QSEHRA vs. ICHRA

Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs) and Individual Coverage Health Reimbursement Arrangements (ICHRAs) both allow companies to set monthly amounts to be paid out for health insurance purposes through the HRA. They free employers and employees from the burden of the one-size-fits-all traditional group plan structure. Each of these HRAs serves a similar purpose but have many differences that make them unique and essential to the success of an alternative form of group health insurance. We’ll address these similarities and differences here:

	QSEHRA	ICHRA
​Law Enacted	December 2016	June 2019
Applicable Company Size	49 or fewer full-time employees that offer no employer group health plan (minimum size 1)	Any size group (minimum size 1)
Considered a Group Health Plan	No	Yes
Contribution Guidelines	Companies can offer different contribution allowances based on age and family status, but maximum contributions apply ($5,850 single, $11,800 family annual limits in 2023)	Companies can offer different allowances based on age, family status, and employee class. No maximum contributions apply
Healthcare Purchase	Employees purchase healthcare insurance based on their specific needs	Employees purchase healthcare insurance based on their specific needs
Offered with a group plan	Company can't offer a group medical, dental, or vision plan	Yes, but the company can't offer both the group plan and the HRA to the same employee class
Employee Eligibility	All full-time employees are eligible. Part-time employees may also be included but the HRA must be offered on the same terms	Company determines the eligibility guidelines according to each employee class, but the HRA must be offered on the same terms to all employees in each class
Coverage requirements	Employees must have minimum essential coverage	Employees must have individual major medical coverage
Effects of Premium Tax Credits	Employees can receive premium tax credits, but the amount received is reduced from the HRA allowance	Employees are not eligible for premium tax credits if the employer contribution is considered affordable
COBRA	Not subject to COBRA	Subject to COBRA for employers with 20 or more employees
Medicare	Integrates with Medicare	Integrates with Medicare
Waiving Coverage	Employees may not waive coverage	Employees may waive coverage
Previous Employees	May not participate	May participate in an ICHRA assuming they continue to have individual major medical coverage or Medicare
ERISA	Applies	Applies
Flexibility	Reimburse qualified medical expenses – exclusively available to small employers	Covers individual health insurance premiums

In summary, QSEHRAs and ICHRAs are both valuable health reimbursement arrangements, each catering to different employer sizes and preferences. Understanding each option can help employers make informed decisions about the best fit for their organization and employees.