ICHRA vs QSEHRA: Side-by-Side Comparison (2027)

ICHRA vs QSEHRA: which health reimbursement arrangement fits your business?

The short answer

Both let you reimburse employees tax-free for their own health plans. Choose a QSEHRA if you have fewer than 50 employees, want the simplest setup and can live with the 2026 caps ($6,450 self-only, $13,100 family). Choose an ICHRA if you want no dollar limit, different amounts for different employee classes, or you have 50 or more employees.

By RedHealth Advisors, a licensed Texas insurance agency. Reviewed by Ryan Hutson, licensed agent (NPN 21321807), on September 25, 2026. Checked against CMS, IRS and federal rules. Updated September 23, 2026.

Side by side.

	ICHRA (CHOICE Arrangement)	QSEHRA
Employer size	Any size	Fewer than 50 full-time equivalents
Group plan allowed too?	Yes, to different classes	No
Annual limit	None	$6,450 self-only, $13,100 family (2026)
Different amounts by class	Yes (full-time, part-time, hourly, salaried, location and more)	No, same terms for all eligible employees
Varies by age and family size	Yes, age up to 3 to 1	Only by the cost of the plan
Coverage employees need	Individual health insurance or Medicare	Any minimum essential coverage, including a spouse's plan
Employees can opt out for a tax credit	Yes, if the offer is unaffordable	No; the credit is reduced instead
Meets the employer mandate (50+)	Yes, if affordable	Not applicable
Notice	90 days before plan year	90 days before plan year

Sources: 2019 HRA final rule; IRS Notice 2017-67; IRS Rev. Proc. 2025-32 and 2026-26.

Three quick scenarios.

A 6-person office in Round Rock with a tight budget

A QSEHRA is often the easiest start: one allowance for everyone, simple notice, reimbursements up to the cap.

A 30-person company with staff in Austin and Tulsa

An ICHRA lets you set different amounts by rating area and between full-time and part-time staff, and each employee chooses a plan and network where they live.

A 60-person employer that must meet the mandate

Only an ICHRA can satisfy the employer shared responsibility rules, using the IRS affordability safe harbors.

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Questions people ask.

Is ICHRA or QSEHRA better for a very small business?

A QSEHRA is usually simpler and cheaper to run for a handful of employees. An ICHRA wins if you need higher amounts or different amounts for different groups.

Can employees use either one with a HealthCare.gov plan?

Yes. Both reimburse individual plans bought on HealthCare.gov or directly from an insurer, and both require employees to report the arrangement when they apply for a tax credit.

Sources.

Final rule, Health Reimbursement Arrangements and Other Account-Based Group Health Plans, 84 FR 28888 (June 20, 2019). federalregister.gov
IRS Notice 2017-67, Qualified Small Employer Health Reimbursement Arrangements. irs.gov
IRS Rev. Proc. 2025-32 (2026 QSEHRA limits). irs.gov
IRS Rev. Proc. 2026-26 (2027 required contribution percentage, 10.22%). irs.gov
HealthCare.gov, CHOICE Arrangement (formerly ICHRA) for employers. healthcare.gov

General information for Texas and Oklahoma residents, not tax or legal advice. Rules and numbers can change; this page is reviewed on the date shown above. Your eligibility and prices are set by HealthCare.gov or the insurer when you apply.

Who wrote this.

RedHealth Advisors LLC is a licensed health insurance agency in Round Rock, Texas (Texas agency license 3449979, NPN 22110493), serving Texas and Oklahoma. Ryan Hutson is a licensed agent (NPN 21321807). Licensing details.