Which statement correctly distinguishes a QSEHRA from an ICHRA?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The QSEHRA (Qualified Small Employer Health Reimbursement Arrangement) is available to employers with fewer than 50 employees that do not offer group health coverage; the ICHRA (Individual Coverage HRA) can be offered by employers of any size. In both arrangements the employer reimburses employees for individual health insurance premiums and qualified medical expenses on a tax-advantaged basis, and in both the employee must have individual health coverage. Neither is an insurance policy or a government subsidy — both are employer-funded reimbursement arrangements.
Why the other options are wrong
- B) Both QSEHRAs and ICHRAs are employer-sponsored arrangements; the ICHRA is not limited to self-employed individuals. The ICHRA is also employer-funded and available to employees of any size of employer.
- C) Participation requires the employee to have individual health coverage; Medicare enrollment is not the qualifying condition. The qualifying condition for these accounts is individual health coverage, not Medicare enrollment.
- D) Neither is an insurance policy, and neither is a government subsidy; they are employer-funded accounts that reimburse employees for coverage they purchase. Both are simply tax-advantaged employer-funded reimbursement arrangements for coverage.
Memory hook
QSEHRA for the little shop, ICHRA for anyone — but both are the employer reimbursing your individual coverage, not selling you a plan.