Managing QSEHRA Allowances for 2026: Guidelines and Key Enquiries
Employers offering a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) can get clarity on managing allowances for the 2026 plan year, including strategies for handling undefined allowances before official limits are released and updates based on finalized maximum figures. Below is a complete guide on how to plan, estimate, and finalize QSEHRA allowances for 2026.
1. Planning Allowances Before Official Limits Are Published
If the IRS has not yet released the contribution limits for 2026, you can take the following steps:
Use the most recently published limits for planning: Reference the latest annual contribution maximums available (e.g., the 2025 IRS limits of $6,350 per year for individuals and $12,800 for families). These figures provide a solid baseline for interim planning. Update your plan design once the official 2026 limits are announced.
Make preliminary adjustments and defer finalizing allowances: If you need to make other plan changes, proceed while postponing the allowance decision until the 2026 limits are published.
Pre-authorize updates to align with 2026 limits: If desired, you can pre-approve future adjustments. Your set allowance amounts can be automatically updated according to the new IRS limits once released.
2. Finalized 2026 QSEHRA Allowance Limits
The IRS has announced the official QSEHRA allowance maximums for 2026:
Individual Coverage: $537.50 per month ($6,450 per year)
Family Coverage: $1,091.67 per month ($13,100 per year)
Employers must align their contribution limits with these figures to ensure compliance.
3. Implementing and Updating Allowances for 2026
If you are setting or updating your QSEHRA allowances for the 2026 plan year, follow these key steps:
Reflect updates starting January 2026: Any changes made for the 2026 plan year must adhere to the required notice obligations to ensure the updated allowance is reflected in January.
Post-announcement customization: Once the 2026 limits are defined, you can establish custom contribution structures for your employees. Note that no custom amounts can be set until the official limits are published.
FAQs
Q: Can I set custom allowance amounts now for 2026? A: No. Custom allowance structures can only be implemented once the IRS publishes the finalized limits for 2026. Q: What happens if I pre-authorize updates? A: Your allowances will automatically align with the 2026 IRS limits once announced, streamlining the adjustment process. Q: When will the updated allowances reflect in payroll? A: If all requirements are met, the changes will be effective starting January 2026.