Tampa Bay's real estate market has been one of the most active in Florida. Hillsborough County's combination of corporate relocations — including major tech and financial services firms establishing Bay area offices — and a sustained migration wave from higher-cost states pushed transaction volume and agent count to record levels in recent years. Many mid-size Tampa brokerages that once operated with just a managing broker and a part-time assistant now employ full operations teams: transaction coordinators, marketing directors, client experience managers, and salaried staff who expect real benefits.
That workforce expansion creates new compliance obligations. When a Tampa brokerage installs a health reimbursement arrangement or a self-funded health plan to cover its principal broker and operations team, federal nondiscrimination rules immediately apply. IRC Section 105(h) requires that self-insured health plans not discriminate in favor of highly compensated individuals — a requirement many growing brokerages discover only after setting up a plan that works great for the owner but inadvertently shortchanges administrative staff.
A typical Tampa real estate brokerage might employ 3–10 W-2 staff alongside 20–80 1099 agent-contractors. The W-2 team usually includes the managing broker or principal, an operations manager, transaction coordinators, and marketing or administrative personnel. The 1099 agents — no matter how many — are completely outside the Section 105(h) testing universe. Only W-2 employees count.
This concentration creates an important compliance dynamic: with a small W-2 population, the ratio of HCIs to non-HCIs can be unfavorable for testing purposes. A brokerage with the principal broker earning $180,000 and three coordinators each earning $50,000 has one HCI and three non-HCIs. The plan must cover all three non-HCIs (100%) and offer them the same benefits 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 (non-highly compensated individuals). Alternatively, the plan can satisfy the test if it benefits at least 80% of all eligible employees when at least 70% of all employees are eligible. The plan can also use a reasonable classification of employees that does not discriminate in favor of HCIs.
For a Tampa brokerage with 4 W-2 employees — 1 HCI and 3 non-HCIs — the plan must benefit at least 3 × 70% = 2.1 → 3 non-HCIs (rounding up to meet the threshold). In practice, covering all non-HCIs is the simplest way to satisfy this test for small brokerages.
The Benefits Test. The plan must provide each benefit made available to any HCI to all non-HCI employees as well. You cannot give the managing broker an HRA that reimburses expenses up to $10,000 per year while giving coordinators only $3,000. The reimbursement ceiling must be the same for all participants, or the plan must offer identical plan options regardless of compensation level.
Health Reimbursement Arrangements (HRAs) — employer-funded accounts that reimburse employees for qualified medical expenses — have become popular with small Tampa brokerages as an alternative to traditional group health coverage. Because employees can use HRAs to reimburse individual market premiums under an Individual Coverage HRA (ICHRA) framework, they offer flexibility that traditional group plans do not.
However, HRAs are self-insured plans subject to IRC 105(h). An ICHRA offered to the managing broker but not to W-2 operations staff will fail the eligibility test. ICHRAs can legitimately restrict eligibility to certain classes of employees (e.g., only full-time employees, or only employees in a specific work location), but the classification must be established before the plan year and must not effectively target HCIs while excluding non-HCIs.
An employer can also offer different ICHRA contribution amounts to different classes, but the permitted classes are defined by ACA regulations — they include full-time vs. part-time, seniority tiers, geographic location, and a few others. Compensation level is not a permitted class for ICHRA design purposes.
Tampa brokerages using fully insured group health plans (purchased from Florida Blue, Cigna, Aetna, etc.) are not subject to IRC 105(h) testing, but they remain subject to ACA Section 1557's prohibition on discrimination in covered health programs. Section 1557 prohibits discrimination based on race, color, national origin, sex, age, and disability in health programs receiving federal financial assistance.
For Tampa brokerages, this most commonly surfaces in plan design review: does the plan have exclusions that disproportionately harm women, racial minorities, or people with disabilities? Does the plan's cost-sharing structure create barriers for lower-income employees in ways that could be tied to protected class status? These are not routine compliance gaps for most small brokerages, but they warrant periodic legal review — especially for plans that have not been updated since pre-ACA designs were in place.
Step 1 — Identify your plan type. Fully insured or self-insured? HRA or traditional group plan? Your compliance path depends entirely on this determination.
Step 2 — Build your W-2 employee census. List every W-2 employee with their annual compensation, title, and current plan enrollment status. Exclude all 1099 agents.
Step 3 — Identify HCIs. Under 105(h), flag the five highest-paid officers, any 10%+ shareholders, and the top 25% of all employees by compensation. With a small staff, this may be only one person.
Step 4 — Run the eligibility and benefits tests. For self-insured plans: confirm that 70%+ of non-HCIs are eligible and that identical benefits are available to all participants regardless of HCI status.
Step 5 — Document and retain results. Keep testing documentation for at least six years. If the IRS ever questions your plan administration, testing records are the first line of defense.
Using 105(h) and 125 HCE definitions interchangeably. These tests use overlapping but distinct definitions. A compliance error in one test often results from applying the wrong employee classification.
Assuming the plan is compliant because it's small. There is no de minimis or small-employer exception to 105(h) for self-insured plans. Even a one-employee plan must comply if it covers an HCI.
Talk to a licensed advisor about health plan nondiscrimination compliance for your Tampa real estate brokerage.