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

QSEHRA in 2026: the small-employer HRA, with HSA stacking rules

QSEHRA lets small employers reimburse employees for health insurance and medical expenses tax-free - without offering a group plan. The 2026 limits are $6,450 self-only / $13,100 family.

QSEHRA self-only 2026

$6,450

$537.50/month - IRS Notice 2026-05

QSEHRA family 2026

$13,100

$1,091.67/month - IRS Notice 2026-05

How QSEHRA works

Employer sets the dollar amount

The employer chooses an annual reimbursement amount up to the IRS cap. All employees in the same class receive the same per-person or per-family benefit. No employee contributions allowed.

Employees submit claims

Employees buy their own individual health insurance on the marketplace (or elsewhere) and submit receipts to the QSEHRA administrator for reimbursement. Reimbursements are tax-free to the employee if they have minimum essential coverage.

ACA premium tax credit interaction

If an employee receives QSEHRA reimbursements, their available premium tax credit on the marketplace is reduced dollar-for-dollar by the QSEHRA amount. Employees should model their net cost before assuming QSEHRA is better than marketplace subsidies.

Eligible expenses

Qualified medical expenses (per IRS Pub 502) plus individual health insurance premiums. Cannot reimburse group plan premiums or non-qualified expenses. Most plan designs also cover dental and vision.

Annual notice requirement

Employers must notify employees 90 days before the plan year begins (or within 90 days of hire for new employees). The notice must state the annual benefit amount, that the employee must have minimum essential coverage to receive tax-free reimbursements, and the effect on premium tax credits.

The HSA stacking question

Can I have a QSEHRA and an HSA at the same time?

A standard QSEHRA (reimbursing both premiums and medical expenses) disqualifies you from making HSA contributions. This is because the QSEHRA constitutes "other coverage" that is not an HDHP - the same logic that disqualifies a general-purpose FSA.

The narrow exception: If your employer structures the QSEHRA as premium-only (reimbursing only health insurance premiums, not general medical claims), and you are enrolled in an HDHP, you remain HSA-eligible. This design is rarely offered because employers lose the ability to reimburse copays and deductibles.

In practice: if you want an HSA, you generally need to decline or not receive QSEHRA reimbursements for medical expenses, or your employer needs to offer a specifically structured premium-only QSEHRA. Talk to a benefits advisor before combining the two.

QSEHRA vs ICHRA comparison

FeatureQSEHRAICHRA
Employer size limitUnder 50 FTEAny size
Group plan requirementMust have no group planCan have group plan for some classes
Annual cap (2026)$6,450 / $13,100No IRS cap
Employee classesMust cover all eligible employees equallyDifferent amounts for different classes
HSA compatibilityNo (unless premium-only)No (unless excepted-benefit ICHRA)
ACA premium tax creditReduces credit dollar-for-dollarDenies credit if affordable
Setup cost$50-150/month (administrator)$100-250/month (more complex)

FAQ

What is a QSEHRA?+
A QSEHRA (Qualified Small Employer Health Reimbursement Arrangement) is a tax-free health benefit available to small employers with under 50 full-time employees who do not offer a group health plan. The employer reimburses employees for individual health insurance premiums and qualified medical expenses up to an annual cap: $6,450 self-only / $13,100 family in 2026 (per IRS Notice 2026-05). Unlike an FSA or HSA, there is no employee contribution - all funding comes from the employer.
Can you stack a QSEHRA with an HSA?+
Generally no. A general-purpose QSEHRA (one that reimburses both premiums and medical expenses) disqualifies you from making HSA contributions because it constitutes disqualifying health coverage. The exception: a QSEHRA structured as premium-only (reimbursing only insurance premiums, not general medical expenses) does not disqualify HSA contributions IF the underlying insurance is an HDHP. Most QSEHRA plans are not structured this way, so in practice the vast majority of QSEHRA recipients cannot simultaneously contribute to an HSA.
Who can offer a QSEHRA?+
A QSEHRA can be offered by any employer with fewer than 50 full-time equivalent employees that does not offer a group health plan. Sole proprietors, partnerships, S-corps, C-corps, LLCs, and non-profits can all offer QSEHRAs to their W-2 employees. Sole proprietors cannot receive QSEHRA benefits themselves (not a W-2 employee), and more-than-2% S-corp shareholders have special rules. The employer must provide a formal written notice to all eligible employees at least 90 days before the plan year begins (or 90 days after hiring for new employees).
What is the difference between QSEHRA and ICHRA?+
The main differences: (1) QSEHRA has an IRS cap ($6,450 / $13,100 in 2026); ICHRA has no cap. (2) QSEHRA is only for employers under 50 FTE with no group plan; ICHRA is available to any employer of any size. (3) QSEHRA cannot exclude any class of employees other than certain part-time workers; ICHRA can offer different benefit amounts to different employee classes. (4) For the ACA premium tax credit: QSEHRA reduces (but does not eliminate) eligibility; ICHRA either provides or denies access depending on affordability.
Related:ICHRA guideSelf-employed HSA pathEmployer decision framework2026 limits