2019 QSEHRA Limit
For 2019, the QSEHRA Limit is $5,150 (Maximum payments and reimbursements) and $10,450 (Maximum payments and reimbursements, family coverage).
Effective 2019-01-01Source: Rev. Proc. 2018-57 (IRS)Verified 2026-08-29
Compared with 2018
| Item | 2018 | 2019 | Change |
|---|---|---|---|
| Maximum payments and reimbursements | $5,050 | $5,150 | +$100 (+2.0%) |
| Maximum payments and reimbursements, family coverage | $10,250 | $10,450 | +$200 (+2.0%) |
Who it applies to
Small employers that offer a qualified small employer health reimbursement arrangement to their employees, and the employees who are covered under such arrangements.
What changed this year, and why
For 2019, the IRS set the maximum amount of payments and reimbursements under a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) at $5,150 for self-only coverage and $10,450 for family coverage, as specified in Revenue Procedure 2018-57 under § 9831(d).
Common questions
- What is a QSEHRA?
- A Qualified Small Employer Health Reimbursement Arrangement is a health reimbursement arrangement maintained by an eligible small employer under § 9831(d) that reimburses employees for medical care expenses.
- What is the maximum reimbursement for self-only coverage in 2019?
- The maximum amount of payments and reimbursements for self-only coverage is $5,150 for 2019.
- What is the maximum reimbursement for family coverage in 2019?
- The maximum amount of payments and reimbursements for family coverage is $10,450 for 2019.
The four things an arrangement must do to be a QSEHRA
To qualify as a QSEHRA, an arrangement must satisfy four conditions. First, the employer alone funds it; employees cannot make salary-reduction contributions. Second, before the employer pays or reimburses any medical expense, the employee must show proof of minimum essential coverage, and the expenses covered can be those of the employee or the employee's family members. Third, total payments and reimbursements cannot exceed the annual dollar cap. Fourth, the arrangement must generally be offered on the same terms to every eligible employee, though certain groups may be excluded. If any one of these four conditions is not met, the arrangement fails to be a QSEHRA, and the tax treatment of the payments changes.
A QSEHRA is an arrangement that meets all the follow- ing requirements. 1. The arrangement is funded solely by you, and no sal- ary reduction contributions may be made under the arrangement. 2. The arrangement provides, after the eligible em- ployee provides proof of coverage, for the payment or reimbursement of the medical expenses incurred by the employee or the employee’s family members. 3. The amount of payments and reimbursements don’t exceed $5,150 ($10,450 for family coverage) for 2019.
Publication 15-B (2019), Employer's Tax Guide to Fringe Benefits (IRS)
Which employers may offer one
An employer can only offer a QSEHRA if it meets two conditions. First, it must not be an applicable large employer, which means it generally employed fewer than 50 full-time employees, including full-time equivalents, in the prior calendar year. Second, the employer must not offer a group health plan - such as a traditional health reimbursement arrangement or a health flexible spending arrangement - to any of its employees. If either condition fails, the employer cannot establish a QSEHRA. These rules ensure that QSEHRAs are available only to small employers that do not already provide group health coverage, so that the arrangement serves as an alternative to group insurance rather than a supplement to it.
Eligible employer. To be an eligible employer, you must not be an applicable large employer, which is de- fined as an employer that, generally, employed at least 50 full-time employees, including full-time equivalent employ- ees, in the prior calendar year. You must also not offer a group health plan (including a health reimbursement ar- rangement (HRA) or a health flexible spending arrange- ment (FSA)) to any of your employees.
Publication 15-B (2019), Employer's Tax Guide to Fringe Benefits (IRS)
The same-terms rule, and who may be left out
A QSEHRA must generally be offered on the same terms to every eligible employee. The employer cannot favor certain employees with higher allowances or better terms. However, the arrangement may entirely exclude specific categories of workers: those who have not completed 90 days of service, employees who have not reached age 25 before the start of the plan year, part-time or seasonal employees, employees covered by a collective bargaining agreement if health benefits were bargained for in good faith, and nonresident aliens who have no U.S.-source earned income. These exclusions allow employers to limit participation to a core workforce while still complying with the same-terms requirement for everyone who remains eligible.
4. The arrangement is generally provided on the same terms to all your eligible employees. However, your QSEHRA may exclude employees who haven’t com- pleted 90 days of service, employees who haven’t at- tained age 25 before the beginning of the plan year, part-time or seasonal employees, employees covered by a collective bargaining agreement if health benefits were the subject of good-faith bargaining, and em- ployees who are nonresident aliens with no earned in- come from sources within the United States.
Publication 15-B (2019), Employer's Tax Guide to Fringe Benefits (IRS)
What the employer reports on Form W-2
Employers that maintain a QSEHRA must report the permitted benefit amount on each employee's Form W-2. Specifically, the total amount the employee is entitled to receive under the arrangement for the calendar year goes in box 12 using code "FF." This reported figure reflects the full annual allowance, not the amount the employee actually received in reimbursements. For example, if the QSEHRA provides a permitted benefit of $3,000 but the employee only submits claims totaling $2,000, the employer still reports $3,000 in box 12 with code "FF." This reporting requirement ensures the IRS can track the benefit and verify that employees properly reduce their premium tax credit by the appropriate amount.
Reporting requirements. You must report in box 12 of Form W-2 using code “FF” the amount of payments and reimbursements that your employee is entitled to receive from the QSEHRA for the calendar year without regard to the amount of payments or reimbursements actually re- ceived. For example, if your QSEHRA provides a permit- ted benefit of $3,000 and your employee receives reim- bursements of $2,000, on Form W-2, you would report a permitted benefit of $3,000 in box 12 using code “FF.”
Publication 15-B (2019), Employer's Tax Guide to Fringe Benefits (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Rev. Proc. 2018-57 (IRS)
- Maximum payments and reimbursements
Qualified Small Employer Health Reimbursement Arrangement. For taxable years beginning in 2019, to qualify as a qualified small employer health reimbursement arrangement under § 9831(d), the arrangement must provide that the total amount of payments and reimbursements for any year cannot exceed $5,150
- Maximum payments and reimbursements, family coverage
the arrangement must provide that the total amount of payments and reimbursements for any year cannot exceed $5,150 ($10,450 for family coverage).