Updated October 29, 2026. Quick answer: Worksheet N in Publication 974 (2025) tests whether a qualified small employer health reimbursement arrangement (QSEHRA) counts as affordable coverage. It compares 9.02% of household income, per month, with the SLCSP premium minus the monthly permitted benefit; an affordable QSEHRA means no premium tax credit for those months, an unaffordable one sends you to Worksheet Q.
More on the 2026 tax figures: the 2026 QSEHRA limit.
What the test decides
“If you are provided a QSEHRA, and it is considered affordable coverage for a month, no PTC is allowed for that month.” The Form 8962 instructions say the same in short: “If the QSEHRA is affordable for a month, no PTC is allowed for the month.” “If the QSEHRA is not considered affordable coverage for 1 or more months, you may still be eligible for the PTC.” The notice from the employer is the input: “The permitted benefit for self-only coverage as reported by the employer in the written notice is used to determine whether the QSEHRA is considered affordable coverage, regardless of whether the permitted benefit provided to you is for self-only or family coverage.” For 2025 the arrangement limit the publication prints is “doesn’t exceed $6,350 ($12,800 for family coverage) for 2025.”
The nine lines
| Line | What it asks |
|---|---|
| 1 | “Enter the amount from Form 8962, line 3” |
| 2 | “Multiply line 1 by 0.0902” |
| 3 | “Enter the number of months you were provided the QSEHRA in 2025” |
| 4 | “Divide line 2 by 12.0” |
| 5 | The monthly premium for self-only coverage under the SLCSP offered by the Marketplace where you enrolled (or, if you did not enroll, where the oldest enrolled member of your coverage family would pay) |
| 6 | “Enter the self-only coverage permitted benefit from the written notice provided by your employer.” |
| 7 | “Divide line 6 by line 3” |
| 8 | “Subtract line 7 from line 5” |
| 9 | “If line 4 is less than line 8, the QSEHRA is not considered affordable. Stop here. Complete Worksheet Q.” If line 4 is greater than or equal to line 8, the QSEHRA is considered affordable. |
The 0.0902 is the 9.02% of household income the publication uses for 2025; this page recomputes the step in the example below rather than copying a result.
What an affordable result does next
An affordable result lets you skip Worksheet Q. The publication adds a filing instruction: “Stop here and do not file Form 8962 if you were provided a QSEHRA for every month you were covered by a qualified health plan and no APTC was paid for you or another individual in your tax family.” Otherwise enter “QSEHRA” in the top margin of Form 8962. Lines 10 to 13 prorate the Form 8962 line 11 amount when the arrangement lasted less than all of 2025.
Part-year and changing inputs
“You must complete a separate worksheet through line 8 for each part of the year in which you had a different SLCSP premium for self-only coverage while provided a QSEHRA, or you were provided a QSEHRA from different employers with different self-only permitted benefits.” For a part-year QSEHRA the notice may give either the months covered or the whole year. If it gives the whole year: “Divide the self‐only coverage permitted benefit for the entire year by 12.0.” “Multiply the result by the number of months you were provided the QSEHRA.”
An example with invented numbers
Illustration, not an IRS example, with invented computation inputs. A household with $48,000 of household income was provided the QSEHRA for all 12 months and the self-only SLCSP premium is $650 a month.
| Line | Entry | Amount |
|---|---|---|
| 1 | Household income, Form 8962 line 3 (invented) | $48,000 |
| 2 | Line 1 times 0.0902 (computed) | $4,329.60 (computed) |
| 3 | Months provided the QSEHRA | 12 |
| 4 | Line 2 divided by 12.0 (computed) | $360.80 (computed) |
| 5 | Monthly self-only SLCSP premium (invented) | $650 |
| 6 | Self-only permitted benefit from the employer’s written notice (invented) | $4,800 |
| 7 | Line 6 divided by line 3 (computed) | $400 (computed) |
| 8 | Line 5 minus line 7 (computed) | $250 (computed) |
| 9 | Line 4 ($360.80) is at least line 8 ($250) | Affordable |
Now the same household with a smaller employer benefit of $2,400 for the year:
| Line | Entry | Result |
|---|---|---|
| 6 | Self-only permitted benefit instead (invented) | $2,400 |
| 7 | Line 6 divided by line 3 (computed) | $200 (computed) |
| 8 | Line 5 minus line 7 (computed) | $450 (computed) |
| 9 | Line 4 ($360.80) is less than line 8 ($450) | Not affordable: go to Worksheet Q |
For the part-year rule: a $4,800 whole-year self-only benefit divided by 12.0 is $400 a month, and seven months of the QSEHRA makes line 6 equal to $2,800 (computed).
Edition
This page reads Publication 974 (2025), Premium Tax Credit (PTC), the file irs.gov served on 2026-10-29 (sha256 in the kit data). Worksheet letters, line numbers and the 2025 figures belong to that edition, so check the label printed on the worksheet in your own copy before you follow a line reference.
Common mistakes
- Using the family permitted benefit on line 6. The test always uses the self-only permitted benefit from the written notice.
- Comparing the annual benefit with the monthly premium. Line 7 divides the benefit by the months you were provided it.
- Forgetting that a changed SLCSP premium or a new employer needs a separate worksheet through line 8.
- Treating an affordable result as a filing step. It ends the credit for those months, and the form is skipped only when the QSEHRA covered every month of marketplace coverage and no APTC was paid.
Related: the QSEHRA limit, Form 8962 household income, and Form 8962 lines 11 to 23.
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Answer againSources
- Publication 974 (2025), Premium Tax Credit (PTC): https://www.irs.gov/pub/irs-pdf/p974.pdf
- Instructions for Form 8962 (2025), Premium Tax Credit (PTC): https://www.irs.gov/pub/irs-pdf/i8962.pdf
Read from the IRS documents linked above on October 29, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.