An affordable, flexible health benefit option for companies with fewer than 50 full-time 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.
Instead of purchasing and managing a traditional group health insurance plan, employers set a monthly allowance amount. Employees use that allowance to purchase the individual health plan that works best for them and their families, then submit their expenses for reimbursement.
Looking for an option for larger companies? Try ICHRA.
Choose a monthly reimbursement amount up to the IRS annual maximum. There is no minimum—you set what fits your budget.
Employees purchase individual health insurance that meets
minimum essential coverage (MEC) requirements. They can shop on the ACA marketplace or through a private carrier.
Employees submit proof of their health insurance premium or other eligible medical expenses through Benafica’s administration platform.
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:
With traditional group health insurance, the employer selects and sponsors a single plan for all employees. With a QSEHRA, the employer instead sets a defined monthly reimbursement allowance, and employees choose the individual health plan that best fits their needs. The employer then reimburses employees for eligible expenses, up to the allowance limit. Unused funds stay with the employer.
This approach gives small businesses a way to offer full-coverage health insurance in a simpler way.
Employers can set up their QSEHRA to reimburse insurance premiums only or insurance premiums + qualified medical expenses under IRS Section 213(d).
QSEHRA can also uniquely be used to reimburse certain out-of-pocket costs tied to a spouse’s group health plan—something ICHRA doesn’t allow.
QSEHRA is designed to be simple and fair. If you offer it, all of your full-time W-2 employees are generally eligible to participate. You can’t pick and choose who gets the benefit—it needs to be offered on the same terms to everyone in that group.
You can also vary contributions by family status—but again, it needs to be applied on the same terms for those eligible.
There are a few categories of employees you’re allowed to exclude, including:
QSEHRA can impact an employee’s eligibility for ACA premium tax credits depending on whether it’s considered “affordable” under IRS rules.
Getting started with a QSEHRA is straightforward:
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.
