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ICHRA vs QSEHRA vs HRA

An ICHRA, a QSEHRA and an HRA that sits beside a group plan differ on employer size, dollar cap, classes and whether a group plan can run alongside.

All three reimburse employees for medical costs. Which one fits depends on how many employees you have, whether you keep a group health plan, and how much control you want over the allowance.

Ask Whether an ICHRA Fits

At A Glance

Which arrangement fits which employer.

ICHRA

Open to employers of any size. The employer sets the allowance, and the regulation sets no dollar cap. Participants and covered dependents must enroll in individual health insurance coverage.

QSEHRA

For employers that are not applicable large employers and offer no group health plan. Funded only by the employer and capped by the IRS at $6,450 self-only and $13,100 family for 2026.

HRA With A Group Plan

Pairs with a group health plan the employee is enrolled in. An ICHRA cannot be offered to the same employee as a choice against a traditional group health plan.

Fit by Employer Size

Test your headcount, workforce spread and group plan renewal against each arrangement before choosing.

Class Rules

Only an ICHRA can be offered by permitted class. See which classes the rules allow and what minimum class sizes apply.

Moving From a Group Plan

What changes for employees, notices and timing when a group plan gives way to an allowance.

Side By Side

How the three arrangements compare.

Factor ICHRA QSEHRA HRA With a Group Plan
Employer eligibility Any employer size Not an applicable large employer, and no group health plan offered to any employee Employers that sponsor a group health plan
Dollar cap None set by the regulation; the employer chooses the allowance $6,450 self-only and $13,100 family for 2026 Set by the plan design
Classes Permitted classes, with the same terms for everyone in a class Same terms for all eligible employees Follows the group plan the employee is enrolled in
Coverage the employee holds Individual health insurance coverage for the participant and any dependents Employee provides proof of coverage before reimbursement The employer group plan
Written notice At least 90 days before the plan year At least 90 days before the plan year Per the group plan documents
Premium tax credit Treated as employer coverage; an affordable offer can end credit eligibility Credit reduced by 1/12 of the permitted benefit each month, or none if the benefit makes coverage affordable Not applicable, since the employee is in the group plan

Figures are for 2026. The IRS adjusts the QSEHRA cap each year, so confirm the current amount before setting an allowance. This table summarizes the rules and is not legal or tax advice; counsel should confirm design choices.

Questions We Get

The questions employers ask about ICHRA, QSEHRA and HRA.

What is the difference between an ICHRA and a QSEHRA?

An ICHRA is open to any employer size, has no regulatory dollar cap and can be offered by class. A QSEHRA is limited to employers that are not applicable large employers and offer no group health plan, and the IRS caps it at $6,450 self-only and $13,100 family for 2026.

Is an ICHRA the same as an HRA?

An ICHRA is one type of HRA. HRA is the broad term for an employer-funded arrangement that reimburses medical expenses. An ICHRA reimburses individual health insurance premiums and other medical costs for employees who are enrolled in individual coverage.

Can an employer with fewer than 50 employees use an ICHRA?

Yes. An ICHRA has no employer-size limit. Smaller employers can choose between an ICHRA and a QSEHRA, and the right choice often turns on the cap, classes and whether any group plan stays in place.

Can I offer a QSEHRA and a group health plan?

No. A QSEHRA employer must not offer a group health plan to any of its employees. An ICHRA can be offered to one class while a group plan covers a different class, subject to the minimum class size rules.

How much notice do employees need?

Both an ICHRA and a QSEHRA require written notice at least 90 days before the plan year begins. Employees who become eligible later receive notice by the date they first become eligible.

How does each arrangement affect the premium tax credit?

A QSEHRA reduces an employee credit by 1/12 of the permitted benefit each month, or ends it if the benefit makes coverage affordable. An affordable ICHRA offer can end credit eligibility. Ask us to model the employee position before you set an allowance.

Let’s Get to Work

Send us your renewal.

We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.

Start the Review248.370.8853
What to send

The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier

Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.

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