Published: June 23, 2026.
QSEHRA is the qualified small employer health reimbursement arrangement. Businesses with fewer than 50 full time equivalent employees can reimburse workers for individual health insurance premiums up to IRS annual limits.
Key Takeaways
- QSEHRA is the qualified small employer health reimbursement arrangement. Businesses with fewer than 50 full time equivalent employees can reimburse workers for individual health insurance premiums up to IRS annual limits.
- QSEHRA must be offered on the same terms to all eligible employees in a class. The employer sets the monthly allowance; employees buy individual coverage and submit premiums for reimbursement.
- Employees with a QSEHRA must report the benefit when applying for APTC. The Marketplace reduces APTC by the QSEHRA allowance amount. Brokers should model net cost after both subsidy and reimbursement.
- Many small employers outgrow QSEHRA limits and evaluate ICHRA for more flexible class design and higher reimbursement caps.
QSEHRA must be offered on the same terms to all eligible employees in a class. The employer sets the monthly allowance; employees buy individual coverage and submit premiums for reimbursement.
Employees with a QSEHRA must report the benefit when applying for APTC. The Marketplace reduces APTC by the QSEHRA allowance amount. Brokers should model net cost after both subsidy and reimbursement.
Many small employers outgrow QSEHRA limits and evaluate ICHRA for more flexible class design and higher reimbursement caps.
Related field notes
Related glossary terms
- ICHRA (Individual Coverage Health Reimbursement Arrangement)
- HRA (Health Reimbursement Arrangement)
- APTC (Advance Premium Tax Credit)
FAQ
Common broker questions about this term.
How is QSEHRA different from ICHRA?
QSEHRA is limited to employers with fewer than 50 FTEs and has annual IRS caps. ICHRA works for any employer size with more flexible class rules.
Can QSEHRA employees still get APTC?
Often yes, but APTC is reduced by the QSEHRA benefit amount. Run the combined math before recommending a Marketplace plan.
Must QSEHRA employees buy Marketplace plans?
They must buy minimum essential coverage to receive tax free reimbursements. Marketplace and many off Marketplace individual plans qualify if they provide MEC.
