QSEHRA vs. ICHRA
Navigating the world of health insurance can be tricky for even the most experienced companies. There are many different plans, policies, and regulations to keep track of. One of the most important is ICHRA or Individual Coverage Health Reimbursement Arrangements and QSEHRA or Qualified Small Employer Health Reimbursement Arrangements. They both represent a modernized solution for employer-sponsored healthcare and are presenting new opportunities to employees and employers alike. But what is the difference between ICHRA vs. QSEHRA?
You're probably wondering what is the difference between ICHRA and QSEHRA, or QSEHRA vs. ICHRA, or how ICHRA and QSEHRA compare?
Many people just like you are asking this question as they evaluate benefits options in the midst of inflation and recession and their impact on health insurance.
Let's start by defining what is an ICHRA, and who is eligible for ICHRA? Implemented in early 2020, ICHRA allows employers to reimburse employees for healthcare, setting higher limits and offering greater flexibility than its predecessor QSEHRA.
ICHRA reimbursement plans can be a great option for employers that want greater control in terms of who qualifies for what and how much they are allotted on a monthly basis.
The ICHRA setup process is relatively straightforward. You should first pick a start date. While many employers choose to start their plans at the beginning of the year, you can set yours up any time you like. Next, you should provide eligible employees with the resources they need to understand the system. You can create different training for different groups of employees to provide them with the information that’s most relevant to their needs.
The third step in getting started with ICHRA is determining your budget. How much do you plan on reimbursing employees for each month? One of the great things about ICHRA is that employers have a lot of flexibility in terms of monthly allowances. You don’t have to distribute funds equally either—you may choose to spend more on certain classes of employees than others. This is especially beneficial for organizations with multiple types of employees with varying degrees of needs.
→ Here's the complete ICHRA employee class list.
Step four is explaining your ICHRA plan to your employees. Make sure that everyone is on the same page as far as start date, allowances, and how they can activate their coverage. It's not going to be the same process as they're use to with their group health insurance plan. Finally, you should provide employees with additional tools and resources for finding plans that work best for them. By laying their options out in front of them, you can better equip employees to do their research, weigh the pros and cons of different plans, and ultimately select the one that’s most aligned with their specific needs. ICHRA benefits include cost control, plan customization, flexibility, and portability. With ICHRA, employers can set limits from the get-go and don’t have to deal with surprise increases for health care costs down the road.
A Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is another type of health plan that employers should know about. So what is a QSEHRA? QSEHRA plans allow employers to set aside a certain amount of funds that employees can use on medical expenses and individual health insurance premiums each month tax-free. While QSEHRA and ICHRA share many similarities, there are some key differences to be aware of.
Differences between ICHRA and QSEHRA
The main difference between QSEHRA and ICHRA is that ICHRA is available for employers of all sizes, while QSEHRA was designed for small businesses with less than 50 employees. When comparing QSEHRA vs. HRA, regardless of the type of HRA, QSEHRAs are the only HRA that's specifically for small companies.
When comparing ICHRA vs QSEHRA, it’s also important to note that the former allows employers to reimburse any amount they choose, and the QSEHRA has limits of $6,150 for self-only coverage and $12,450 for family coverage in 2024. QSEHRA setup is a fairly simple process, as long as you’ve got the required documents and know how you want to design your health reimbursement arrangement HRA plan.
Here's a high level checklist of differences between ICHRA vs. QSEHRA:
- ICHRA does not have reimbursement limits, QSEHRA does.
- ICHRA does not have company size limits, QSEHRA is limited to companies with less than 50 full time equivalent employees.
- Premium tax credits are handled differently with ICHRA vs. QSEHRA.
- QSEHRA integrates with spousal group plans and Tricare, ICHRA does not.
- ICHRA allows employers to designate different reimbursement amounts to different types of employees, while a QSEHRA requires that all employees be offered the exact same amount regardless of class.
- ICHRA can work alongside a group plan; QSEHRA cannot.
QSEHRA benefits are extensive. Rather than having to settle for a one-size-fits-all group plan, small businesses can optimize plans to better meet the needs of individual employees. QSEHRA eligibility is dependent on a number of factors, including business size and pre-existing coverage, so it’s important that employers ensure that they are on top of their specific requirements. This is important not only for meeting key criteria but helping employees to understand their plans and how they can take full advantage of QSEHRA reimbursement.
Another important point? QSEHRA can reimburse for spouse's premiums from their employer's group plan.
ICHRA vs. QSEHRA: Takeaways
Whether you’re looking to implement ICHRA or QSEHRA, Take Command can help you get started creating customized health plans that your employees will love.
The platform makes it easy for employers to design plans, introduce those plans to their employees with ease, and reimburse their employees for health care costs, insurance plans, and qualifying medical expenses. With Take Command, you can get your employees on the same page and allow them to choose the plans that are best for their specific needs—even if you lack experience working with health reimbursement arrangement HRAs. You get total freedom and flexibility in terms of how you create and implement plans and choose participants.