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Small Business Employee Benefits and HR Blog

2018 QSEHRA Contribution Limits

A qualified small employer health reimbursement arrangement (QSEHRA), or small business HRA, is a company-funded, tax-free personalized health benefit. It allows small businesses with fewer than 50 full-time employees to reimburse their employees for individual health care expenses.

With a QSEHRA, businesses must stick to annual contribution limits outlined each year by the IRS. This article outlines the QSEHRA contribution limits for 2018.

QSEHRA contribution limits for 2018

The IRS released the 2018 QSEHRA guidelines through Revenue Procedure 2017-58 on October 19, 2017.

For tax years beginning in 2018, small businesses can offer QSEHRAs with the following limits.

  Annual Limit Monthly Limit
Self-only employees $5,050 $420.83
Employees with a family $10,250 $854.16

The monthly limit reflects the annual limit over a period of 12 months.

For employees who become eligible for the QSEHRA midyear, the limits must be prorated to reflect the total amount of time the employee is eligible. For example, an employee who is eligible for the QSEHRA for eight months in 2018 could receive up to $3,366.64 through the benefit that year.

How the new limits compare with 2017 limits

In 2017, the QSEHRA contribution limits were $4,950 annually for self-only employees and $10,000 annually for employees with a family.

In 2018, QSEHRA contribution limits reflect a $100 annual increase for self-only employees and a $250 annual increase for employees with a family. That's about $16.66 more per month for self-only employees and $20.83 for employees with a family.