This site is an independent educational resource. We are not a tax advisor, financial advisor, insurance broker, HSA administrator, or HRA administrator. Contribution limits and eligibility rules are sourced from IRS Publication 969, IRS Revenue Procedure 2025-19, IRS Notice 2026-05, and Healthcare.gov. Verified April 2026. Nothing here is personalised tax, financial, or medical advice. Consult a qualified tax professional or licensed insurance agent before making decisions about your health benefits.

HSA vs HRA

Updated April 2026

Offering HSA, QSEHRA, ICHRA, or EBHRA in 2026: a small employer's framework

Four real options in 2026 for small employers. Each has different cost structures, compliance burdens, and employee value. Here is the neutral decision framework.

Four-option comparison (2026)

Option2026 capWho qualifiesHSA compatibleAdmin cost
Group HDHP + HSA contribution$8,750 family HSA limitAny employerYesGroup carrier fees
QSEHRA$6,450 / $13,100Under 50 FTE, no group planNo (std design)$50-150/mo
ICHRANo IRS capAny employerNo (std design)$100-250/mo
EBHRA$2,200 flatAny employer; must have other coveragePossibly$30-80/mo

Decision framework by employer size

Under 10 employees

Group health plans are expensive and inflexible at this size. QSEHRA is typically the most cost-effective option - no group plan required, employees choose their own coverage, employer sets the budget. Setup through PeopleKeep or Take Command takes 1-2 weeks. Annual cost = reimbursements paid + ~$1,200-1,800 in admin fees.

10-49 employees

QSEHRA remains attractive at this size. ICHRA becomes worth considering if you want to offer different benefit amounts to different roles (e.g., higher reimbursement for full-time salaried vs part-time hourly). Group HDHP with HSA contribution is viable if you can negotiate competitive group rates (typically through a broker).

50-200 employees (ALE territory)

At 50+ FTE you are an Applicable Large Employer under the ACA and must offer minimum essential coverage or face penalties. ICHRA is the most common HRA choice at this size as it satisfies the employer mandate if affordable. QSEHRA is no longer available (50+ FTE). Group HDHP with HSA contribution remains viable and is often competitive.

Illustrative cost model: 10-employee small business

OptionAnnual employer costNotes
Group HDHP (employer pays 60%)$60,000-$90,00010 employees x ~$600-$900/mo employer share
QSEHRA ($3,600 self-only per employee)$36,000 + $1,500 adminFull employees; well below cap
ICHRA ($400/mo per employee)$48,000 + $2,400 adminNo cap, employer sets dollar
EBHRA only$22,000 + $600 adminEmployees must have other coverage; supplemental only

Illustrative only. Actual costs depend on location, employee ages, chosen benefit levels, and carrier pricing. Get quotes from at least three sources before deciding.

FAQ

What health benefits can a small employer with under 50 employees offer?+
A small employer (under 50 FTE) has four main options: (1) a group health plan - typically a group HDHP that employees pair with HSAs; (2) QSEHRA - no group plan required, reimburse up to $6,450 self / $13,100 family in 2026; (3) ICHRA - no IRS cap, any size employer, can offer different amounts to different employee classes; (4) EBHRA - $2,200 flat in 2026, limited to excepted benefits (copays, dental, vision, COBRA), requires employees have other coverage. A fifth non-option: doing nothing, which risks losing talent in competitive markets.
How much does it cost to set up a QSEHRA?+
QSEHRA administration typically costs $50-150 per month through a third-party administrator (PeopleKeep, Take Command Health, StretchDollar, Benafica). The employer sets the reimbursement amount up to the IRS cap ($6,450 / $13,100 in 2026). Total employer cost = reimbursement amounts paid out plus administration fee. Unlike a group health plan, there are no insurance premiums, no carrier negotiations, no network management, and no ACA employer mandate (for employers under 50 FTE). Setup time is typically 2-4 weeks.
Can I offer a QSEHRA and have an HSA myself as the owner?+
As a sole proprietor or LLC owner offering a QSEHRA to your W-2 employees, you yourself cannot benefit from the QSEHRA (you are not a W-2 employee of your own unincorporated business). However, you can independently maintain an HSA for yourself by enrolling in an HDHP marketplace plan. Your employees on QSEHRA have separate rules from your personal health coverage. The two are not in conflict - they apply to different people.
When should an employer choose ICHRA over QSEHRA?+
Choose ICHRA over QSEHRA when: (1) you have 50 or more full-time employees; (2) you want to offer different benefit amounts to different classes of employees (full-time vs part-time, different locations, different seniority); (3) you want to offer more than the QSEHRA annual caps ($6,450 / $13,100 in 2026); or (4) you currently have a group health plan but want to use ICHRA for a specific class of employees. QSEHRA is simpler and cheaper to administer for small employers who want the same benefit for all employees.
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