Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)

What is a Qualified Small Employer Health Reimbursement Arrangement?

Employers of 50 or fewer employees (qualified small employers or QSEs) can offer Health Reimbursement Arrangements (HRA) to their employees.

With a QSEHRA, an employee is reimbursed for health insurance coverage purchased on the individual market or through the health care exchange.

QSEHRAs can also be paired with a spouse’s plan and/or used for out-of-pocket medical, dental, and vision expenses.

QSEHRAs are funded by the employer up to $5,850 for an employee who is single and $11,800 per employee with a family (2023 rates).

A QSEHRA eliminates the requirement that HRA plans with two or more employees be integrated with an ACA-compliant employer-sponsored group health insurance.

Benefits of Offering a QSEHRA to Employees

Here’s why employers should consider offering a QSEHRA to their employees:

Tax benefits

A QSEHRA offers tax benefits to both employers and employees. Employers can deduct reimbursement expenses from their business taxes, while employees do not have to pay taxes on the reimbursements they receive.


A QSEHRA is customizable, which means employers can tailor the benefits to meet the specific needs of their employees. Employers can set different reimbursement levels for different employees based on factors like age, family size, and job position.

Cost-effective benefit

A QSEHRA is a cost-effective way for small businesses to provide health benefits to their employees. Unlike traditional group health insurance, employers can set a monthly budget for each employee, and reimburse them for qualified medical expenses.

Retention and attraction tool

Offering a QSEHRA as a benefit can help small businesses attract and retain talented employees. Health benefits are often a top consideration for employees when choosing a job, and QSEHRA can be a competitive offering for small businesses.

Improved employee morale, productivity, and job satisfaction

A QSEHRA can improve employee morale and job satisfaction. When employees have access to affordable healthcare, they are more likely to be healthy, productive, and engaged in their work.

Offering a QSEHRA can be a win-win for both small businesses and their employees, as it provides cost-effective healthcare benefits and tax benefits while improving employee retention and morale.

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