Medical Expense✓ Verified · outline & fact-checked · Sep 2026Difficulty 3/5
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 QSEHRA is designed for small employers — generally those with fewer than 50 employees — that do not offer group health coverage; it reimburses employees' qualified medical expenses and is subject to annual contribution limits set by the IRS. An ICHRA may be offered by employers of any size to reimburse the cost of individual health insurance coverage and has no fixed annual cap. Both are employer-funded reimbursement arrangements, and the differences in employer size, group coverage offer, and annual limits are the distinguishing exam points.
Why the other options are wrong
- B) The size limitation applies to the QSEHRA, not the ICHRA; ICHRAs are available to employers of any size.
- C) HRAs are funded by the employer, not the employee, and they are reimbursement arrangements rather than use-it-or-lose-it employee savings accounts.
- D) Both arrangements are offered instead of a traditional group plan — the QSEHRA requires the employer not to offer group coverage, and the ICHRA replaces it.
Memory hook
QSEHRA = small employers, capped, no group plan. ICHRA = any size, no cap, reimburses individual policies.