Losing Staff Over Benefits? Small Business Health, Chandler
A small employer in Chandler has more ways to help with health coverage than a traditional group plan: reimbursement arrangements like QSEHRA and ICHRA, a federal tax credit for the smallest firms, and add-on dental, vision and life. Here is how each works.
Key takeaways
- Businesses with fewer than 50 full-time employees (including full-time equivalents) are not required by federal law to offer health coverage, but many do to hire and keep staff.
- A QSEHRA lets a small employer reimburse individual premiums and medical costs tax free, up to $6,450 self-only or $13,100 family for 2026 (IRS Rev. Proc. 2025-32).
- An ICHRA has no dollar cap and works for any size employer; employees buy their own individual plan and you reimburse a set amount.
- Employers with fewer than 25 full-time equivalent employees may qualify for the small business health care tax credit of up to 50% of premiums, for coverage bought through SHOP.
- Dental, vision and group life can be offered on their own or alongside medical, often at lower cost to the business.
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If you run a small business in Chandler and want to offer health benefits, you have four main paths: a traditional small group health plan, a QSEHRA, an ICHRA, or a smaller package of dental, vision and life coverage. Which fits depends on your headcount, your budget, and how much control you want over the cost each year.
Federal law only requires employers with 50 or more full-time employees, counting full-time equivalents, to offer affordable coverage. Below that line, benefits are a choice. For many East Valley employers it is a choice they make anyway, because good people ask about health insurance before they ask about almost anything else.
This guide lays out how each option works, what the 2026 limits are, and the questions to answer before you pick one. Rise Up Benefits Group works with employers from our office at 2160 N Alma School Road in Chandler.
Do small businesses in Arizona have to offer health insurance?
No, not if you have fewer than 50 full-time employees, including full-time equivalents. The Affordable Care Act's employer shared responsibility rules apply to "applicable large employers," which the IRS defines as those with 50 or more full-time employees including equivalents. Below 50, offering health benefits is voluntary under federal law.
Larger employers that must offer coverage also have to make it "affordable." For plan years beginning in 2026, coverage counts as affordable when the employee's share for self-only coverage is no more than 9.96% of household income (IRS Rev. Proc. 2025-25). Smaller employers who choose to offer a plan often use the same yardstick when deciding how much to contribute.
- Full-time employees (incl. equivalents) where the federal employer mandate starts
- 50
- Employer coverage affordability threshold, 2026 plan years
- 9.96%
- FTEs to be eligible for the small business tax credit
- Fewer than 25
What are the options for a small business health plan?
The main options are a traditional group plan, a QSEHRA, an ICHRA, and supplemental benefits on their own. Each shifts cost, choice and paperwork differently between you and your employees.
| Option | Who it suits | How cost works | Employee choice |
|---|---|---|---|
| Small group health plan | Employers who want one shared plan and network | You pay a share of a group premium; renewals can change each year | Choose from the plans you offer |
| QSEHRA | Employers with fewer than 50 full-time equivalents and no group plan | You set a monthly allowance up to the 2026 limits | Employees choose their own individual plan |
| ICHRA | Employers of any size, including those with different worker classes | You set an allowance per class, with no federal dollar cap | Employees choose their own individual plan |
| Dental, vision and life only | Employers not ready for medical | Usually lower cost per employee | Depends on the plan offered |
Traditional group plans give everyone the same network and benefits, which many employees find simple. Reimbursement arrangements give the employer a fixed, predictable budget and let each employee pick a plan that fits their doctors and family, usually on HealthCare.gov or directly with a carrier.
How does a QSEHRA work, and what are the 2026 limits?
A QSEHRA, or Qualified Small Employer Health Reimbursement Arrangement, lets an employer with fewer than 50 full-time equivalent employees and no group health plan reimburse employees tax free for individual health premiums and qualifying medical costs, up to an annual limit. For 2026 the limits are $6,450 for self-only coverage and $13,100 for family coverage.
| Coverage | Annual maximum | Monthly equivalent (approx.) |
|---|---|---|
| Self-only | $6,450 | $537.50 |
| Family | $13,100 | $1,091.67 |
Two details matter. First, the QSEHRA allowance reduces any premium tax credit an employee could get on HealthCare.gov, so the arrangement has to be explained clearly. Second, employees must have their own qualifying coverage to receive reimbursements tax free.
