Short answer: A QSEHRA is only for employers with fewer than 50 FTEs and no group plan, has statutory dollar caps, and is not an ERISA plan (no COBRA). An ICHRA is for employers of any size, has no dollar cap, allows up to 11 employee classes, can run alongside a group plan for other classes, and IS an ERISA group health plan.
Both the Qualified Small Employer HRA (QSEHRA) and the Individual Coverage HRA (ICHRA) let an employer reimburse employees tax-free for individual health insurance, but they suit very different situations.
QSEHRA comes from the 21st Century Cures Act and is limited to employers with fewer than 50 full-time-equivalent employees that offer no group health plan. It has statutory annual caps (for 2026, $6,450 self-only and $13,100 family) and terms must be uniform (varying only by self-only vs. family, age, and family size). Importantly, a QSEHRA is not a group health plan, so there is no ERISA plan, no COBRA, and reimbursement is reported with W-2 Code FF.
ICHRA is available to employers of any size, has no dollar cap, and allows up to 11 permissible employee classes with different allowances by class. It can be offered alongside a traditional group plan for other classes. But an ICHRA is an ERISA group health plan, so COBRA, Form 5500, and ACA reporting obligations attach.
A rough rule of thumb: a very small employer that wants simplicity and no ERISA exposure often prefers a QSEHRA; a larger employer, or one that wants higher or class-differentiated allowances, generally needs an ICHRA. The two also measure premium-tax-credit affordability against different benchmark plans (see the related FAQ).
Sources
- 21st Century Cures Act (QSEHRA); IRS Rev. Proc. 2025-32 (2026 QSEHRA caps).
- Individual Coverage HRA final rule, 84 FR 28888 (2019).
Content history
Originally published: June 16, 2026
Last reviewed: June 16, 2026