ICHRA and QSEHRA have a lot in common, including tax-advantages for employers, flexibility of design, popularity with employees, but they differ when it comes to whether or not they have reimbursement rates. For example QSEHRA has a ceiling that changes each year, and ICHRA only has a minimum. Many of their characteristics stay the same from year to year, but some things like reimbursement rates change. Let’s look at the 2021 health insurance reimbursement rates for QSEHRA and ICHRA.
Qualified Small Employer HRAs have annual contribution limits that cap the amount an employer can reimburse their employees for health insurance each year. These amounts are tied to inflation, so we expect them to go up a little bit every year. In fact, since its inception, we’ve seen a steady increase annually of about $100 for individuals and $150-200 for families.
For 2020, the contribution rates were as follows:
- Individual $5250 or $437.50/month
- Family $10,600 or $883.33/month
For 2021, the limits haven't been released yet, but if we assume the same annual rate increases, we predict:
- Individual $5350 or $445/month
- Family $10,700 or $891.67/month
While QSEHRA requires that all employees are reimbursed equally and that amount is only allowed to be scaled based on age or family size.
Unlike the QSEHRA, the ICHRA does not have reimbursement, or contribution, limits. While there aren’t any contribution limits, there is the issue of how little you can actually contribute, which changes from year to year. The minimum amount is determined by the issue of ICHRA affordability and how the HRA interacts with premium tax credits. The affordability threshold is the highest percentage of household income an employee can be required to pay out of pocket for monthly health insurance premiums.
How can we help?
We are more than happy to walk you through the advantages and changes that these HRAs bring. Reach out with one of our HRA experts today! In the meantime, you can find loads of information in our handy QSEHRA and ICHRA guides.
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