2023 QSEHRA Limit
For 2023, the QSEHRA Limit is $5,850 (Maximum payments and reimbursements) and $11,800 (Maximum payments and reimbursements, family coverage).
Effective 2023-01-01Source: Rev. Proc. 2022-38 (IRS)Verified 2026-08-29
Compared with 2022
| Item | 2022 | 2023 | Change |
|---|---|---|---|
| Maximum payments and reimbursements | $5,450 | $5,850 | +$400 (+7.3%) |
| Maximum payments and reimbursements, family coverage | $11,050 | $11,800 | +$750 (+6.8%) |
Who it applies to
Small employers with qualified small employer health reimbursement arrangements (QSEHRAs) under § 9831(d) and their employees.
What changed this year, and why
The maximum payments and reimbursements limits for qualified small employer health reimbursement arrangements (QSEHRAs) for taxable years beginning in 2023 are $5,850 for individual coverage and $11,800 for family coverage.
Common questions
- What is a QSEHRA?
- A QSEHRA is a qualified small employer health reimbursement arrangement under IRC § 9831(d) that allows eligible small employers to reimburse employees for medical expenses and individual health insurance premiums.
- What are the requirements for a QSEHRA?
- The arrangement must be maintained by an eligible small employer and must not exceed the annual payment and reimbursement limits set by the IRS.
The four things an arrangement must do to be a QSEHRA
Under IRS rules, a Qualified Small Employer Health Reimbursement Arrangement must satisfy four specific conditions to be valid. First, the arrangement must be funded entirely by the employer - employees cannot contribute through salary reductions. Second, it must provide for payment or reimbursement of medical expenses for the employee and their family members, but only after the employee provides proof of minimum essential coverage. Third, the total payments and reimbursements cannot exceed $5,850 for individual coverage or $11,800 for family coverage in 2023. Fourth, the arrangement must generally be offered on the same terms to all eligible employees, though certain categories of employees may be excluded from participation.
A QSEHRA is an arrangement that meets all the follow- ing requirements.
Publication 15-B (2023), Employer's Tax Guide to Fringe Benefits (IRS)
Which employers may offer one
To offer a Qualified Small Employer Health Reimbursement Arrangement, an employer must meet two key requirements. First, the employer must not be an applicable large employer, which is defined as an employer that generally employed at least 50 full-time employees, including full-time equivalent employees, in the prior calendar year. Second, the employer must not offer a group health plan, including a health reimbursement arrangement or a health FSA, to any of its employees. These restrictions ensure that QSEHRAs are available only to small employers that do not provide other group health coverage to their workforce.
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.
Publication 15-B (2023), 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. However, the arrangement may exclude certain categories of employees from participation. These excluded employees include those who have not completed 90 days of service, employees who have not attained 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 employees who are nonresident aliens with no earned income from sources within the United States. This flexibility allows employers to tailor coverage while maintaining the same-terms requirement for those who are eligible.
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 (2023), Employer's Tax Guide to Fringe Benefits (IRS)
What the employer reports on Form W-2
Employers must report QSEHRA benefits on Form W-2 using code FF in box 12. The amount reported is the total permitted benefit that the employee is entitled to receive from the QSEHRA for the calendar year, without regard to the amount of payments or reimbursements actually received by the employee. This means the reported figure reflects the full benefit available under the arrangement, not the amount the employee actually claimed. For instance, an employee may be entitled to the full annual limit but submit only a portion for reimbursement - the W-2 must still show the full entitlement amount. This reporting requirement provides the IRS with information about the tax-free benefit each employee receives.
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.
Publication 15-B (2023), 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. 2022-38 (IRS)
- Maximum payments and reimbursements
Qualified Small Employer Health Reimbursement Arrangement. For taxable years beginning in 2023, 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 $5,850
- Maximum payments and reimbursements, family coverage
the arrangement must provide that the total amount of payments and reimbursements for any year cannot exceed $5,850 ($11,800 for family coverage).