Can I switch from QSEHRA to ICHRA?

Yes. Many employers start with QSEHRA and move to ICHRA as they grow past 50 employees or want to contribute more than the cap.

Which is better for a 10-person company?

It depends on goals. QSEHRA is simpler and can preserve some ACA-subsidy eligibility; ICHRA offers more flexibility and higher contributions. A broker can model both for your team.

Do employees pay tax on either one?

No. Both deliver reimbursements free of income tax to employees and payroll tax to employers when set up correctly.

Comparison

ICHRA vs QSEHRA: which HRA is right for your business?

ICHRA and QSEHRA both let you reimburse employees tax-free for health insurance — but they differ on company size, contribution caps, and how they interact with ACA subsidies. Here’s a clear side-by-side and a recommendation.

The short version

QSEHRA is the simpler, capped option built for businesses under 50 employees. ICHRA has no contribution cap, no size limit, and supports employee classes — but employees offered an affordable ICHRA generally can’t also take an ACA premium subsidy. Bigger or more complex employers usually land on ICHRA; very small employers who want subsidy compatibility sometimes prefer QSEHRA.

When QSEHRA wins

You have fewer than 50 full-time-equivalent employees.
You want maximum simplicity and a modest, capped benefit.
You want employees to potentially keep an ACA subsidy alongside the benefit.

When ICHRA wins

You have 50+ employees, or expect to grow past that.
You want to contribute more than the QSEHRA cap allows.
You want to vary benefits by employee class (full-time, part-time, location).
You want to offer some employees ICHRA and others a group plan.

The verdict

Choose ICHRA for flexibility, scale, and no contribution cap. Choose QSEHRA if you’re a very small employer who wants simplicity and subsidy compatibility.

Feature	ICHRA	QSEHRA
Company size	Any size (1 to 1,000+)	Under 50 full-time-equivalent employees
Contribution limit	No cap — you set the amount	Annual IRS cap (adjusted yearly)
Employee classes	Yes — 11 permitted classes	No — same terms for all employees
Works alongside a group plan	Yes (different classes)	No — can’t offer a group plan too
ACA subsidy interaction	No subsidy if ICHRA is ‘affordable’	Subsidy reduced by the benefit amount
Eligible coverage	Individual coverage or Medicare	Individual coverage (and some other plans)
Best for	Growing / mid-size / complex teams	Very small, simple teams

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Frequently asked questions

ICHRA has no contribution cap and no company-size limit and supports employee classes; QSEHRA is capped and limited to employers with fewer than 50 employees. ICHRA is more flexible; QSEHRA is simpler.

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