The Full Comparison
| Factor | QSEHRA | ICHRA |
|---|---|---|
| Who can use it | Under 50 FTEs only | Any employer, any size |
| Annual contribution limit (2026) | $6,350 individual / $12,800 family | No IRS limit |
| Different amounts by class | No (uniform, except family size) | Yes (by employment class) |
| Coexist with group health plan | No — mutually exclusive | Yes — for different classes |
| Employee marketplace subsidies | Reduces subsidies dollar-for-dollar | Eliminates if "affordable" |
| Notice to employees required | 90 days before plan year | 90 days before plan year |
| Employee must have MEC | Yes — for tax-free reimbursement | Yes — for tax-free reimbursement |
| ACA affordability test | Doesn't apply (ALE compliance) | Applies for ALE (50+ FTEs) |
| SHOP tax credit eligible | No | No |
| Administration complexity | Low–Moderate | Moderate–High |
When QSEHRA Is the Better Choice
QSEHRA typically wins for Florida small businesses when:
- You have fewer than 50 FTEs and want a simple, uniform benefit for all employees
- Your employees are concentrated in a single county with consistent individual market options
- You don't need to offer different benefit amounts to different employee classes
- Your employees have relatively low marketplace subsidy amounts (so subsidy offset is minimal)
- You want the simplest possible HRA structure
QSEHRA is the preferred choice for most Florida businesses with 1–15 employees who want a defined contribution health benefit without group plan complexity.
When ICHRA Is the Better Choice
ICHRA typically wins when:
- You have 50+ employees or anticipate growing past the QSEHRA limit
- You want to offer different benefit amounts to different employee classes (full-time vs. part-time, management vs. hourly, geographic regions)
- You already offer a group plan to one class and want to add HRA benefits to a different class
- You want to contribute more than the QSEHRA limits ($6,350/$12,800 annually)
- Your business has employees in multiple Florida counties with different individual market options
Florida Multi-County Employers: A Lakeland-based business with employees in Polk, Hillsborough, and Orange counties faces very different individual market conditions in each county. ICHRA allows different reimbursement amounts by geographic class — higher for Tampa (Hillsborough) where premiums are more expensive, lower for Lakeland where premiums are more affordable. QSEHRA cannot offer this geographic flexibility.
The ACA Subsidy Problem — A Critical Difference
Both QSEHRA and ICHRA can displace marketplace premium tax credits for employees who currently receive subsidies. The mechanics differ:
- QSEHRA: Reduces employee subsidies by the QSEHRA amount, dollar-for-dollar, regardless of affordability
- ICHRA: If the ICHRA is "affordable" (employer contribution makes the lowest-cost Silver plan cost ≤9.02% of household income), the employee is fully ineligible for marketplace subsidies. If not affordable, the employee can choose the marketplace subsidy instead of ICHRA.
For Florida employers with low-wage workers who receive substantial marketplace subsidies, an HRA may provide less net benefit than it appears. We model the subsidy offset as part of our HRA analysis before recommending either structure.
QSEHRA vs. ICHRA vs. Group Plan: A Three-Way Summary
| Structure | Best When | Watch Out For |
|---|---|---|
| Group health plan | Stable workforce; SHOP credit eligibility; need for consistent network | Participation requirements; renewal pricing risk |
| QSEHRA | Under 50 FTEs; simple uniform benefit; low admin budget | Contribution caps; subsidy offset for subsidized employees |
| ICHRA | Need class flexibility; large employer; want no contribution cap | Affordability test complexity; higher admin cost |
Frequently Asked Questions
My Florida business currently offers a QSEHRA. Can I convert to ICHRA?
Yes. You can terminate a QSEHRA and establish an ICHRA — you must provide 90 days advance notice of QSEHRA termination. When the ICHRA starts, employees have a special enrollment period to update their individual marketplace coverage if needed. The main reasons to switch from QSEHRA to ICHRA are: business growth past 50 FTEs, desire to offer different benefit amounts by class, or desire to contribute above QSEHRA limits. There is no IRS penalty for switching between HRA types as long as proper notice is given.
Can my Florida nonprofit use QSEHRA or ICHRA?
Yes. Nonprofits can use both QSEHRA and ICHRA — the tax treatment is the same as for-profit entities. However, nonprofits should note that neither QSEHRA nor ICHRA qualifies for the SHOP tax credit (which provides up to 35% of premiums for qualifying nonprofits). If your nonprofit qualifies for the SHOP credit, a group health plan purchased through SHOP provides better value than an HRA. We evaluate the SHOP credit alongside HRA options for every nonprofit client to determine the most cost-effective structure.
Get an HRA Comparison for Your Florida Business
We model QSEHRA, ICHRA, and group plan options side by side. Call (877) 224-8539 or use the form. Florida License #L088529.