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(For Churches and Organizations with Fewer Than 50 Employees and No Group Health Plan)

A Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is an excellent, IRS-approved benefit option designed specifically for small employers—such as churches and ministries with fewer than 50 full-time employees—that do not offer a traditional group health insurance plan.

With a QSEHRA in place, the church establishes a reimbursement-based health benefit that allows eligible employees to receive tax-free reimbursements for a wide range of healthcare expenses.

What Expenses Can Be Reimbursed?

A QSEHRA can reimburse employees for qualified medical expenses as defined by the IRS, including:

• Individual health insurance premiums (on or off the Marketplace)
• Co-pays and deductibles
• Prescription medications
• Vision care, including exams, glasses, and contact lenses
• Dental care, including cleanings, fillings, and major procedures
• Chiropractic and other eligible treatments
• Long-term care services
• Certain medically necessary over-the-counter medications (based on plan design)

This flexibility allows employees to choose the healthcare coverage and services that best meet their needs, while still receiving financial support from their employer.

Key Tax Advantages

A QSEHRA provides meaningful tax benefits for both the employer and employees:

• Tax-free reimbursements for employees – Funds received through the plan are not subject to federal income or payroll taxes when used for qualified expenses.

This creates a highly efficient compensation strategy, allowing churches to provide valuable health benefits without the high cost and complexity of group insurance.

Eligibility and Plan Requirements

To qualify for and maintain a QSEHRA, the following rules must be met:

• The church or organization must have fewer than 50 full-time employees
• The employer cannot offer a group health insurance plan to any employees
• The plan must be offered on the same terms to all eligible employees (with limited variations allowed for family size or age)
• The employer fully funds the benefit—employees cannot contribute
• Employees must have minimum essential coverage (MEC) to receive tax-free reimbursements

2026 Contribution Limits

The IRS sets annual maximum reimbursement limits for QSEHRA plans. For 2026:

• Individual coverage: up to $6,450 per year
• Family coverage: up to $13,100 per year

These limits are prorated for employees who are not eligible for the full year. For example, if an employee begins mid-year, their maximum benefit is adjusted based on the number of months they are eligible—employers cannot increase monthly allowances to “catch up” to the full annual maximum.

Why Consider a QSEHRA?

A QSEHRA is ideal for churches and small organizations that want to:

• Provide meaningful health benefits without sponsoring a group plan
• Control costs with predictable, defined contribution limits
• Offer flexibility for employees to choose their own coverage
• Convert healthcare expenses into tax-advantaged reimbursements

What Happens Next?

Getting started with a QSEHRA is simple and fully supported:

Step 1: Complete the Enrollment Form
Submit your information so we can design a plan tailored to your church’s needs.

Step 2: Expert Review
A benefits advisor will review your submission to ensure accuracy, completeness, and compliance with IRS regulations.

Step 3: Receive Your Custom Plan Package
Once finalized, we will provide everything you need to implement your plan, including:

• Official Plan Document
• Summary Plan Description (SPD)
• Required forms and compliance materials
• Easy-to-follow setup and signing instructions

Do You Need Ongoing HRA Plan Support?

Click here to enroll