Which statement correctly describes a qualified small employer HRA (QSEHRA) or 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 QSEHRA and an ICHRA are both employer-funded health reimbursement arrangements: the employer contributes money, and the arrangement reimburses employees for qualified medical expenses — including premiums for individual health insurance coverage purchased on or off the marketplace. The QSEHRA is limited to small employers that do not offer a group plan, while the ICHRA is a broader option for employers of any size. In both, the employer funds the account and the employee owns the underlying individual coverage. Both arrangements must meet IRS requirements, including providing a written notice to employees, but they differ in which employers may use them and in how they interact with the health insurance marketplace.
Why the other options are wrong
- B) Individual ownership and portability describe the HSA; QSEHRA and ICHRA funds belong to the employer and do not travel with the employee.
- C) They are employer-funded accounts, not government programs; the government merely authorizes the structure.
- D) They are employer-funded; requiring employees to contribute the funds themselves reverses the design.
Memory hook
QSEHRA/ICHRA = the employer picks up the tab for your individual plan. Company money, personal coverage.