Which statement correctly distinguishes a QSEHRA from an ICHRA?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The Qualified Small Employer HRA (QSEHRA) and the Individual Coverage HRA (ICHRA) are both employer-funded reimbursement arrangements, but they serve different employers. The QSEHRA was created for small employers that do not offer group coverage and is limited to that market, while the ICHRA, introduced later, can be offered by employers of any size and may even be used alongside a traditional group plan for certain classes of employees. Neither arrangement is employee-funded, and both reimburse employees for individual health coverage premiums and qualified expenses, with the employer controlling the account.
Why the other options are wrong
- B) QSEHRAs and ICHRAs are employer-funded; employee salary reductions describe flexible spending accounts.
- C) ICHRAs are available to private employers of any size, not only government employers.
- D) Like all HRAs, QSEHRA balances are not owned by or portable with the departing employee.
Memory hook
QSEHRA is the small-shop version; ICHRA fits employers of any size.