At first glance, the only difference between Health Reimbursement Arrangements (HRAs) and Qualified Small Employer HRAs (QSEHRAs) are the three extra letters. But don’t be fooled; these two employee health benefits differ meaningfully, with important nuances to understand.
HRAs and QSEHRAs are both tools employers can use to help cover employees’ medical expenses. However, they vary regarding employer eligibility, contribution limits, and how they interact with other health insurance plans. For example, HRAs are versatile and can be used by companies of any size, allowing employers to set flexible budgets and determine which expenses are covered. QSEHRAs, on the other hand, are designed specifically for small businesses and have more rigid contribution limits and guidelines.
If you’re a business owner or an HR professional trying to decide which option is best for your organization, it’s crucial to understand these differences. The right choice depends on factors such as company size, budget, and the types of benefits you want to offer your employees.