An affordable, flexible health benefit option for companies with fewer than 50 FTE employees.
QSEHRA stands for Qualified Small Employer Health Reimbursement Arrangement. It’s an alternative to traditional group health care plans that allows small businesses with fewer than 50 full-time employees to reimburse employees for individual health insurance premiums and medical expenses.
1. Employer sets a monthly allowance
Choose a monthly reimbursement amount up to the IRS annual maximum. There is no minimum—you set what fits your budget.
2. Employees choose coverage
Employees can get reimbursed for any qualifying coverage, including individual plans, spouse’s group plan, etc.
3. Employees submit expenses
Employees submit proof of their health insurance premium or other eligible medical expenses through Benafica’s administration platform.
4. Tax-free reimbursement
Approved expenses are reimbursed to the employee, tax-free for both the employer and the employee. We handle the substantiation, compliance, and payment processing.
For the 2026 plan year, employers can offer up to:
$6,450 for individual employees ($537.50 per month)
$13,100 for employee + family ($1,091.66 per month)
QSEHRA is designed exclusively for small employers.
To qualify, your business must meet three requirements:
Employers with fewer than 50 full-time equivalent employees that do not offer a group health plan or certain other employer-sponsored coverage can offer a QSEHRA.
No. An employer can generally establish a QSEHRA even if it has only one eligible employee.
Yes, but QSEHRA generally must be offered on the same terms to eligible full-time and part-time employees. However, you can structure the reimbursement amount to vary based on permitted factors, such as age and family size.
Yes, but eligibility depends on the business’s tax structure. Sole proprietors generally cannot participate as employees, while LLCs and S corporations may offer a QSEHRA if they meet the applicable requirements.
A QSEHRA can reimburse eligible health insurance premiums and qualified medical expenses, including deductibles, copays, prescriptions, dental and vision expenses, and other Section 213(d) medical expenses (if you so choose).
To receive tax-free QSEHRA reimbursements, employees must generally have minimum essential coverage (MEC). This can include individual health insurance, Marketplace coverage, Medicare, or coverage through a spouse’s employer-sponsored group health plan.
You only reimburse the amount the employee actually pays for an eligible expense. Unclaimed money stays with the business.
No. To offer a QSEHRA, an employer must not offer a group health plan or certain other employer-sponsored health benefits.
No. A QSEHRA is not subject to COBRA. When an employee leaves the company, their QSEHRA reimbursement ends, but they keep their individual health insurance policy. The coverage belongs to the employee, not the employer, so they can continue the policy on their own (or through a spouse’s plan, if applicable).
A QSEHRA can reduce the amount of premium tax credit an employee is eligible to receive. The impact depends on the employee’s QSEHRA allowance and household income. Employees need to report any QSEHRA offerings so tax credits can be adjusted.
A QSEHRA can typically be set up in 30-90 days, depending on your business and how quickly you provide the information needed to get started. Once your plan is in place, employees can be onboarded and begin using their benefit.
Starting early gives everyone more time to prepare and helps make the transition to an ICHRA as smooth as possible.
Yes. You don’t have to wait for the end of the year to start a QSEHRA. What will happen is employees will enroll for the remainder of the current calendar year, and then have additional enrollment in the Fall for the next calendar year.
What happens to an employee’s premium tax credit eligibility when they get offered ICHRA or QSEHRA dollars? Learn more about how each HRA coordinates with premium tax credits and things you should consider as an employer before you implement a plan.
Qualified Small Employer HRA (QSEHRA) limits for 2026 have been updated by the IRS. These contribution rules limit how much a small employer can contribute to employee health insurance premiums for the year. See the updated amounts for 2026 QSEHRAs.
Open enrollment season is the perfect reminder to review your employee health benefits strategy. With rising costs and new 2026 regulations ahead, now is the time to ensure your plan supports both your business and your team.
Talk to Benafica about setting up an ICHRA or QSEHRA for your business.
We’ll help you choose the right HRA type, design employee classes, and handle all the administration.
Call us at 651-287-3253 or fill out the form below.
