QSEHRA Notice Deadline 2026: The October 3 Rule
· HR Cadence Hub Team
If you offer a QSEHRA, you owe your employees a written notice 90 days before your plan year starts. For a January 1, 2027 plan year, that's October 3, 2026.
Most of the small employers I've watched get tripped up here weren't careless. They set up the QSEHRA, told everyone about it in a meeting, funded it on time, and genuinely believed the hard part was done. Then the notice deadline came and went, because nobody told them the notice was a separate legal obligation with its own date and its own penalty.
It is. And the penalty is per employee, which is why a small miss gets expensive faster than you'd expect.
Here's the whole thing in one place: when it's due, what it has to say, what the 2026 numbers are, and the one paragraph in the notice that quietly costs your employees money if you get it wrong.
What a QSEHRA is, in one paragraph
A Qualified Small Employer Health Reimbursement Arrangement lets you give employees tax free money to buy their own health insurance instead of you buying a group plan. You set an allowance, employees buy individual coverage, they submit proof, you reimburse them. The reimbursement isn't taxable income to them and it's deductible to you.
To offer one, you have to clear two bars under Internal Revenue Code section 9831(d): you have fewer than 50 full time equivalent employees, and you don't offer a group health plan. Not a skinny one, not a stipend dressed up as one. If you have a group plan, you can't have a QSEHRA in the same months.
That eligibility test is worth sitting with, because it describes a very specific business. Under 50 FTEs, no group plan, probably one person handling all of HR. If that's you, this deadline is yours.
The deadline: 90 days before your plan year starts
The rule in section 9831(d)(4) is that you furnish written notice to each eligible employee at least 90 days before the beginning of each year. Not 90 days before open enrollment. Not 90 days before the first reimbursement. Ninety days before the plan year itself.
Most small employers run a calendar plan year, so the date almost everyone needs is October 3, 2026.
One practical note: October 3, 2026 falls on a Saturday. Treat Friday, October 2 as your real deadline and you've removed the problem entirely.
If your plan year starts somewhere other than January 1, count back 90 days from your own start date:
| Plan year starts | Notice is due | | --- | --- | | November 1, 2026 | August 3, 2026 | | December 1, 2026 | September 2, 2026 | | January 1, 2027 | October 3, 2026 | | February 1, 2027 | November 3, 2026 | | March 1, 2027 | December 1, 2026 | | April 1, 2027 | January 1, 2027 | | July 1, 2027 | April 2, 2027 |
If the November 1 row made you look twice, that's not a typo. A November plan year start put the notice deadline at August 3, 2026, and that date has passed. If that's your plan year and the notice never went out, send it late rather than not at all: record the send date and keep proof, because relief under section 6652(o) requires reasonable cause.
There's a second trigger people miss. For an employee who becomes eligible partway through the year, the notice is due on the date they first become eligible to participate. So a new hire in March gets their notice in March, not next October. If your onboarding packet doesn't already include the QSEHRA notice, that's the fix, and it's a ten minute fix.
What happens if you miss it
Section 6652(o) sets the penalty at $50 per employee per incident, capped at $2,500 per calendar year per employer.
Fifty dollars sounds like rounding. It isn't, because it multiplies. Miss the notice for 30 employees and you're at $1,500 for a document you already had the information to write. Miss it for 50 and you're at the cap.
Penalty relief exists if the failure was due to reasonable cause and not willful neglect. That's a real door, but it's a door you have to argue your way through after the fact, which is more work than sending the notice on time.
What the notice actually has to say
The statute requires three things. Not a specific form, not IRS letterhead, just three pieces of information in writing. IRS Notice 2017-67 is the guidance that fleshes these out and it's still the operative word on QSEHRAs.
1. The permitted benefit amount. The dollar figure each eligible employee is entitled to for the year. If your amounts vary by family status (they're allowed to), say which amount applies to whom.
2. The Marketplace disclosure instruction. Tell the employee that if they're applying for advance premium tax credits through the Health Insurance Marketplace, they must report their permitted benefit amount, and that the QSEHRA will reduce or eliminate that credit.
3. The minimum essential coverage warning. Tell the employee that if they aren't enrolled in minimum essential coverage, reimbursements may be taxable to them, and they may be subject to individual mandate consequences.
That third item has a wrinkle worth knowing in 2026. The federal individual mandate penalty has been $0 since 2019, so the federal half of that warning describes a penalty that doesn't currently bite. But state mandates do. California, Massachusetts, New Jersey, Rhode Island and the District of Columbia all impose their own penalties, and Vermont requires reporting without one. If your employees live in those places, the warning is live, and it's the part they'll actually thank you for.
Here's the scaffold I'd use. It's not a form to file, it's the checklist to write against:
> QSEHRA notice checklist > > - [ ] Employee name and the plan year the notice covers > - [ ] The permitted benefit amount for this employee, stated in dollars, for the year > - [ ] How the amount is prorated if they're eligible for only part of the year > - [ ] The instruction to report the permitted benefit to the Marketplace when applying for advance premium tax credits > - [ ] A plain statement that the QSEHRA reduces or eliminates any premium tax credit > - [ ] The warning that without minimum essential coverage, reimbursements may be taxable > - [ ] A note that state individual mandates may still apply, with the employee's state named if you know it > - [ ] The date you furnished it, and how (this is the part that proves you met the deadline)
That last line is the one people skip and the one that matters if anyone ever asks. Keep the send date and the delivery method. A dated email with a read receipt is fine.
