QSEHRA eligible expenses

What a QSEHRA can reimburse

• Individual health insurance premiums
• Doctor visits, copays, coinsurance, and deductibles
• Prescription drugs
• Dental and orthodontia
• Vision exams, glasses, and contacts
• Many other IRS Publication 502 qualified medical expenses

Premiums and the coverage requirement

A QSEHRA can reimburse individual insurance premiums tax-free — but the employee must have minimum essential coverage for premium reimbursements to qualify. This coverage requirement is central: the QSEHRA reimburses real coverage and qualified care, not arbitrary spending.

The eligible expense list

Eligible medical expenses follow IRS Publication 502 — the same broad list used for HSAs and FSAs — covering most medically necessary care. The employer can choose to reimburse the full range or focus narrowly (for example, premiums only) within the plan design and the annual cap.

How reimbursement works

Employees pay for eligible premiums and expenses, submit proof, and the employer reimburses them tax-free up to the QSEHRA allowance — typically through payroll. Substantiation (proof of coverage and expenses) is required to keep reimbursements tax-free.

The annual cap

Total QSEHRA reimbursements are limited to the annual IRS cap (separate self-only and family limits), adjusted each year. Once an employee hits the cap for the year, additional expenses aren''t reimbursed under the QSEHRA. This cap is the key difference from ICHRA, which is uncapped.

What''s not eligible

• Cosmetic procedures without a medical purpose
• General wellness items without a medical need
• Expenses already reimbursed by insurance or another account
• Amounts above the annual QSEHRA cap

Reimbursing family members' expenses

A QSEHRA can generally reimburse qualified medical expenses for the employee's spouse and tax dependents, not just the employee, as long as the plan is written to allow it and the coverage requirement is met. That makes it a meaningful benefit for employees with families.

Which premiums qualify

Beyond individual major-medical premiums, a QSEHRA can often reimburse a range of coverage costs when the plan permits.

• Individual-market health insurance premiums (on or off exchange).
• Dental and vision premiums.
• Medicare premiums for eligible employees.
• Qualified out-of-pocket medical costs under IRS Section 213(d).

Substantiation and recordkeeping

Every QSEHRA reimbursement must be substantiated. Employees provide proof of the expense and proof that they have minimum essential coverage, and you keep those records. The eligible expense universe follows IRS Section 213(d), the same reference used for other tax-advantaged health accounts.

How the cap prorates for mid-year hires

The annual QSEHRA limit is prorated for employees who become eligible partway through the year. A worker who joins mid-year receives a portion of the annual cap based on the months they are eligible, rather than the full-year amount.