QSEHRA vs ICHRA: where the cap runs out
A QSEHRA caps what you can give. An ICHRA does not. For 2026 the QSEHRA cap is $537.50 a month for one person. We checked 24,217 plan and rating-area combinations in the 2026 individual market. At age 60 and above, not one of them costs less than that.
The short version
Both plans do the same basic thing. You give people money. They buy their own health insurance. You never touch a group plan.
The difference is the ceiling.
A QSEHRA has a hard dollar cap set by the IRS. An ICHRA has no cap at all.
That sounds like a small detail. It is not. Our own premium data shows the cap stops covering a full premium well before retirement age.
The one difference that decides most cases
Start here, because it settles most decisions on its own.
For 2026, a QSEHRA may reimburse at most $6,450 a year for one person. That is $537.50 a month. For a family it is $13,100 a year, or $1,091.66 a month (HealthCare.gov).
Those figures come from IRS Revenue Procedure 2025-32, section 4.63 (IRS).
An ICHRA has no such number. Federal rules cap how much the allowance may vary by age. They do not cap the amount.
So the real question is simple. Does $537.50 a month buy a health plan for your people?
We can answer that from our own data.
Where the 2026 cap actually lands
We hold every published rate for the 2026 individual market in the 30 states that use the federal marketplace.
That is 1,235,067 rate rows. They cover 4,044 plans across 67 rating areas, at every age from 14 to 64.
For any single age, that gives 24,217 plan and rating-area combinations. We call each one a plan cell. It is one real plan, at one real price, in one real place.
So we asked one question of all 24,217. Is the monthly premium at or below $537.50?
The cap runs out with age
Here is what we found. Queried 2026-09-01.
| Age | Median monthly premium | Plan cells the cap fully covers | Share | States with none |
|---|---|---|---|---|
| 21 | $540.49 | 11,871 of 24,217 | 49.0% | 1 of 30 |
| 25 | $543.70 | 11,658 of 24,217 | 48.1% | 1 of 30 |
| 30 | $614.48 | 7,584 of 24,217 | 31.3% | 2 of 30 |
| 40 | $691.56 | 4,389 of 24,217 | 18.1% | 3 of 30 |
| 50 | $966.63 | 215 of 24,217 | 0.9% | 12 of 30 |
| 55 | $1,206.72 | 13 of 24,217 | 0.1% | 23 of 30 |
| 60 | $1,468.11 | 0 of 24,217 | 0.0% | 30 of 30 |
| 64 | $1,621.47 | 0 of 24,217 | 0.0% | 30 of 30 |
Read the last two rows again.
At age 60, and at age 64, the count is zero. Not one plan in the whole 30-state set costs $537.50 a month or less.
The cheapest plan we can find anywhere for a 64-year-old is $651.63 a month. That is 1.21 times the cap. The median is $1,621.47, or 3.02 times the cap.
Put another way. The full annual QSEHRA cap of $6,450 covers 33.1% of the median 64-year-old's premium.
The turn happens early too. At age 20 the median premium is $517.27, just under the cap. At age 21 it is $540.49, just over. The median crosses the cap in a single year of age.
By age 55 only 13 plan cells out of 24,217 are still at or under the cap. They sit in seven states: Florida, Hawaii, Iowa, North Dakota, New Hampshire, Oklahoma and South Dakota. The cheapest of the thirteen is $484.38.
Which states have nothing under the cap
Age matters most. Location matters next.
This is every state we cover, at age 40, sorted by median premium.
