for employees with family coverage compared to self-only coverage, and adjustments for age (up to a 3:1 ratio). An HCI cannot receive a higher QSEHRA benefit solely because of their compensation or title.
For 2026, the QSEHRA contribution limits are $6,350 per year for self-only coverage and $12,800 per year for family coverage. These apply uniformly across all W-2 employees enrolled in the arrangement.
| Compliance Step | Frequency | Who Performs |
|---|---|---|
| Compile W-2 employee census (exclude 1099 agents) | Annually | HR / Owner / Payroll provider |
| Identify HCIs under 105(h) definition | Annually | HR / TPA / Benefits advisor |
| Run eligibility test (70% non-HCI coverage) | Annually | TPA / Benefits counsel |
| Run benefits test (equal plan terms for all) | Annually | TPA / Benefits counsel |
| Document testing results | Annually | HR / TPA |
| Report excess reimbursements on W-2 if plan fails | Annually (if applicable) | Payroll provider / CPA |
| Review plan document for prohibited distinctions | At plan setup + renewal | Benefits counsel |
Failing to Include New W-2 Hires Mid-Plan-Year. Brokerages that grow their operations staff mid-year sometimes fail to add new W-2 hires to the plan within the plan's waiting period. Excluding eligible non-HCI employees from coverage can tip the eligibility test into failure territory. Set calendar reminders to enroll new W-2 employees within the applicable waiting period window.
Using the Wrong HCI Definition. The 105(h) HCI definition differs from the HCE definition used in 401(k) and Section 125 testing. Applying the wrong definition when identifying who is "highly compensated" can cause under- or over-counting that skews test results. Always use the three-prong 105(h) definition: top 5 officers, 10%+ shareholders, and top 25% of employees by compensation.
Talk to a licensed advisor about health plan nondiscrimination compliance for your Fort Lauderdale real estate brokerage.