Benafica is a health benefits and insurance company that helps employers offer flexible, tax-free health reimbursement plans instead of traditional group health insurance.
An affordable, flexible health benefit option for companies with fewer than 50 full-time employees.
Last Updated: August, 2026 · Reviewed by: Troy Holmen, VP of Insurance Services
QSEHRA stands for Qualified Small Employer Health Reimbursement Arrangement. It’s an alternative to traditional group health plans that lets small businesses reimburse employees for individual health insurance premiums and eligible medical expenses.
Instead of managing a traditional group health plan, employers set a monthly allowance. Employees use it to purchase the individual coverage that best fits their needs, then submit eligible expenses for reimbursement.
If you have 50 or more employees or want more flexibility in how you structure your benefit, compare this with an ICHRA.
$537.50 per month
2026 Individual Limit
$1,091.66 per month
2026 Family limit
Coming for the 2027 numbers?
We publish updated limits as soon as the IRS releases them, usually in the autumn. See the full limit history and how proration works →
Not sure which HRA is right for you? QSEHRA and ICHRA have different eligibility requirements, contribution limits, and flexibility. Use the chart below to compare your options.
QSEHRA
ICHRA
Employer size
Less than 50 FTEs
Any size
Contribution limits
$6,450 / $13,100 (2026)
None
Employee classes?
No, same terms for all eligible employees
11 employee classes
Allowance may vary by
Family status, age (benchmark method)
Class, age, family size
Can run alongside a group plan?
No
Yes, to different classes
Reimburse spouse’s group-plan out-of-pocket costs?
Yes
No
Premium tax credit effect
Reduces PTC dollar-for-dollar; an affordable QSEHRA disqualifies
Affordable ICHRA disqualifies; if unaffordable the employee may opt out and take the PTC
Best for:
Small employers wanting a simple, defined benefit
Employers controlling budget across a mixed workforce
Our dedicated QSEHRA platform helps you handle most of the steps along the way, from employee enrollment and coverage verification to reimbursement claims, payments, notices, and ongoing compliance.
Confirm You’re Eligible
Have fewer than 50 FTEs, no group health plan, and at least one W-2 employee.
Choose the Allowance
Set a monthly reimbursement amount for eligible employees, up to the annual IRS limit.
Employees Purchase Coverage
Employees choose and purchase an individual health plan that works for them and their families.
Submit & Get Reimbursed
Employees submit eligible expenses through our platform. Once approved, they receive tax-free reimbursement from their employer.
From plan setup to employee reimbursements, we handle the details of QSEHRA administration so you can focus on your business.
*Benafica provides administrative and reporting support but does not provide tax or legal advice. Employers remain responsible for reviewing, approving, and filing their required tax forms and should consult their tax advisor regarding their specific reporting obligations.
Still have questions about QSEHRA? We’re here to help.
Benafica provides QSEHRA administration nationwide, serving employers across all 50 U.S. states.
Employers with fewer than 50 full-time equivalent employees that do not offer a group health plan or certain other employer-sponsored coverage can offer a QSEHRA.
No. An employer can generally establish a QSEHRA even if it has only one eligible employee.
Yes, but QSEHRA generally must be offered on the same terms to eligible full-time and part-time employees. However, you can structure the reimbursement amount to vary based on permitted factors, such as age and family size.
Yes, but eligibility depends on the business’s tax structure. Sole proprietors generally cannot participate as employees, while LLCs and S corporations may offer a QSEHRA if they meet the applicable requirements.
A QSEHRA can reimburse eligible health insurance premiums and qualified medical expenses, including deductibles, copays, prescriptions, dental and vision expenses, and other Section 213(d) medical expenses (if you so choose).
To receive tax-free QSEHRA reimbursements, employees must generally have minimum essential coverage (MEC). This can include individual health insurance, Marketplace coverage, Medicare, or coverage through a spouse’s employer-sponsored group health plan.
You only reimburse the amount the employee actually pays for an eligible expense. Unclaimed money stays with the business.
No. To offer a QSEHRA, an employer must not offer a group health plan or certain other employer-sponsored health benefits.
No. A QSEHRA is not subject to COBRA. When an employee leaves the company, their QSEHRA reimbursement ends, but they keep their individual health insurance policy. The coverage belongs to the employee, not the employer, so they can continue the policy on their own (or through a spouse’s plan, if applicable).
A QSEHRA can reduce the amount of premium tax credit an employee is eligible to receive. The impact depends on the employee’s QSEHRA allowance and household income. Employees need to report any QSEHRA offerings so tax credits can be adjusted.
A QSEHRA can typically be set up XX-XX days, depending on your business and how quickly you provide the information needed to get started. Once your plan is in place, employees can be onboarded and begin using their benefit.
Yes. The plan year doesn’t have to run January to December, and plenty of employers launch off-cycle. Two things follow: allowances are prorated for the remaining months, and the 90-day notice becomes a scheduling constraint rather than a formality — you need to be planning roughly a quarter ahead of your intended start date.
What happens to an employee’s premium tax credit eligibility when they get offered ICHRA or QSEHRA dollars? Learn more about how each HRA coordinates with premium tax credits and things you should consider as an employer before you implement a plan.
Qualified Small Employer HRA (QSEHRA) limits for 2026 have been updated by the IRS. These contribution rules limit how much a small employer can contribute to employee health insurance premiums for the year. See the updated amounts for 2026 QSEHRAs.
Open enrollment season is the perfect reminder to review your employee health benefits strategy. With rising costs and new 2026 regulations ahead, now is the time to ensure your plan supports both your business and your team.
We’ll build a side-by-side comparison against your current plan using your actual census, so you can see the real numbers before you decide anything.