2022 QSEHRA Limit
For 2022, the QSEHRA Limit is $5,450 (Maximum payments and reimbursements) and $11,050 (Maximum payments and reimbursements, family coverage).
Effective 2022-01-01Source: Rev. Proc. 2021-45 (IRS)Verified 2026-08-29
Compared with 2021
| Item | 2021 | 2022 | Change |
|---|---|---|---|
| Maximum payments and reimbursements | $5,300 | $5,450 | +$150 (+2.8%) |
| Maximum payments and reimbursements, family coverage | $10,700 | $11,050 | +$350 (+3.3%) |
Who it applies to
Small employers that maintain a qualified small employer health reimbursement arrangement under IRC § 9831(d) for taxable years beginning in 2022
What changed this year, and why
For taxable years beginning in 2022, the maximum amount of payments and reimbursements under a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is $5,450. For family coverage, the maximum is $11,050.
Common questions
- What is a Qualified Small Employer Health Reimbursement Arrangement?
- A QSEHRA is an arrangement under § 9831(d) that allows a small employer to pay or reimburse employees' medical care expenses, subject to annual dollar limits.
- What were the QSEHRA limits in 2021?
- In 2021 the limits were $5,300 for individual coverage and $10,700 for family coverage.
The four things an arrangement must do to be a QSEHRA
A QSEHRA is an arrangement that meets all the following requirements. 1. The arrangement is funded solely by you, and no salary reduction contributions may be made under the arrangement. 2. The arrangement provides, after the eligible employee 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 doesn't exceed $5,450 ($11,050 for family coverage) for 2022. 4. The arrangement is generally provided on the same terms to all your eligible employees.
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 doesn’t exceed $5,450 ($11,050 for family coverage) for 2022. 4. The arrangement is generally provided on the same terms to all your eligible employees.
Publication 15-B (2022), Employer's Tax Guide to Fringe Benefits (IRS)
Which employers may offer one
A Qualified Small Employer Health Reimbursement Arrangement may only be offered by small employers. An eligible employer must not be an applicable large employer, meaning it generally employed fewer than 50 full-time employees (including full-time equivalents) in the prior calendar year. Additionally, the employer must not offer a group health plan - including a health reimbursement arrangement or health flexible spending account - to any of its employees. If an employer meets either disqualifying condition (being an applicable large employer or offering any group health plan), it cannot establish a QSEHRA. The IRS also requires eligible employers to provide a written notice to each eligible employee about the arrangement, as further described in Notice 2017-67.
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 FSA) to any of your employ- ees.
Publication 15-B (2022), Employer's Tax Guide to Fringe Benefits (IRS)
The same-terms rule, and who may be left out
A QSEHRA must generally be provided on the same terms to all eligible employees, meaning the employer cannot favor certain workers in the amount or conditions of the benefit. However, the arrangement may entirely exclude specified categories of employees. These include employees who have not completed the required service period, employees who have not reached the minimum age before the plan year begins, part-time or seasonal workers, employees covered by a collective-bargaining agreement where health benefits were the subject of good-faith bargaining, and nonresident aliens with no earned income from United States sources. If the employer fails to operate the arrangement on the same terms for all eligible employees who are not within an excluded category, the arrangement loses its QSEHRA status and becomes a group health plan subject to the Affordable Care Act market reforms, which can result in significant excise taxes.
The arrangement is generally provided on the same terms to all your eligible employees.
Publication 15-B (2022), Employer's Tax Guide to Fringe Benefits (IRS)
What the employer reports on Form W-2
Each year the employer must report on Form W-2 the amount of payments and reimbursements the employee is entitled to receive under the QSEHRA for the calendar year, regardless of how much the employee actually submits for reimbursement. The reported amount appears in box 12 of Form W-2 using code FF. For example, if the QSEHRA provides a permitted benefit of $3,000 but the employee only receives reimbursements of $2,000, the employer still reports the full $3,000 permitted benefit in box 12 with code FF. This reporting is required even though the reimbursements may be excluded from the employee's gross income, and it gives the IRS information needed to verify that the employee's premium tax credit, if any, has been properly reduced.
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 (2022), 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. 2021-45 (IRS)
- Maximum payments and reimbursements
Qualified Small Employer Health Reimbursement Arrangement. For taxable years beginning in 2022, 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 $5,450
- Maximum payments and reimbursements, family coverage
the arrangement must provide that the total amount of payments and reimbursements for any year cannot exceed $5,450 ($11,050 for family coverage).