| State | Plan cells | Median premium, age 40 | Cheapest plan | Share the cap covers |
|---|---|---|---|---|
| NH | 46 | $449.52 | $277.59 | 82.6% |
| IA | 535 | $511.81 | $300.41 | 57.8% |
| ND | 167 | $550.63 | $296.44 | 43.1% |
| HI | 17 | $559.41 | $296.87 | 35.3% |
| MI | 892 | $573.71 | $345.23 | 40.8% |
| IN | 883 | $584.71 | $372.84 | 40.8% |
| SC | 2,518 | $599.22 | $335.74 | 28.8% |
| OH | 2,019 | $599.85 | $355.85 | 30.3% |
| SD | 156 | $605.63 | $290.64 | 26.9% |
| OR | 356 | $606.98 | $426.45 | 26.4% |
| AZ | 423 | $646.61 | $351.99 | 27.9% |
| OK | 396 | $647.36 | $299.03 | 17.9% |
| WI | 974 | $650.48 | $352.77 | 19.8% |
| MO | 537 | $655.59 | $365.07 | 17.7% |
| TX | 2,263 | $666.23 | $320.39 | 20.9% |
| AL | 530 | $682.60 | $365.93 | 20.9% |
| NC | 944 | $692.21 | $420.11 | 10.6% |
| MT | 150 | $702.69 | $312.41 | 24.0% |
| MS | 274 | $710.74 | $563.24 | 0.0% |
| LA | 362 | $710.92 | $402.19 | 18.0% |
| KS | 262 | $715.72 | $441.90 | 14.5% |
| TN | 449 | $718.48 | $465.65 | 7.6% |
| AR | 364 | $719.85 | $355.80 | 23.1% |
| DE | 40 | $742.02 | $467.86 | 2.5% |
| UT | 196 | $747.60 | $472.44 | 10.7% |
| FL | 7,569 | $780.17 | $281.89 | 4.2% |
| NE | 374 | $829.23 | $493.86 | 1.3% |
| AK | 45 | $918.00 | $648.00 | 0.0% |
| WV | 407 | $1,007.60 | $528.82 | 0.5% |
| WY | 69 | $1,049.62 | $739.62 | 0.0% |
Three states show 0.0%. In Mississippi, Alaska and Wyoming, a 40-year-old has no plan at or under the cap. Not a cheap one. None at all.
The cheapest plan for a 40-year-old in Wyoming is $739.62 a month. The cap is $537.50. The gap is $202.12 every month, before anyone gets sick.
New Hampshire is the only state where most plans fit under the cap.
The tax-credit trap nobody mentions
This is the part that surprises people, and it is worth reading twice.
Both plans affect the premium tax credit. They do it differently, and the difference runs the wrong way for a QSEHRA.
With a QSEHRA, if the arrangement counts as affordable coverage, no tax credit is allowed that month (IRS, section 36B(c)(4)(A)).
If it is not affordable, the employee may still get a credit. But the credit is reduced by one twelfth of the permitted benefit (IRS, section 36B(c)(4)(B)).
Read that carefully. The reduction applies whether or not the QSEHRA was enough.
With an ICHRA the employee has a different option. An ICHRA must let a participant opt out and waive future reimbursements, once for each plan year. If the ICHRA is unaffordable, that employee may then claim the credit (IRS, final ICHRA rules).
Now combine that with our data.
Say you employ a 62-year-old in Wyoming. The QSEHRA cap cannot cover their premium — our numbers say nothing at that age is under the cap anywhere. So the QSEHRA falls short. And it still cuts their tax credit by $537.50 a month.
The ICHRA rules require an annual opt-out opportunity. The QSEHRA rules carry no matching requirement.
An ICHRA at the same dollar amount leaves the choice open. If the offer is unaffordable, the employee can walk away from it and keep the credit whole.
That is not a small difference for an older workforce.
Side by side
| QSEHRA | ICHRA | |
|---|---|---|
| Annual limit, one person, 2026 | $6,450 | None set by the IRS |
| Monthly limit, one person | $537.50 | None set by the IRS |
| Annual limit, family, 2026 | $13,100 | None set by the IRS |
| Employer size | Fewer than 50 full-time employees | Any size |
| May you also offer a group plan? | No | Yes, but not to the same class of employee |
| Split staff into different groups? | No. Same terms for all full-time staff | Yes. Eleven permitted classes |
| Allowance may vary by | Age, and number of people covered | Age, and number of people covered |
| If it is affordable | No tax credit that month | No tax credit that month |
| If it is not affordable | Credit is reduced by the monthly benefit | Employee may opt out and keep the full credit |
| Written notice to staff | At least 90 days before the plan year | At least 90 days before the plan year |
| Annual opt-out required by rule? | No | Yes, once for each plan year |
The QSEHRA size limit and same-terms rule come from HealthCare.gov. The QSEHRA notice rule is in 26 U.S.C. § 9831(d). The ICHRA notice and opt-out rules are in the final ICHRA regulations.
Who can offer which
A QSEHRA has a gate on the door. You must have fewer than 50 full-time employees. You must not offer a group health plan, and that includes SHOP coverage and a health FSA (HealthCare.gov).
An ICHRA has no size gate. Any employer may offer one.
There is one more QSEHRA rule worth knowing. You must offer it on the same terms to all full-time employees. Amounts may vary only by age and by how many people are covered.
So a QSEHRA cannot be given to one group and withheld from another. An ICHRA can, using the eleven permitted classes.
What the cap does not stop you doing
A QSEHRA cap is a limit on tax-free reimbursement. It is not a limit on generosity.
