QSEHRA; Win-Win for Employer and Employee

A Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is a company-funded, tax-free health benefit used to reimburse employees for personal health care expenses.

Such arrangement is a win-win for small employers and their employees, because the employer is relieved of paying social security, unemployment, and other tax on the monies used to reimburse the employee, and the reimbursements are tax-free to the employee, provided the employee maintains minimum essential health insurance coverage while also receiving QSEHRA payments.

To offer the QSEHRA, a business must (1) have fewer than 50 full-time employees, and (2) not offer a group insurance benefit, including health, dental, or vision.


  • First, the employer sets a monthly allowance. For 2019, QSEHRA contribution limits are $429.17 per month for single employees, and $870.83 per month for employees with a family.
  • Second, the employee buys and pays for the health care products and services he wants.
  • Third, the employee submit proof of the eligible personal health care expense to the employer.
  • Finally, the employer reviews and reimburses the employee up to the allowance amount for the eligible personal health care expenses.

A small employer that is otherwise unable to offer a group health plan benefit to its employees, is able to attract and retain key employees with a QSEHRA, which relieves some or all of the cost associated with the employee’s health insurance coverage, while also providing tax relief to the employer and employee.

Contact The Troy Law Firm to prepare your QSEHRA plan documents, including a summary plan description, all to comply with ERISA, IRS, and Department of Labor requirements.

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