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ICHRA vs QSEHRA: Which is right for your small business?

Considerations for employers when choosing between health reimbursement accounts that can help your employees pay for health insurance

Author: Louise Norris

Date Posted: May 28, 2025

If you’re a small-business owner and you’d like to reimburse your employees, pre-tax, for the cost of health insurance that they buy on their own, you have two options: An ICHRA (Individual Coverage Health Reimbursement Arrangement) or a QSEHRA (Qualified Small Employer Health Reimbursement Arrangement).¹

As long as you have fewer than 50 full-time equivalent (FTE) employees and don’t also offer a group health plan, you have your choice of either an ICHRA or a QSEHRA. Note that only employers with fewer than 50 FTE employees can select a QSHERA.

Read our overviews of ICHRAs and QSEHRAs.

What are the differences between a QSEHRA and an ICHRA?

Here’s a summary of how these two types of health reimbursement arrangements compare, to help you determine which one will be a better fit for your business:

Key differences between ICHRA and QSEHRA
	ICHRA	QSEHRA
Eligible employer size	Available to employers of any size.²	The employer must have fewer than 50 full-time equivalent employees.³
Can the employer also offer a group health plan?	Yes, as long as the ICHRA and group plans are offered to different employee classes.⁴	No.³
Are there caps on how much an employer can reimburse?	No, this is up to the employer.⁴	Yes. In 2025, reimbursements are capped at $6,350 for a single employee, or $12,800 for an employee with family coverage.⁵ (Employers can set lower limits.)
Can employees use the benefit in addition to a Marketplace subsidy?	No.⁴ Learn more about Marketplace plan affordability and ICHRAs.	Yes, but the subsidy amount is reduced by the amount of the QSEHRA.⁶
Do employees get an individual-market special enrollment period when the reimbursement arrangement becomes available to them?	Yes.	Yes.
What type of coverage can employees have?	Individual-market coverage or Medicare.⁴	Any minimum essential coverage.⁷ (If it’s a group plan through their spouse’s employer, pre-tax QSEHRA reimbursement is likely not available, because group premiums are typically already paid with pre-tax dollars.)⁸
Can out-of-pocket medical expenses be reimbursed?	Yes, if allowed by the employer.⁴	Yes, if allowed by the employer.³
Are there minimum contribution or participation requirements?	No.⁹	No.¹⁰
Can different benefits be offered to different employees?	Yes, if you divide your employees into aauthorized classes and offer different benefits to different classes. (If any classes are being offered a traditional group plan instead of an ICHRA, each class must have at least 10 employees.)⁴	No, the QSEHRA must be offered on the same terms to all eligible employees. (Employees might receive different reimbursement amounts, depending on the receipts they submit for reimbursement.)¹⁰