ICHRA (Individual Coverage HRA)
Who can offer it: Employers of any size.
How it works: The employer sets a monthly allowance that employees can use to be reimbursed for individual Marketplace or other qualified health plans.
Coverage requirement: Employees must be enrolled in individual health coverage (not a group plan) to use ICHRA funds.
Flexibility: Employers can offer different reimbursement amounts to different employee classes (e.g., full-time vs. part-time, salaried vs. hourly).
Subsidy impact:
If the ICHRA is considered affordable, the employee cannot receive Marketplace premium tax credits.
If the ICHRA is not affordable, the employee may opt out and apply for Marketplace savings instead.
An ICHRA is defined as affordable if the employee’s out-of-pocket premium cost for the lowest-cost silver, self-only plan on the marketplace, after the employer's ICHRA contribution, is no more than 9.96% of their household income.
QSEHRA (Qualified Small Employer HRA)
Who can offer it: Only small employers with fewer than 50 full-time employees and no group health plan.
How it works: Employers provide a fixed, tax-free reimbursement amount for employees to use toward individual health insurance premiums and qualified medical expenses.
Uniformity: All eligible employees must be offered the same terms (the same maximum reimbursement amount, prorated for part-year coverage if applicable).
Limits: Annual maximum reimbursement amounts are set by the IRS each year.
Subsidy impact:
If the ICHRA is considered affordable, the employee cannot receive Marketplace premium tax credits.
If the ICHRA is not affordable, the employee may opt out and apply for Marketplace savings instead.
A QSEHRA is defined as affordable if the employee’s out-of-pocket premium cost for the lowest-cost silver, self-only plan on the marketplace, after the employer's QSEHRA contribution, is no more than 9.96% of their household income.
How QSEHRA Affects Marketplace Savings
When applying for coverage, enter your employer’s QSEHRA contribution exactly as shown in your employer’s notice.
The Marketplace will automatically calculate whether your employer’s QSEHRA is considered affordable and adjust your premium tax credit (PTC) accordingly.
If your employer’s contribution makes coverage affordable, you’ll receive no PTC.
If it’s not affordable, you may receive a reduced PTC.
Quick Tips
Keep your QSEHRA letter from your employer handy — you’ll need it to complete your Marketplace application accurately.
If your employer offers either a QSEHRA or ICHRA, you can use your reimbursement to shop for and enroll in Marketplace coverage through HealthSherpa.
Need help? Contact our Consumer Advocate team at 855-772-2663, Monday–Friday, 6 a.m.–4 p.m. PT.
In Summary
Feature | ICHRA | QSEHRA |
Who can offer | Any employer | Employers with < 50 full-time employees |
Reimbursement type | Monthly allowance for individual coverage | Fixed, annual allowance for premiums & expenses |
Flexibility | Varies by employee class | Same terms for all eligible employees |
Set limits | Employer-defined | IRS-defined annual maximum |
Subsidy impact | Marketplace checks affordability; if affordable, no PTC | Marketplace checks affordability using 8.39% rule for 2026; may reduce or eliminate PTC |
Eligible coverage | Individual market plans only | Individual market plans only |