Hollywood, Florida occupies a unique and strategically valuable position in South Florida's real estate market — sandwiched between Fort Lauderdale and Miami, with direct access to both metros' buyer and seller pools. The city's mix of beachfront properties along the Hollywood Broadwalk, established inland neighborhoods like West Lake, and diverse condo and townhome inventory makes Hollywood a diverse-transaction market. Real estate brokerages here often serve clients who couldn't afford Brickell or Las Olas but want the South Florida waterfront lifestyle, and brokerage operations teams reflect that active, high-volume transaction environment.
As Hollywood brokerages have built out their W-2 operations staffs, employer health plan compliance has become increasingly relevant. IRC Section 105(h)'s nondiscrimination rules apply to any self-insured health arrangement offered by a Hollywood brokerage — including HRAs, self-funded medical plans, and QSEHRAs — and the consequences of non-compliance affect not just the brokerage's tax filings but the W-2 compensation reporting of its highest-paid employees. This guide covers the rules and the compliance steps.
A typical Hollywood brokerage has 1–3 HCIs — the principal broker(s) and any managing director-level employees in the top compensation quartile — and 4–8 non-HCI W-2 operations staff. Depending on the brokerage's structure, the principal broker may also be the sole shareholder of an S-corp, which affects how certain benefits are taxed but does not change the 105(h) HCI classification for plan testing purposes.
The 105(h) compliance requirement is clear: all W-2 non-HCI employees must be offered the same self-insured health benefits as HCIs. Offering the principal broker a $9,600 annual HRA reimbursement while offering coordinators nothing is a compliance failure. The simplest remedy is to extend the same HRA to all W-2 employees.
Eligibility Test. At least 70% of non-HCI W-2 employees must be eligible to benefit from the self-insured plan. For a brokerage with 2 HCIs and 6 non-HCIs, at least 5 of the 6 non-HCIs (83%) must be eligible. All 6 is safest.
Benefits Test. Every benefit option available to HCIs must be available to all eligible employees. Reimbursement ceilings, covered expense categories, and coverage tier options must be uniform. You cannot limit non-HCIs to lower reimbursement amounts or narrower expense categories than HCIs receive.
Option 1: Fully Insured Small-Group Plan. Purchase a group health plan from a Florida carrier. Eligible employees are offered the plan; employer pays a flat contribution toward premiums. No 105(h) testing required. Most predictable compliance path for a brokerage of 3–10 employees.
Option 2: QSEHRA. If fewer than 50 FTEs and no group plan, a QSEHRA reimburses individual health insurance premiums and medical costs tax-free. 2026 limits: $6,350/year self-only; $12,800/year family. All eligible W-2 employees receive the same maximum amounts. Easy to administer but still subject to 105(h).
Option 3: ICHRA. Allows different contribution amounts for different classes of employees — but the classes must be defined by legitimate criteria (full-time vs. part-time, geographic location, seniority), not compensation or HCI status. Within each class, contributions must be equal or age-adjusted only.
Option 4: Traditional HRA (Self-Insured). Flexible reimbursement arrangement, but fully subject to 105(h). All eligible employees must receive equal reimbursement limits. The simplest version: an HRA with the same annual maximum for all W-2 employees paired with a requirement that participants be enrolled in some form of qualifying health coverage.
Inconsistent Waiting Periods Targeting Non-HCIs. If the managing broker is enrolled immediately but coordinators face a 90-day waiting period, the plan may effectively cover only HCIs for much of the first quarter. While different waiting periods for different employee classes are permissible if consistently applied, the classes must be bona fide (e.g., full-time vs. part-time) rather than compensation-driven.
Administering the Plan Differently Than the Document States. A plan document that says "all eligible employees receive a $7,000 annual HRA" must be administered that way. If the managing broker informally receives reimbursements above the stated limit while coordinators are held to it, the actual administration controls for testing purposes — and the informal over-reimbursement creates a benefits test failure.
Talk to a licensed advisor about health plan nondiscrimination compliance for your Hollywood real estate brokerage.