2025 QSEHRA Limit
For 2025, the QSEHRA Limit figures are $6,350 (Maximum payments and reimbursements) and $12,800 (Maximum payments and reimbursements, family coverage).
Effective 2025-01-01Source: Rev. Proc. 2024-40 (IRS)Verified 2026-09-03
Compared with 2024
| Item | 2024 | 2025 | Change |
|---|---|---|---|
| Maximum payments and reimbursements | $6,150 | $6,350 | +$200 (+3.3%) |
| Maximum payments and reimbursements, family coverage | $12,450 | $12,800 | +$350 (+2.8%) |
Who it applies to
Small employers that maintain a qualified small employer health reimbursement arrangement under IRC § 9831(d) and their employees
What changed this year, and why
For taxable years beginning in 2025, the IRS set the maximum amount of payments and reimbursements under a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) at $6,350 for self-only coverage and $12,800 for family coverage, as specified in Revenue Procedure 2024-40.
Common questions
- What is a QSEHRA?
- A Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is a tax-advantaged arrangement under IRC § 9831(d) that allows eligible small employers to reimburse employees for medical expenses and individual health insurance premiums.
- Do these limits apply to the calendar year or the taxable year?
- The $6,350 self-only limit and the $12,800 family coverage limit apply to taxable years beginning in 2025.
Every amount on this page is a published figure rather than yours. The QSEHRA reimbursement headroom takes the number you enter and works it out against them, showing which published figure it used.
The four things an arrangement must do to be a QSEHRA
A QSEHRA is an arrangement that meets all the following requirements. First, it must be funded solely by the employer, and no salary reduction contributions may be made. Second, it must provide for the payment or reimbursement of medical expenses incurred by the employee or the employee's family members, but only after the employee provides proof of coverage. Third, the amount of payments and reimbursements cannot exceed $6,350 for self-only coverage or $12,800 for family coverage in 2025. Fourth, the arrangement must generally be provided on the same terms to all eligible employees, though certain categories of employees may be excluded.
A QSEHRA is an arrangement that meets all the follow- ing requirements.
Publication 15-B (2025), Employer's Tax Guide to Fringe Benefits (IRS)
Which employers may offer one
To be an eligible employer, you must meet two requirements. First, you 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, you must not offer a group health plan to any of your employees. This includes health reimbursement arrangements (HRAs) and health flexible spending arrangements (FSAs). If you offer any group health plan to any employee, you cannot offer a QSEHRA.
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 (2025), Employer's Tax Guide to Fringe Benefits (IRS)
The same-terms rule, and who may be left out
A federal QSEHRA must generally be offered on the same terms to every eligible employee of the sponsoring small employer. An employer cannot favor highly compensated workers or key employees with larger allowances or better reimbursement rules. At the same time, the IRS permits a QSEHRA to leave certain categories of workers out entirely without breaking the same-terms requirement. Specifically, the arrangement may exclude employees who have not yet completed 90 days of service, employees who have not reached age 25 before the start of the plan year, part-time or seasonal workers, employees covered under a collective bargaining agreement where health benefits were bargained in good faith, and nonresident aliens who have no U.S.-source earned income. Any employee who is not excluded on one of these grounds must be offered the arrangement on identical terms, including the same maximum allowance - up to $6,350 for self-only coverage or $12,800 for family coverage in 2025.
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 (2025), Employer's Tax Guide to Fringe Benefits (IRS)
What the employer reports on Form W-2
The figure that goes on the W-2 is the promise, not the payout. Box 12 with code FF carries the permitted benefit, meaning the most the employee was entitled to draw from the arrangement over the year, and it is reported at that amount whether or not the employee ever claimed a cent of it. So where a QSEHRA offers a permitted benefit of $3,000 and the employee submits $2,000 of reimbursable expenses, the box still reads $3,000. Two things follow for anyone reading the form. The number will often be larger than any money that changed hands, so it should not be read as what the employee received. And because it reports an entitlement rather than activity, it is fixed by what the arrangement offered and does not move if the employee is healthy and claims nothing. For 2025 that entitlement is itself capped: $6,350 where the arrangement covers the employee alone and $12,800 where it also covers family, so those are the largest amounts code FF can carry.
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 (2025), 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. 2024-40 (IRS)
- Maximum payments and reimbursements
Qualified Small Employer Health Reimbursement Arrangement. For taxable years beginning in 2025, 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 $6,350
- Maximum payments and reimbursements, family coverage
the arrangement must provide that the total amount of payments and reimbursements for any year cannot exceed $6,350 ($12,800 for family coverage).