Qualified Small Employer Health Reimbursement Arrangement (QSEHRA), also known as a small business HRA for employers with fewer than 50 employees is an employer-funded, tax-free health benefit used to reimburse employees for personal health care expenses.
Each year the IRS outlines the contribution limit (the maximum amount an employee can be reimbursed for health care expenses). In 2022 small businesses can offer up to $5,450 per self-only employee and up to $11,050 per employee with a family.
The IRS released the 2022 QSEHRA guidelines through Revenue Procedure 2021-45 on November 10, 2021.
For tax years beginning in 2022, small businesses can offer up to $5,450 for self-only employees ($454.16 per month) and $11,050 for employees with a family ($920.83 per month).
These contribution limits reflect a $150 annual increase for self-only employees and a $350 annual increase for employees with a family over 2021 limits. That's about $12.49 more per month for self-only employees and $29.16 for employees with a family.
| 2021 | 2022 | |
| Self-only (annual) | $5,300 | $5,450 |
| Self-only (Monthly) | $441.67 | $454.16 |
| Family (annual) | $10,700 | $11,050 |
| Family (Monthly) | $891.67 | $920.83 |
If you find the QSEHRA annual contribution limit is not enough to support your employees, you might want to consider another type of HRA, the Individual Coverage HRA. The ICHRA has no maximum contribution limit.
Learn more about an ICHRA vs QSEHRA
This can vary from plan to plan as the employer can choose which expenses employees can spend their QSEHRA Allowance on. In most cases, employees can use their contribution on their individual health insurance premiums and well as over 200 out-of-pocket expenses.
A few popular expenses include:
Keeping a close eye on the adjusting QSEHRA allowance caps is important to ensure you're offering a compliant QSEHRA and helping your employees use their benefit to the fullest.
Interested in setting up a QSEHRA for your small business?
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