Offering a qualified small employer health reimbursement arrangement (QSEHRA) can greatly benefit both the employer as well as the employees of any small business. There is significant flexibility in the monthly allowance you choose to offer, when you can start your plan, and how you want to set it up.
Important QSEHRA deadlines
If you're looking to set up a Qualified Small Employer QSEHRA or if you are new to your QSEHRA, it's important to note some key dates to help you stay organized.
As a QSEHRA administration expert, we've broken down some of the more significant ones to help you keep track of them.
What is the deadline for QSEHRA?
This one is the easiest deadline for you to remember: there is no deadline for offering a QSEHRA.
You may choose to begin your QSEHRA with the calendar year, or you can start offering the QSEHRA as soon as you’re able. That can happen anytime during the year.
It is usually easier and more manageable to offer a QSEHRA with a QSEHRA administrator such as Take Command, which can automate plan documents and other necessary items.
What is the deadline for a QSEHRA notice?
To offer QSEHRA to your employees, there is obviously going to be some paperwork involved, such as a written notice for your employees.
- For new QSEHRAs: the deadline on this is fairly flexible as long as the notice is sent prior to the QSEHRA going into effect. (This also applies to any staff that may be newly eligible for an existing QSEHRA.)
- For existing QSEHRAs: this notice must be sent at least 90 days before the start of each calendar year in which you will be offering QSEHRA. So if you would like to start the benefit January 1, 2024, you must send out the notice by October 3, 2023.
What is the deadline for employees purchasing individual insurance coverage?
Employees must have minimum essential coverage to receive their QSEHRA benefits. Because a majority of your staff will enroll in individual health insurance, it is important for them to know when open enrollment occurs, typically November 1 through December 15th.
If for whatever reason, they miss this window, they will need to experience some kind of qualifying life event in order to be eligible for the special enrollment period (SEP.) There is no deadline for an SEP, but the qualifying life events are pretty specific (getting married, having a baby, job loss, etc).
As of 2020, all individuals newly eligible for a QSEHRA will qualify for an SEP.
That means that after they've been offered a QSEHRA, they'll have 60 days to sign up for individual health insurance through their SEP.
→ More on QSEHRA and SEPs here
What is the deadline for submitting reimbursement requests?
Employees can submit for reimbursement any eligible expenses that were incurred either during that plan year or during the 90-day runout period following the close of the plan year.
The 90-day runout period is simply the 90 days following the last day of the plan year.
For example, March 31st 2024 would be the last day to submit for any eligible expenses incurred in 2023.
If you have an employee who becomes ineligible for the benefits (whether it be that they leave the company for any reason or change their hours worked), the 90-day runout period also applies to them. In this case, individuals have 90 days from the date they became ineligible for the QSEHRA to submit for reimbursement expenses that were incurred during that plan year.
→ Here's a list of QSEHRA eligible expenses
What's the deadline for reimbursing employees?
You as the employer determine this deadline, which you will outline in your QSEHRA plan documents.
*Helpful tip: generally, these documents will require businesses to issue reimbursement for approved expenses within 90 days of receiving them.
PCORI Fee for QSEHRA
The Affordable Care Act (ACA) imposes a fee on employers that offer certain types of self-insured health plans, which includes QSEHRA and ICHRA, to help fund the Patient-Centered Outcomes Research Institute (PCORI). The fee is reported and paid to the IRS by the plan sponsor (the employer) only once per year, and it is due on July 31st for the previous year’s HRA. So on 7/31/24, anyone who offered a QSEHRA in 2023 will own a fee based on their 2023 QSEHRA. Take Command will provide information to employer admins about how to calculate their fee and how to report and pay it (we’ll also include an estimate of calculated fees). More info from the IRS can be found here.
QSEHRA and year-end tax reporting
As an employer offering a QSEHRA plan to your employees, you are required to report the total amount offered to each eligible employee through the QSEHRA in 2023 on their W-2 forms (due to employees by January 31st 2024). We will provide a report with data that will help you (or your tax professional) fill out this portion of the forms.
→ More on QSEHRA and W2 reporting here
Still need help?
While offering a QSEHRA provides significant value to both small businesses and their employees, it does come with some necessary detailed documents you must produce and some moving deadlines throughout the year.
This is where a QSEHRA administration tool can help you immensely. We'll handle all the accounting and legal legwork, take care of onboarding each of your employees, and make tax time easy and painless. You'll never have to hassle with receipts or worry about setting up a health plan again.
Want to learn more? Check out the setup chapter in our handy new QSEHRA Guide.
Want to see if an HRA could work for your small business to offer personalized benefits? Learn more about our small business platform or schedule a call with one of our small business HRA experts today.
This post was originally published in 2019 and has been updated in 2023 to reflected the latest exciting QSEHRA changes.