The 2026 numbers
For taxable years beginning in 2026, Revenue Procedure 2025-32 section 4.63 sets the maximum permitted benefit at:
- $6,450 for self only coverage - $13,100 for family coverage
That's a $100 increase for self only and $300 for family over the 2025 figures. These are ceilings, not targets. You can offer less, and most small employers do. What you can't do is offer more, or offer different amounts to similarly situated employees.
You also have to offer the QSEHRA to all eligible full time employees on the same terms. You get to exclude some categories the statute allows, but you don't get to offer it to the people you're worried about losing and skip everyone else.
Come January, the amount each employee was *entitled* to gets reported in Box 12 of their W-2 using code FF. Note the word entitled. You report the permitted benefit, not what they actually claimed. If someone was eligible for eight months, you prorate. If someone never submitted a single receipt, their W-2 still shows the full amount they could have used.
The premium tax credit trap
This is the part that costs your employees real money, and it's the part most vendor explainers skate past.
A QSEHRA interacts with Marketplace subsidies in one of two ways, and which one applies depends on an affordability test in section 36B(c)(4)(C).
If your QSEHRA counts as affordable coverage, the employee gets no premium tax credit at all for that month.
If it doesn't count as affordable, the employee can still claim the credit, but the monthly credit is reduced dollar for dollar by the monthly permitted benefit.
The test itself compares the self only premium for the second lowest cost silver plan in their area, minus one twelfth of their permitted benefit, against one twelfth of a percentage of household income. For 2026 that percentage is 9.96%.
You don't need to run that math for your employees, and honestly you shouldn't. Household income is theirs, not yours. What you owe them is the heads up, early enough to matter, that the QSEHRA and a subsidy are not additive and choosing the bigger one is a real decision. IRS Publication 974 walks through the worksheet, and healthcare.gov has a QSEHRA page written for employees rather than accountants.
Say that out loud in the notice conversation and you'll prevent the February conversation where someone's tax refund came back smaller than they planned.
QSEHRA or ICHRA?
The question comes up every time, so: an ICHRA is the bigger, looser cousin.
A QSEHRA caps out at under 50 FTEs, has statutory dollar limits, and must be offered on the same terms to everyone eligible. An ICHRA has no employer size limit, no statutory dollar cap, and lets you vary allowances across defined classes of employees. The trade is complexity, and an ICHRA has its own notice rules on a different clock.
If you're under 50 FTEs, have no group plan, and want the simplest compliant thing, the QSEHRA is usually it. If you're growing through 50, or you need to treat salaried and hourly groups differently, that's when the ICHRA conversation starts being worth the overhead. Either way it's a compensation decision before it's a benefits decision, which is why it belongs in the same conversation as how you set pay in the first place.
Put it on the calendar, not in your head
The reason this deadline gets missed isn't that it's hard. It's that it fires once a year, 90 days ahead of a date you're already thinking about for other reasons, and nothing in your normal week reminds you.
Three things worth doing now:
1. Find your plan year start date. Not open enrollment, the plan year. Count back 90 days. Put that date on a calendar that will actually interrupt you. 2. Add the notice to your onboarding packet so mid year hires are handled automatically instead of remembered. 3. Save the send date each year. Ninety seconds now, and it's the only evidence you'll have if it's ever questioned.
If you want the rest of the year's recurring dates mapped to the month they land instead of discovered the week they're due, our HR compliance calendar for solo and small teams lays them out, and the July 31 federal deadline stack is a good example of how quickly a quiet month fills up. If you're still building the underlying stack, the free HR tools roundup covers what's worth using before you pay for anything.
One more that's easy to forget: when someone leaves mid year, their permitted benefit prorates and their W-2 reporting changes with it. That belongs on your offboarding checklist next to the equipment return, because payroll will need it in January whether or not anyone wrote it down in June.
Frequently asked questions
When is the QSEHRA notice deadline? At least 90 days before the first day of your plan year. For a January 1, 2027 plan year, that's October 3, 2026. For employees who become eligible mid year, the notice is due the day they first become eligible to participate.
What's the penalty for missing the QSEHRA notice? Section 6652(o) sets it at $50 per employee per incident, capped at $2,500 per calendar year per employer. Relief is available for reasonable cause that isn't willful neglect, but you have to establish it after the fact.
How much can a small employer contribute to a QSEHRA in 2026? Up to $6,450 for self only coverage and $13,100 for family coverage, per Revenue Procedure 2025-32 section 4.63. Those are annual ceilings, and you must offer the benefit on the same terms to all eligible employees.
Can I offer a QSEHRA if I already have a group health plan? No. Offering any group health plan disqualifies you for those months. QSEHRA eligibility requires fewer than 50 full time equivalent employees and no group health plan.
What's the difference between a QSEHRA and an ICHRA? A QSEHRA is limited to employers with fewer than 50 FTEs, carries statutory dollar caps, and must be offered on uniform terms. An ICHRA has no size limit and no statutory cap, and allows different allowances for defined employee classes, with its own separate notice requirements.
---
*This is general compliance information, not legal or tax advice. Benefits rules interact with your specific plan documents and your state's requirements, so confirm your own dates with your benefits advisor or counsel before relying on them.*
Health benefits are one of the few compliance areas where the deadline arrives quietly and the penalty is per person. If you'd rather have the QSEHRA notice date, the W-2 reporting window and the rest of your year nudge you before each one is due instead of living in your head, that's exactly what HR Cadence Hub is built to do for a team of one.