Individual Coverage Health Reimbursement Arrangements (ICHRAs) and Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs) are both types of employer-funded health reimbursement arrangements, but they are designed for different employer needs and have distinct rules and features.
ICHRAs are suitable for businesses of any size and allow employers to reimburse employees for individual health insurance premiums and other medical expenses. They do not have set contribution limits and can be offered to any employee, regardless of the company size or requirement for a high-deductible health plan.
On the other hand, QSEHRAs are specifically designed for small employers with fewer than 50 full-time employees who do not offer group health insurance. These arrangements have annual contribution limits set by the IRS and are intended to provide a more straightforward and budget-friendly solution for small businesses.
Here is a detailed comparison chart to further illustrate the differences between ICHRAs and QSEHRAs:
| Feature | ICHRA (Individual Coverage Health Reimbursement Arrangement) | QSEHRA (Qualified Small Employer Health Reimbursement Arrangement) |
|---|---|---|
| Definition | An employer-funded arrangement to reimburse employees for individual health insurance premiums and other medical expenses. | A health reimbursement arrangement for small employers to reimburse employees for medical expenses, including insurance premiums. |
| Funding | Employer-funded only. | Employer-funded only. |
| Eligibility | Any employee, with no minimum company size and no requirement for a high-deductible health plan. | Available to small employers with fewer than 50 full-time employees, not offering group health insurance. |
| Contribution Limits | No legal limit, set by the employer. | Subject to annual contribution limits set by the IRS. |
| Portability | Not portable, tied to current employment. | Not portable, tied to current employment. |
| Qualified Expenses | Insurance premiums and other qualified medical expenses, as defined by the employer. | Insurance premiums and other qualified medical expenses, as defined by the IRS. |
| Suitability for Employers | Suitable for employers of any size, offering flexibility in benefit design. | Ideal for small employers seeking a simpler, more budget-friendly health benefit solution. |
This comparison highlights how ICHRAs offer greater flexibility and are suited for a wider range of employers, while QSEHRAs provide a targeted solution for small businesses.