Choose between one group plan and employee-chosen coverage
A group plan gives employees one employer-sponsored set of choices. A Health Reimbursement Arrangement, called an HRA, lets the employer reimburse qualifying costs while employees choose individual coverage. The useful question is not which option sounds newer. It is which one fits your business size, budget, employee locations, and ability to manage the rules.
| Option | Who can offer it | What employees receive | Main decision rule |
|---|---|---|---|
| QSEHRA | An eligible employer with fewer than 50 full-time employees and full-time equivalents that does not offer a group health plan | Employer-funded reimbursement for qualifying medical costs, including individual coverage premiums | The 2026 federal maximum is $6,450 for self-only coverage or $13,100 for family coverage |
| CHOICE Arrangement, formerly ICHRA | An employer of any size | Employer-funded reimbursement for qualifying individual coverage or Medicare costs | Affordability and the employee's decision to accept or decline can affect Marketplace premium tax-credit eligibility |
| Qualified group plan, including SHOP | A qualifying small employer that wants to sponsor group coverage | One employer-sponsored plan or plan selection, with the employer usually paying part of the premium | SHOP participation may make an eligible employer eligible for the Small Business Health Care Tax Credit |
Sources: HealthCare.gov's current group coverage and HRA guide and the IRS 2026 QSEHRA limits.
When a group or SHOP plan makes sense
A group plan can be the cleanest choice when employees work in one area, the business wants one shared benefit, and the employer is comfortable managing enrollment and premium contributions. A SHOP plan can also matter when the business may qualify for the federal small-business tax credit.
Group plan participation and employer contribution rules vary by insurer and state. Get the actual quote and enrollment rules before promising a plan or a fixed employee cost.
When QSEHRA makes sense
A Qualified Small Employer Health Reimbursement Arrangement can fit a small employer that does not offer a group health plan and wants employees to choose their own coverage. The employer funds the arrangement. Employees do not contribute through salary reductions.
The annual cap makes the budget predictable, but it also limits how much can be reimbursed. The arrangement generally needs consistent terms for eligible employees, with only permitted differences.
When a CHOICE Arrangement may fit better
HealthCare.gov now calls the Individual Coverage Health Reimbursement Arrangement a CHOICE Arrangement. The former name, ICHRA, is still useful because employers, brokers, and older materials continue to use it.
A CHOICE Arrangement can work for an employer of any size and can be useful when employees live in different insurance markets. It also requires careful affordability and employee-notice work because the offer can change whether an employee qualifies for Marketplace premium tax credits.
Five checks before choosing small-business coverage
- Count the workforce correctly. Use full-time employees and full-time equivalents when a rule depends on employer size.
- Decide who chooses the plan. A group plan centers the employer's selection. An HRA centers employee-chosen individual coverage.
- Price the whole employer cost. Include premiums or reimbursements, administration, notices, and professional help.
- Check where employees live. One local group network may not fit a team spread across several states.
- Review tax-credit effects. A QSEHRA or CHOICE offer can change an employee's Marketplace financial help.
The next useful step
Start with the comparison above, then take the business size, employee locations, budget, and preferred contribution to a licensed benefits broker or qualified tax professional. Ask for the group-plan quote and the HRA calculation in the same conversation so the costs and employee effects can be compared on equal terms.