8812 / What are the dollar limits that apply to QSEHRA contributions?

Generally, a QSEHRA may not provide reimbursements in excess of the annual contribution limits ($6,350 for 2025 for self-only coverage and $12,800 for family coverage; $6,150 for 2024 for self-only coverage and $12,450 for family coverage).

If the QSEHRA only provides partial year coverage, the dollar limits must be prorated to reflect the months that the individual is covered. QSEHRAs may comply with the statutory dollar limits by using the limits for the immediately preceding year (since the applicable dollar limits are not generally available until October). If the QSEHRA is not a calendar year plan, the dollar limits are prorated based upon the number of months in each portion of the two calendar years. Generally, however, the QSEHRA will not know the dollar amounts three months before the beginning of the non-calendar year plan so as to provide required notice. As a result, the QSEHRA would generally use the dollar limit in place as of the first day of the plan year for the entire plan year.

QSEHRAs that allow amounts from the prior year to be carried over into the next year may not add the carried over amounts to the permitted benefit if that would cause the permitted reimbursements to exceed the statutory limit for that year.

The annual statutory limit must also be prorated for newly eligible employees who are only covered by the QSEHRA for a portion of the year. If the employee is a participant on any day of a month, he or she is treated as being eligible for the entire month. If the employee receives reimbursements that equal the statutory limit and later terminates employment (so that he or she is not covered for the entire year), the QSEHRA does not fail to be a QSEHRA because the arrangement is treated as satisfying the dollar limit as of the time the expenses were incurred and reimbursed.

If the QSEHRA is provided for a period that is less than twelve months, the annual statutory dollar amount must be prorated to reflect the number of months in that period.

If an employee participates in more than one QSEHRA and the relevant employers are not treated as members of a single group, each employer may reimburse the employee for up to the annual statutory dollar amount (so long as no single expense is reimbursed more than once).

If a reimbursement is made mistakenly so that the total reimbursements exceed the statutory dollar amount, the employee can repay the reimbursement with after-tax funds to correct the error. The repayment must be made before March 15 of the year following the year in which the excess reimbursement was made or the date the employer receives written notice from the IRS citing the excess reimbursement.¹