What is the primary eligibility criterion for self-employed sole proprietors to qualify for a Section 105 HRA?

Self-employed sole proprietors qualify for a Section 105 Health Reimbursement Arrangement (HRA) primarily based on having no employees except possibly a spouse. This eligibility criterion is designed to allow self-employed individuals to set up tax-advantaged health reimbursement plans that specifically cater to their situations. A Section 105 HRA is intended to reimburse employees for qualified medical expenses, and for solo practitioners or sole proprietors, it is structured to benefit them without the complexities of having additional employees in the mix.

When a sole proprietor has no employees other than a spouse, they can utilize this arrangement to cover their medical expenses in a tax-efficient manner. This provision acknowledges the unique circumstances of self-employment, where traditional employer-employee structures do not apply in the same way as they do in larger organizations. Other eligibility criteria, such as organizational membership or state tax filing, do not contribute to the foundation of accessing a Section 105 HRA for sole proprietors in this context, making the specific criterion of having no employees except a spouse the correct choice.