Which statement correctly distinguishes a Qualified Small Employer HRA (QSEHRA) from an Individual Coverage HRA (ICHRA)?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A Qualified Small Employer HRA is restricted to employers with fewer than 50 full-time equivalent employees that do not offer group health coverage; eligible employees use the funds to buy individual coverage. An Individual Coverage HRA may be offered by employers of any size to reimburse employees for individual market premiums, subject to class-based rules. Neither account is employee-funded, and an ICHRA generally cannot be offered to the same class of employees that is offered a traditional group plan. These are two distinct account-based arrangements in the small employer and general employer markets.
Why the other options are wrong
- B) An employer generally cannot offer an ICHRA and a traditional group plan to the same class of employees; the arrangements are alternatives, not complements.
- C) ICHRAs are available to employers of any size; the 25-employee limit applies to the QSEHRA and the small employer tax credit, not the ICHRA.
- D) HRAs are employer-funded only; employees cannot contribute their own money into a QSEHRA or ICHRA.
Memory hook
QSEHRA = tiny employers only, no group plan allowed. ICHRA = any size, class by class.