# QSEHRA calculator and 2026 limits

Source: https://www.getprescience.com/tools/qsehra-calculator
Author: Rishab Jain, Cofounder and CEO, Prescience
Published: 2026-10-25
Updated: 2026-10-25
Cite as: Rishab Jain. "QSEHRA calculator and 2026 limits." Prescience, October 25, 2026. https://www.getprescience.com/tools/qsehra-calculator

A qualified small employer HRA (QSEHRA) lets companies under 50 full-time equivalents with no group plan reimburse employees' health costs tax-free, up to $6,450 for self-only coverage or $13,100 for family coverage in 2026. That's $537.50 and $1,091.66 a month. Enter your planned allowance to check it against the limit for the months each employee is eligible.

- **2026 limit, self-only:** $6,450 ($537.50/month)
- **2026 limit, family:** $13,100 ($1,091.66/month)
- **Who can offer it:** Under 50 FTEs, no group plan
- **Notice deadline:** 90 days before the plan year

## Check your QSEHRA allowance

_Interactive calculator: open the page in a browser to use it. The rules and figures it applies follow._

The IRS publishes the next year's QSEHRA limits each fall with its other inflation adjustments. The 2027 limits weren't out when I published this page, so the calculator uses 2026. I'll update it when the new figures are released.

## What a QSEHRA is

A QSEHRA is a simple way for a small company to help with health costs without sponsoring a group plan. The company sets a monthly allowance. Employees buy their own individual health insurance (or are covered elsewhere) and submit premiums and medical expenses for reimbursement, tax-free up to the allowance.

**QSEHRA requirements at a glance**

| Rule | What it means |
| --- | --- |
| Employer size | Fewer than 50 full-time employees including equivalents |
| No group plan | You can't offer any group health plan to any employee |
| Same terms for all | Allowances can vary only by family size and age, as the individual premiums do |
| Annual limit | $6,450 self-only, $13,100 family in 2026, prorated for partial years |
| Proof of coverage | Employees must have minimum essential coverage to be reimbursed tax-free |
| Written notice | At least 90 days before the plan year, or when someone becomes eligible |

## Worked examples

**A full year at $450 a month, self-only**

Illustrative. A 2026 QSEHRA offers $450 a month to single employees for all 12 months.

- Allowance for the year: $5,400
- 2026 self-only limit: $6,450
- Room left: $1,050

**Within the limit.** The company could raise the allowance to $537.50 a month.

**A new hire in September**

Illustrative. An employee becomes eligible on September 1, 2026 and is offered the family allowance of $1,100 a month.

- Eligible months: 4
- Prorated family limit: $13,100 × 4/12 = $4,366.66
- Allowance offered: $4,400.00
- Over the limit by: $33.34

**Over the limit.** Keep the monthly family allowance at or below $1,091.66.

## What a QSEHRA can reimburse

The plan document decides what's covered, within what the tax code allows. Most small employers choose one of two designs:

- **Premiums only.** The QSEHRA reimburses individual health insurance premiums. Simple to run and easy for employees to understand.
- **Premiums and medical expenses.** The QSEHRA also reimburses deductibles, copays, prescriptions and other eligible expenses under Section 213(d). More flexible, more receipts.

Employees can use a QSEHRA even if they're covered by a spouse's group plan, as long as they have minimum essential coverage. That's a meaningful difference from ICHRA, which requires the employee to be enrolled in individual coverage or Medicare.

A QSEHRA can't be combined with a group plan, and it doesn't satisfy the employer mandate. That's fine while you're under 50 full-time equivalents, but if you're growing quickly, plan the switch to ICHRA or a group plan before you cross the line. The [ALE calculator](https://www.getprescience.com/tools/ale-calculator) shows where you stand.

## How a QSEHRA interacts with premium tax credits

This is the part most small employers miss. An employee who buys an exchange plan and qualifies for a premium tax credit has their credit reduced by the QSEHRA allowance. If the QSEHRA is "affordable" for them, they can't get a credit at all.

A QSEHRA is affordable if the second-lowest-cost silver plan's self-only premium, minus one-twelfth of the annual self-only allowance, is no more than 9.96% of household income in 2026. Employees have to report the allowance when they apply for a credit, so tell them the amount in writing.

> **When a QSEHRA can leave employees worse off:** A lower-income employee getting a large tax credit may lose more in credit than they gain in allowance. If several of your employees buy subsidized exchange plans, model it before you launch.

## Is the QSEHRA limit enough?

The 2026 self-only cap of $537.50 a month covers a lowest-cost silver plan for most people in their 20s and 30s, but often not for people in their 50s and 60s, whose individual premiums can run $1,000 to $1,500 a month in many states. The family cap of $1,091.66 a month rarely covers a family's full premium.

That's fine if your goal is to help with costs rather than cover them. But if you want the allowance to fully fund a good plan for everyone, including older employees and families, a QSEHRA won't get you there. That's the most common reason the small employers I talk to move to ICHRA, which has no cap and lets you set larger allowances for older employees within the 3:1 rule.

