Who can offer a QSEHRA?
A QSEHRA is limited to employers with fewer than 50 full-time-equivalent employees that do NOT offer a group health plan, and it must be offered to all full-time employees on the same terms.
QSEHRAs
A Qualified Small Employer HRA lets an employer with fewer than 50 employees and no group plan reimburse workers tax-free for premiums and medical costs. The IRS caps the annual amount, and employees must have minimum essential coverage to receive it tax-free.
Can employees use QSEHRA money to buy their own health insurance?
Yes. QSEHRA funds can reimburse individual-market premiums and other qualified medical expenses tax-free, as long as the employee has minimum essential coverage and substantiates the expense.
ICHRA vs. QSEHRA: which one fits my business?
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.
How does an ICHRA or QSEHRA affect an employee’s premium tax credit?
If the HRA offer is “affordable,” it blocks the premium tax credit: the employee takes the HRA instead. If it’s unaffordable, the employee may opt out and keep the PTC. A QSEHRA also reduces the PTC dollar-for-dollar, while an ICHRA is all-or-nothing.