What if you could offer health benefits that employees value, but not a one-size-fits-all plan? When you’re able to provide coverage your employees want, while keeping costs predictable, it is a win-win.

Did you know there’s a way to offer your employees health coverage without committing to a traditional group plan? Your employees want flexibility, but your goal is controlling costs so that health benefits don’t drain your budget or your time. 

Your employees and their jobs are as diverse as their healthcare needs. 

Let’s break down the acronyms and learn how HRAs are a viable solution for most businesses.

ICHRA - Individual Coverage Health Reimbursement Arrangement
- Available to businesses of any size
- Customize benefits by employee class, location, etc. 
- No IRS limit on reimbursement amount 
- Predictable costs and no group plan administration 
- Employees choose their own insurance plans 
- Tax benefits for both employer and employee 
- Great for scaling companies and flexibility

QSEHRA - Qualified Small Employer Health Reimbursement Arrangement
- Available only to businesses with fewer than 50 FTEs 
- Must offer the same allowance to all eligible employees 
- Subject to annual IRS limits 
- Easy to set up, great for very small teams 
- No group plan/participation requirements 
- Employees must have Minimum Essential Coverage (MEC) 
- Offers tax advantages/predictable costs

Traditional Group Plans offer a group health insurance policy that covers all eligible employees. They may have options through different tiers, but under one group contract.
ICHRAs and QSEHRAs give employees the flexibility to shop for and choose their own individual health insurance plan, while the employer provides a tax-free allowance to help cover the cost.
Both ICHRA and QSEHRA employer-sponsored health plans operate under IRS/ERISA rules. They are regulated by IRS, DOL, and CMS. Consult your tax or benefits advisor.

4 simple questions to help decide if ICHRA or QSEHRA is the best fit for your business.

1. How many full-time employees do you have?
Fewer than 50 > Go to Question 2. ICHRA or QSEHRA are possible.
50 or more > ICHRA only
Note: QSEHRA is only available to businesses with fewer than 50 full-time employees.

2. Do you want to offer different contribution amounts for different types of employees (FT, PT, etc.)?
Yes > ICHRA
No, I want to offer the same amount to all eligible employees > Go to Question 3.
ICHRA allows benefit customization by employee class.

3. Do you want the ability to contribute more than the IRS annual limits for small employers?
Yes > ICHRA, (no capped contribution limits; fully flexible per class).
No > QSEHRA (>50 employees)
QSEHRA has fixed annual limits: $6,350 individual / $12,800 family (2025).*

4. Do you want a simple setup with minimal annual administrative work?
Yes > ICHRA or QSEHRA (>50 employees)
ICHRA and QSEHRA are easy to set up and HealthPlan Freedom offers the programs you need! 

ICHRA Employer Benefits

- Employers can create classes of employees (FT, PT, seasonal, etc.) and offer different benefits 
- No IRS caps, employer sets allowance 
- Flexibility allows employers to scale benefits as the company grows, without committing to specific coverage.
- Highly customizable (different classes, varying contributions, etc.)

QSEHRA Employer Benefits

- All eligible employees must be offered the same terms, and the allowance may vary only by family status (single or family) 
- IRS sets annual limits. $6,350 year for self-only*, and $12,800 for family* 
- Simple, capped way to provide health
benefits, without the cost or complexity of a group plan. 
- Simple but less customizable

This material is for informational purposes only and is not legal or tax advice. Employers offering ICHRA or QSEHRA must follow federal rules set by the IRS, U.S. Department of Labor, and Centers for Medicare & Medicaid Services (CMS). Employers should consult these resources or a qualified advisor to
ensure compliance is met.
Affordability testing is conducted for groups of more than 50 employees.
*This amount is subject to change annually. 09.17.2025

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