You can always pay someone more in wages. That money is taxed as wages, which is the whole point of the cap.
And if the QSEHRA amount is small next to premiums in your state, a plain raise may serve some employees better. Our state table is the input to that comparison, not the answer to it.
What we could not check
Three limits on the numbers above. All three matter.
We only hold 30 states. These are the states using the federal marketplace. The other states run their own marketplaces and publish prices separately. We do not price them and do not guess.
We cannot test the family cap. Our rate data holds individual premiums only. There is no family rate in the source files. So the $13,100 family cap is quoted from the IRS, not tested against our data. Honest absence beats a guess.
These are sticker premiums. Every figure above is the full premium before any tax credit. A person who qualifies for a credit may pay far less. The comparison here is cap against list price, which is the number an employer is deciding against.
We also cannot tell you what any one employee will actually pay. That depends on their income and household, which we do not hold.
How to choose
A short version, and it follows from the data rather than from preference.
Choose a QSEHRA if you are under 50 full-time staff and your team is young. It is the simpler setup. It only works if the cap comfortably covers premiums in your state. New Hampshire and Iowa are the two states where that is most likely.
Choose an ICHRA if any of these is true. You have 50 or more employees. You have staff over 50 years old. You are in a high-premium state. You want to give different amounts to different groups. Or you want employees to keep the option of the tax credit.
The age table is the honest test. Find the ages of your staff. Read across. If your people sit in the bottom rows, the QSEHRA cap will not reach.
Where these numbers come from
Source file: CMS 2026 Marketplace Public Use Files, individual-market rate tables, loaded into our own database.
Source URL: CMS Marketplace PUF
Records behind this page: 1,235,067 rate rows; 4,044 standard components; 67 rating areas; ages 14 to 64; 24,217 plan and rating-area cells per age; 30 states. Queried: 2026-09-01.
Computed here, and nowhere in the source file:
- The count of plan and rating-area cells at or under the 2026 QSEHRA monthly cap, at each age.
- The number of states with no plan at or under that cap, at each age.
- The share of the median annual premium the full annual cap covers.
- The state-level median and cheapest age-40 premium, with the share of plans the cap covers.
The 2026 QSEHRA limits are quoted from IRS Rev. Proc. 2025-32 and HealthCare.gov, retrieved 2026-09-01. Tax-credit and opt-out rules are quoted from Internal Revenue Bulletin 2019-28, retrieved 2026-09-01.
We did not model any employee's tax credit, and no figure above is an estimate.
Questions people ask
What is the 2026 QSEHRA limit?
For 2026 it is $6,450 a year for one person, which is $537.50 a month. For a family it is $13,100 a year, or $1,091.66 a month. The IRS set these in Revenue Procedure 2025-32.
Does an ICHRA have a contribution limit?
No. The IRS sets no maximum on an ICHRA allowance. Rules limit how much the allowance may vary by age, not how large it may be.
Can the QSEHRA cap cover a full premium for an older employee?
Not in the states we cover. At age 60 and at age 64, none of the 24,217 plan cells we checked cost $537.50 a month or less. The cheapest at age 64 was $651.63.
Can I offer both a QSEHRA and a group health plan?
No. A QSEHRA requires that you offer no group health plan. That includes SHOP coverage and a health FSA. An ICHRA may sit alongside a group plan, but not for the same class of employee.
Does a QSEHRA reduce my employee's premium tax credit?
Yes. If the QSEHRA is affordable coverage, no credit is allowed for that month. If it is not affordable, the credit is reduced by one twelfth of the permitted benefit.
Can an employee turn down a QSEHRA to keep the tax credit?
The ICHRA rules require an annual opt-out opportunity, and the QSEHRA rules carry no matching requirement. With an unaffordable ICHRA, an employee may opt out and waive future reimbursements, then claim the credit.
How many employees can I have and still offer a QSEHRA?
Fewer than 50 full-time employees. An ICHRA has no size limit, so employers at or above that line use an ICHRA.
Do I have to give every employee the same QSEHRA amount?
You must offer it on the same terms to all full-time employees. Amounts may differ only by age and by the number of people covered. There are no classes in a QSEHRA.
When do I have to tell employees about a QSEHRA?
At least 90 days before the start of the plan year. A new hire who becomes eligible later must get notice by the date they first become eligible.
Which states have no plan under the QSEHRA cap?
At age 40, three of the 30 states we cover have none: Mississippi, Alaska and Wyoming. The cheapest 40-year-old premium in Wyoming is $739.62 a month, which is $202.12 above the cap.