How is an ICHRA different?
An ICHRA, or Individual Coverage Health Reimbursement Arrangement, works like a QSEHRA but has no federal dollar cap and is open to employers of any size. You can set different allowances for different classes of employees, such as full-time and part-time, or by location.
- Predictable cost. You decide the allowance; you are not exposed to a group renewal increase.
- Employee choice. Each employee picks an individual plan that fits their doctors and prescriptions.
- Class rules. Allowances must be the same within a class, with permitted variation by age and family size.
- Coordination with tax credits. An employee offered an ICHRA that counts as affordable cannot also take a premium tax credit; one that is not affordable lets the employee decline it and use the credit instead.
Can my small business get a tax credit for health insurance?
Possibly, if you have fewer than 25 full-time equivalent employees. The small business health care tax credit is worth up to 50% of the premiums you pay (35% for tax-exempt employers), according to the IRS. To qualify, you must pay at least 50% of the cost of employee-only coverage, buy a qualified plan through the SHOP Marketplace (or meet a limited exception), and have average wages below an inflation-adjusted limit.
The credit is only available for two consecutive tax years, and it phases down as you pass 10 full-time equivalents or as average wages rise. Your tax professional confirms eligibility using IRS Form 8941; we can help with the plan side.
What about dental, vision and life insurance for employees?
Dental, vision and group life can be offered with a medical plan or on their own, and they are often the most noticed benefits for the money. Some employers start with these while they decide on medical; others offer them as voluntary benefits that employees pay for through payroll.
- Count your people. Full-time, part-time and full-time equivalents decide which options and rules apply.
- Set a budget per employee. A fixed monthly amount makes QSEHRA and ICHRA easy to price.
- Ask employees what they value. A specific doctor, a family plan, or dental often tops the list.
- Compare at least two structures. A group plan and a reimbursement arrangement can look very different in year two.
- Plan the timing. Group plans can start most months; individual plans follow open enrollment or a Special Enrollment Period.
The bottom line
A small business in Chandler does not have to offer health insurance below 50 full-time employees, but it has more ways to do it than ever: a group plan, a QSEHRA up to $6,450 self-only or $13,100 family for 2026, an ICHRA with no federal cap, a tax credit for the smallest employers, and dental, vision and life on their own. Start with your headcount and budget, then compare at least two structures before you commit.
Frequently asked questions
What is the QSEHRA limit for 2026?
For 2026, a QSEHRA can reimburse up to $6,450 a year for self-only coverage and $13,100 a year for family coverage, according to IRS Revenue Procedure 2025-32.
Do I have to offer health insurance with 20 employees in Arizona?
No. Federal employer shared responsibility rules apply only to employers with 50 or more full-time employees, including full-time equivalents. Below that, offering coverage is voluntary.
What is the difference between QSEHRA and ICHRA?
Both reimburse employees for individual health insurance. A QSEHRA is for employers with fewer than 50 full-time equivalents and has annual dollar limits. An ICHRA works for any size employer, has no federal dollar cap and allows different allowances by employee class.
Who qualifies for the small business health care tax credit?
Employers with fewer than 25 full-time equivalent employees, average wages below the IRS inflation-adjusted limit, who pay at least 50% of employee-only premiums for a plan bought through the SHOP Marketplace. The credit can be up to 50% of premiums for two consecutive years.
Sources
- Revenue Procedure 2025-32 (2026 inflation adjustments, including QSEHRA limits) Internal Revenue Service
- Revenue Procedure 2025-25 (2026 required contribution percentage) Internal Revenue Service
- Small business health care tax credit and the SHOP Marketplace Internal Revenue Service
- Employer shared responsibility provisions Internal Revenue Service
Please note: Life, long-term care, annuity and supplemental products are subject to underwriting and carrier approval. Guarantees are based on the claims-paying ability of the issuing company. Nothing on this site is tax, legal or investment advice. This article is general information, not medical, tax or legal advice.
