ICHRA v. QSEHRA - How Do They Compare?
ICHRA v. QSEHRA - How Do They Compare?
5/26/2026
Health Reimbursement Arrangements (HRAs) are employer-funded arrangements that reimburse employees tax-free for out-of-pocket medical expenses and/or premiums. Two key types — ICHRAs and QSEHRAs — share a common foundation but differ significantly in design, eligibility, and flexibility.
Employer Eligibility
- QSEHRAs are restricted to employers with fewer than 50 full-time equivalent employees that do not offer any group health plan.
- ICHRAs, by contrast, are available to employers of any size and can coexist with a group health plan — as long as the two are offered to different classes of employees.
Contribution Limits
- QSEHRAs are subject to annual IRS caps — $6,450 for self-only and $13,100 for family coverage in 2026.
- ICHRAs have no statutory contribution ceiling; employers set amounts at their discretion. However, Applicable Large Employers (ALEs) offering an ICHRA must ensure contributions result in affordable coverage to avoid ACA penalties.
Employee Classes & Contribution Flexibility
- QSEHRAs use a single-class model — all eligible employees receive the same terms, with variation only by age and family size.
- ICHRAs allow employers to define distinct classes (e.g., full-time vs. part-time, salaried vs. hourly, geographic area), with each class potentially receiving different contribution amounts.
Coverage Requirements
- QSEHRAs require only Minimum Essential Coverage (MEC), which is broader and includes a spouse's group plan, Medicaid, and TRICARE. This flexibility is a meaningful advantage for QSEHRAs when employees have access to spousal coverage.
- ICHRA participants must be enrolled in individual health insurance or Medicare. Coverage under a spouse's employer group plan does not qualify.
Key QSEHRA Limitation
Employers offering a QSEHRA cannot offer any group health plan to any employee — including excepted benefit plans such as dental, vision, life insurance, disability, or indemnity coverage. The only exception is HSA contributions, which are permitted alongside a QSEHRA only if the QSEHRA reimburses premiums exclusively.
ICHRA vs. QSEHRA Comparison
| Feature | ICHRA | QSEHRA |
|---|---|---|
| Eligible Employers | Employers of any size | Small employers (<50 FTEs) who do NOT offer a group medical plan |
| Contribution Limits | Unlimited Employer Contributions | $6,450 for individuals / $13,100 for families (2026) |
| Coverage Requirements | Individual coverage or Medicare only | Minimum Essential Coverage - includes individual, Medicare, Medicaid, TRICARE, or spouse's group plan |
| Ability to Vary Contributions | By age, family size, and between allowable classes | By and family size only |
| ERISA, COBRA, & PCORI | Subject to ERISA, COBRA, and PCORI fees | Subject to ERISA and PCORI fee, not COBRA |
| Impact to Other Benefits | No restrictions on offering other non-medical benefits | Cannot offer other 'group plans,' including dental, vision, life, or disability coverage |
Conclusion
ICHRAs and QSEHRAs both offer tax-advantaged ways to help employees pay for health coverage, however they serve different employer profiles.
Resources
- Amwins HRA Comparison Chart
- Amwins Compliance Library - Health Reimbursement Arrangements (HRAs)
- Health Reimbursement Arrangements (HRAs) | IRS
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