A QSEHRA is an employer-funded health benefit for small businesses that reimburses employees tax-free for eligible health insurance premiums and medical expenses after employees submit proof of coverage and valid documentation.
What a QSEHRA is
A QSEHRA is a tax-free health reimbursement benefit for small employers
A Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is a health benefit that allows small employers to:
Set a fixed monthly allowance for employees
Reimburse employees for eligible medical expenses
Reimburse individual health insurance premiums
Provide tax-free benefits when IRS requirements are met
It is designed for businesses with fewer than 50 full-time employees that do not offer a traditional group health plan.
Who QSEHRA is for
Employers and employees have different roles in the system
Employers:
Design the benefit and set monthly allowances
Fund all reimbursements
Define eligibility rules within IRS limits
Review reimbursement reporting
Employees:
Choose their own health insurance plan
Pay premiums or medical expenses out of pocket
Submit claims for reimbursement
Provide proof of coverage and documentation
How QSEHRA works step by step
The process follows a simple reimbursement model
1. Employer sets the benefit
Employer chooses monthly allowance amounts
Employer defines eligibility rules (within IRS constraints)
Plan is activated for eligible employees
2. Employee gets covered
Employee selects an individual health insurance plan or other eligible coverage
Employee pays premiums or medical costs directly
3. Employee submits expenses
Employee uploads receipts or insurance documentation
Claims are submitted through the Take Command Health portal
4. Employer reimburses approved claims
Claims are reviewed for eligibility and compliance
Approved reimbursements are paid up to the employee’s allowance
Payments are typically made through payroll or employer reimbursement process
What QSEHRA can reimburse
Eligible expenses must meet IRS Section 213(d) rules
QSEHRA can reimburse:
Health insurance premiums
Individual Marketplace plans
Off-exchange individual plans
COBRA coverage
Medicare premiums (in many cases)
Other qualified individual coverage
Medical expenses
Doctor visits and hospital care
Prescription medications
Dental and vision care
Mental health services
Medical equipment and supplies
Other qualified expenses
Lab tests and diagnostics
Physical therapy
Medical transportation
Preventive care services