2026 QSEHRA Limit
For 2026, the QSEHRA Limit is $6,450 (Maximum payments and reimbursements) and $13,100 (Maximum payments and reimbursements, family coverage).
Effective 2026-01-01Source: Rev. Proc. 2025-32 (IRS)Verified 2026-08-29
Compared with 2025
| Item | 2025 | 2026 | Change |
|---|---|---|---|
| Maximum payments and reimbursements | $6,350 | $6,450 | +$100 (+1.6%) |
| Maximum payments and reimbursements, family coverage | $12,800 | $13,100 | +$300 (+2.3%) |
Who it applies to
Small employers that do not offer a group health plan and that reimburse employees for medical expenses or individual health insurance premiums through a qualified small employer health reimbursement arrangement.
What changed this year, and why
For taxable years beginning in 2026, the maximum payments and reimbursements under a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) are $6,450 for self-only coverage and $13,100 for family coverage. These amounts are up from $6,350 and $12,800, respectively, in 2025.
Common questions
- What is a QSEHRA?
- A QSEHRA is a health reimbursement arrangement that eligible small employers can use to reimburse employees for medical expenses and individual health insurance premiums, subject to annual IRS limits.
- What are the 2026 QSEHRA limits?
- For taxable years beginning in 2026, the maximum is $6,450 for self-only coverage and $13,100 for family coverage.
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 Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) must satisfy four specific requirements to be valid. First, the arrangement must be funded solely by the employer - employees cannot make salary reduction contributions. Second, it must provide for payment or reimbursement of medical expenses incurred by the employee or their family members, but only after the employee provides proof of minimum essential coverage. Third, the total payments and reimbursements cannot exceed the annual limit, which is $6,450 for individual coverage and $13,100 for family coverage in 2026. 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. These exclusions are limited and specific, and the employer must ensure they meet the criteria before excluding any worker.
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 employee provides proof of coverage, for the payment or reim- bursement of the medical expenses incurred by the employee or the employee’s family members.
Publication 15-B (2025), Employer's Tax Guide to Fringe Benefits (IRS)
Which employers may offer one
Only certain small employers may establish a QSEHRA. To be an eligible employer, 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. You must also not offer a group health plan (including a health reimbursement arrangement (HRA) or a health FSA) to any of your employees. If the employer had 50 or more full-time employees (including full-time equivalents) in the previous year, it is too large to offer a QSEHRA. Additionally, the employer must not maintain any other group health plan for any employee - even offering a health FSA or a traditional HRA to any employee disqualifies the employer from using a QSEHRA. Both conditions must be met simultaneously: the employer must be small enough and must not offer any competing group health arrangement.
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 FSA) to any of your employ- ees.
Publication 15-B (2025), 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 all eligible employees of the employer. This means the employer cannot favor highly compensated employees or managers with richer benefits. However, the arrangement may exclude five specific categories of employees without violating the same-terms requirement: employees 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 the subject of good-faith bargaining, and nonresident aliens who have no earned income from U.S. sources. If an employee does not fall into one of these five excluded categories, the employer must offer that person the same QSEHRA benefits on the same terms as every other eligible employee.
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
Employers offering a QSEHRA have a specific W-2 reporting obligation. 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 actually received. This means the employer reports the full permitted benefit amount the employee could receive, not just what they actually spent or claimed. 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 $3,000 in box 12 using code FF. The purpose is to disclose the total available benefit so that the IRS and the employee can determine whether the employee's premium tax credit is properly reduced. The reporting is done annually, and the amount reported reflects the full permitted benefit for the calendar year, regardless of when or how much the employee actually submitted for reimbursement.
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. 2025-32 (IRS)
- Maximum payments and reimbursements
Qualified Small Employer Health Reimbursement Arrangement. For taxable years beginning in 2026, 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 $6,450
- Maximum payments and reimbursements, family coverage
the arrangement must provide that the total amount of payments and reimbursements for any year cannot exceed $6,450 ($13,100 for family coverage).