Choosing the right health benefits for your employees can be challenging, especially with evolving options like ICHRA vs. QSEHRA in 2025. As healthcare costs rise, many small and medium-sized businesses are exploring these reimbursement-based health plans to provide flexible, cost-effective coverage.
At Skyline Benefit, we help business owners navigate health reimbursement arrangements (HRAs) to find the best fit for their needs. In this blog, we’ll break down ICHRA vs. QSEHRA, explaining how each works, their key differences, and which might be the best choice for your business in 2025.
What Is an ICHRA?
An Individual Coverage Health Reimbursement Arrangement (ICHRA) is a flexible employer-funded health benefit that allows businesses to reimburse employees for individual health insurance premiums and other qualified medical expenses.
Key Features of ICHRA in 2025
- No company size restrictions—businesses of any size can offer an ICHRA
- Employers set their budgets and define reimbursement limits
- Employees choose their own health plan, increasing flexibility
- It can be used to reimburse individual health insurance premiums, dental, and vision costs
- Complies with Affordable Care Act (ACA) requirements when structured properly
What Is a QSEHRA?
A Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is designed specifically for small businesses with fewer than 50 full-time employees. It allows employers to provide tax-free reimbursements for health insurance premiums and medical expenses.
Key Features of QSEHRA in 2025
- Only available to businesses with fewer than 50 employees
- Has annual contribution limits set by the IRS
- Employees must have minimum essential coverage (MEC) to receive reimbursements
- Employers cannot offer group health insurance alongside a QSEHRA
- Tax-free reimbursements help employees save on healthcare costs
ICHRA vs. QSEHRA: What’s the Difference?
An ICHRA is available to businesses of any size, while QSEHRA is limited to companies with fewer than 50 employees. ICHRA allows employers to set their own reimbursement limits, whereas QSEHRA follows annual limits set by the IRS. Both options provide tax-free reimbursements for employees and tax-deductible contributions for employers. However, employees using ICHRA must purchase an ACA-compliant health plan, while QSEHRA participants only need to maintain minimum essential coverage. Neither plan can be offered alongside traditional group health insurance.
Which One Is Right for Your Business?
Choose ICHRA if:
- Your business has more than 50 employees
- You want complete flexibility in setting reimbursement limits
- You need a scalable health benefit solution that can grow with your company
Choose QSEHRA if:
- Your business has fewer than 50 employees
- You want a simple, tax-efficient health benefit with pre-set contribution limits
- You do not offer a group health insurance plan
ICHRA and QSEHRA: Tax Benefits for Employers
Both ICHRA and QSEHRA provide tax advantages that can help businesses reduce costs:
- Employer contributions are fully tax-deductible
- Reimbursements are tax-free for employees
- These plans reduce payroll tax burdens by offering non-wage benefits instead of direct salary increases
How Skyline Benefit Can Help
Understanding ICHRA vs. QSEHRA in 2025 can be overwhelming, but Skyline Benefit is here to help. We specialize in helping businesses implement the right health reimbursement arrangement to maximize savings while keeping employees covered.
Need Help Choosing Between ICHRA and QSEHRA?
Skyline Benefit is an independent health insurance broker in Fullerton, CA that offers affordable and flexible group health insurance options, we guide small and medium-sized businesses through their health benefit options, ensuring they choose the best plan for their needs.
Schedule a consultation today. Call us at: (714) 888-5112