If you're comparing the two, run your oldest employee through the [ICHRA affordability calculator](https://www.getprescience.com/tools/ichra-affordability-calculator) to see what a compliant ICHRA allowance would be.

## QSEHRA or ICHRA?

**QSEHRA and ICHRA compared**

|  | QSEHRA | ICHRA |
| --- | --- | --- |
| Employer size | Under 50 FTEs | Any size |
| Allowance limit | $6,450 / $13,100 (2026) | No limit |
| Employee classes | No | Yes: different amounts by class |
| Coverage required | Minimum essential coverage | Individual health insurance or Medicare |
| Effect on tax credits | Reduces the credit | Affordable ICHRA: no credit; otherwise employee can opt out |

I recommend ICHRA over QSEHRA once you want to give more than the QSEHRA limit, which happens quickly with older employees or families, or once you need different allowances for different groups. ICHRA also scales past 50 employees, so you won't need to switch later. Check the minimum allowance with our [ICHRA affordability calculator](https://www.getprescience.com/tools/ichra-affordability-calculator).

## Setting up a QSEHRA step by step

1. **Confirm you qualify** Count full-time employees and equivalents. Under 50, and no group health plan for anyone, including a group dental or vision plan that isn't an excepted benefit.
2. **Choose the allowance** Pick monthly self-only and family amounts at or below the limits. Many companies start around $300 to $500 for self-only coverage.
3. **Decide who's eligible** All full-time employees must be offered it. You may exclude employees in their first 90 days, under 25, part-time or seasonal, and those covered by a collective bargaining agreement.
4. **Adopt a plan document** A written plan sets the allowance, eligible expenses and how claims are reimbursed.
5. **Send the written notice** At least 90 days before the plan year starts (or by the date a new employee becomes eligible). It must state the allowance and tell employees to report it if they apply for premium tax credits.
6. **Verify coverage and reimburse** Collect proof of minimum essential coverage, then reimburse premiums and eligible expenses up to the allowance.
7. **Report it on the W-2** Show the amount available in Box 12 with code FF.

Penalties for getting it wrong are real. Reimbursing individual premiums outside a properly designed QSEHRA or ICHRA can be treated as an "employer payment plan," which can trigger an excise tax of $100 per day per affected employee. That is the main reason not to simply add a health stipend to payroll; see our guide to [health insurance stipends](https://www.getprescience.com/guides/health-insurance-stipend).

QSEHRA allowances are use-it-or-lose-it by default. Unused amounts can carry over within the limit if the plan allows it, but the total available in a year still can't exceed the cap.

## Running an HRA with Prescience

Prescience Choice is an ICHRA, so it has no annual cap and lets you set allowances by class. For most small teams the price is similar to a QSEHRA administrator, and you avoid outgrowing it.

> **Prescience Choice: ICHRA for $20 per enrolled employee per month.** If your planned QSEHRA allowance hits the cap, Choice lets you give more, by class, in every state.
> - **You set a monthly allowance;** each employee picks and owns an individual plan
> - **$20 per enrolled employee per month,** with no setup or platform fee
> - **Works in all 50 states and DC,** so remote and multi-state teams fit
> - **Plan comparison, enrollment help and Crystal,** our assistant for benefits questions
> Best for small teams, teams in several states, and anyone pricing ICHRA. [Get a Choice quote](https://www.getprescience.com/employer/choice)

## Frequently asked questions

**What are the QSEHRA limits for 2026?**

$6,450 a year for self-only coverage and $13,100 for family coverage, or $537.50 and $1,091.66 a month (IRS Revenue Procedure 2025-32).

**What are the QSEHRA limits for 2027?**

The IRS publishes them each fall. They weren't released when this page was published; this page will be updated when they are.

**Who can offer a QSEHRA?**

Employers with fewer than 50 full-time employees including equivalents that don't offer a group health plan to any employee.

**Can I offer different QSEHRA amounts to different employees?**

Only by family size or by age in line with individual premiums. Otherwise every eligible employee gets the same terms. ICHRA allows different amounts by employee class.

**Is a QSEHRA allowance taxable?**

No, as long as the employee has minimum essential coverage. Reimbursements to an employee without it are taxable income.

**Do QSEHRA allowances reduce premium tax credits?**

Yes. An employee's credit is reduced by the allowance, and an affordable QSEHRA means no credit at all.

**Is ICHRA better than QSEHRA?**

ICHRA has no allowance cap, supports employee classes and works at any company size, so it suits most growing teams. QSEHRA is simpler for very small companies that want to offer a modest allowance to everyone.

## Sources

- [IRS Notice 2017-67 (QSEHRA guidance)](https://www.irs.gov/pub/irs-drop/n-17-67.pdf)
- [IRS Revenue Procedure 2025-32 (2026 inflation adjustments)](https://www.irs.gov/pub/irs-drop/rp-25-32.pdf)
- [HealthCare.gov, Qualified small employer HRAs](https://www.healthcare.gov/small-businesses/learn-more/qsehra/)
- [CMS, Health Reimbursement Arrangements (ICHRA) overview](https://www.cms.gov/marketplace/private-health-insurance/health-reimbursement-arrangements)
- [IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans](https://www.irs.gov/publications/p969)