Tools

QSEHRA and ICHRA allowance calculator

Prices a QSEHRA against the 2026 IRS maximums and an ICHRA by employee class, then sets both beside the cost of a group health plan.

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A health reimbursement arrangement (HRA) lets an employer reimburse employees for individual health insurance premiums and other medical costs instead of buying a group plan. This tool prices the two versions small employers use and compares them with a group plan. The allowances it opens with are examples.

How to use it

  1. QSEHRA eligibility. Two checkboxes: you have fewer than 50 full-time employees counting equivalents, and you offer no group health plan to any employee. Both start checked. Uncheck whichever is not true and the tool says a QSEHRA is not available to you.
  2. QSEHRA allowances. How many employees get a self-only allowance and its monthly amount, and the same for family allowances. These are your decisions, usually set from your benefits budget.
  3. ICHRA classes. Up to four rows: a class name, how many employees are in it, and the monthly allowance. Classes follow your own headcount, such as full-time and part-time, salaried and hourly, or by rating area. Your payroll or HR records give you the counts.
  4. Group plan cost (optional). The employer's annual cost of a group plan, from a quote or the group health insurance cost and affordability calculator.

The math

Every allowance is the monthly amount times 12. The QSEHRA cost is self-only employees × the yearly self-only allowance plus family employees × the yearly family allowance. The tool checks each yearly allowance against the 2026 QSEHRA maximums of $6,450 for self-only coverage and $13,100 for family coverage, and flags anything above them. The ICHRA cost is employees × allowance × 12, class by class, with a total. There is no ICHRA cap.

A hypothetical example with the opening numbers: 6 employees at $400 a month self-only is $4,800 each, or $28,800. Two employees at $900 a month for family coverage is $10,800 each, or $21,600. The QSEHRA costs $50,400 a year, under both limits. For an ICHRA, 10 full-time employees at $500 a month cost $60,000 and 4 part-time employees at $250 cost $12,000, for $72,000.

Assumptions and limits

  • Each figure is a maximum cost. An HRA reimburses only the premiums and eligible expenses employees actually incur, so the real spend can be lower.
  • QSEHRA limits are prorated for a partial year. The tool assumes a full year.
  • The 2027 QSEHRA limits had not been published when the tool was checked in October 2026. Look them up before you plan a 2027 allowance.
  • An ICHRA must follow the permitted employee classes in the regulations. The rules also allow allowances to vary within a class by age and family size, while the tool takes one flat amount per class.
  • An ICHRA offered by an applicable large employer has to be affordable, measured against the lowest-cost silver plan in the employee's area. The tool does not test that.
  • Employees need individual health coverage to use an ICHRA, and the tool does not model what that coverage costs them or whether they would be better off.
  • Dropping a group plan has consequences for participation, taxes and the ACA. Talk to a benefits broker or attorney before you switch.

The plans are explained in QSEHRA explained: the small employer HRA, 2026 limits and rules and ICHRA explained: individual coverage HRAs for employers. Read group health insurance for small businesses: how it works and what it costs for the alternative, and use the ACA employer mandate (ALE) calculator to see whether the 50-employee line applies to you. The glossary has entries for a QSEHRA, an ICHRA and the broader health reimbursement arrangement.

Where the figures come from

Last reviewed October 10, 2026

Related guides

QSEHRA explained: the small employer HRA, 2026 limits and rules How a QSEHRA works for employers under 50 full-time employees: 2026 limits ($6,450 and $13,100), eligibility, notice, W-2 reporting and tax credit effects. ICHRA explained: individual coverage HRAs for employers How an ICHRA works: tax treatment, employee classes, allowance rules, the affordability test (9.96% for 2026), ACA mandate treatment, notices and risks. Group health insurance for small businesses: how it works and what it costs How small-group health coverage is sold, rated and administered: eligibility, contribution rules, enrollment, plan options and the ACA rules that shape it. The ACA employer mandate: who must offer coverage and the 2026 penalties Who is an applicable large employer, what coverage avoids the 4980H penalties, and the 2026 figures: 9.96% affordability, $3,340 and $5,010. Building an employee benefits package that fits your budget How to build a benefits package in layers, what private employers actually offer per 2026 BLS data, and a budgeting worked example with 2026 FSA and HSA limits.

Terms used here

QSEHRA An employer-funded account for businesses under 50 full-time equivalent employees that reimburses workers for premiums and medical costs up to an annual cap. ICHRA An employer-funded account that reimburses employees tax-free for individual health insurance premiums they buy themselves, with no federal dollar cap. Health reimbursement arrangement (HRA) An employer-funded plan that reimburses employees tax-free for medical expenses and, in some versions, individual health insurance premiums. Applicable large employer (ALE) Under the ACA, an employer with an average of 50 or more full-time and full-time-equivalent employees in the prior year, subject to the employer mandate.

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