Are you thinking about setting up a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) for your business? Get excited because the benefits of QSEHRA are substantial!
QSEHRAs are a way for employers to reimburse employees for health and medical expenses with funds that are not taxed. This flexibility allows employees to find individual health care plans that best fit the unique medical needs of them and their families. Because employees are required to find their own health care plan, employers aren’t faced with trying to choose health care coverage that never quite checks all the boxes.
Feel free to check out this article for more in depth instructions, but here is a brief overview:
Because QSEHRAs are regulated by the IRS, it’s important to make sure you’re staying up to date with new policies, reimbursement limits, and eligible expenses. We’ll lay it all out below, but if you need help answering specific questions, don’t hesitate to reach out!
Let’s start with the basics. What is a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)? A QSEHRA is a relatively new (and incredibly beneficial) type of Health Reimbursement Arrangement (HRA) for employers to offer health benefits to their employees. QSEHRAs allow employers to allocate pre-taxed funds for their employees to use on eligible health-related expenses through reimbursements.
It’s super simple:
Now, if you’ve heard of a QSEHRA, you’ve probably also heard of an Individual Coverage Health Reimbursement Arrangement (ICHRA). To clear up any confusion, let’s review some key differences:
Includes:
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Includes:
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If you think you may be eligible to participate in a QSEHRA, we’d love to hear from you! While it’s (somewhat) possible to administer your own QSEHRA in house, we highly recommend you check out some reputable QSEHRA software administrators (like Take Command) to make sure you’re covering all your bases.
One of the biggest questions we get asked is, “What can QSEHRA funds be used for?” You may be surprised! Keep in mind that QSEHRA limits are determined (within IRS guidelines) by an employer. The pre-taxed funds that get to be utilized by employees are completely funded by their employer based on their own approved budget. As a result, QSEHRA plans will look different from employer to employer.
Each year, the IRS publishes a comprehensive list of approved expenses that can be submitted for reimbursement through a QSEHRA.
In general, employees can use their QSEHRA funds for:
Bonus: over the counter medications are now considered a QSEHRA eligible expense thanks to the Cares Act!
In addition, employees can use their approved funds to cover the costs of their own individual health care plans. Regardless of how your employees choose to use their funds, make sure they have a good understanding of eligible expenses. You want them to take advantage of their entire benefit and max out their funds each month. It’s helpful to have resources available for your employees to access so they get the most up to date information regarding their eligible expenses.
Still have more questions about your unique health care needs? Reach out to Take Command Health QSEHRA experts to discuss all things QSEHRA!
QSEHRA requirements are set and monitored by the IRS. Given that QSEHRAs are relatively new in the world of health care, the IRS regularly updates requirements. As a result, it’s important to keep yourself informed of any and all QSEHRA requirement policies and changes. Nonetheless, QSEHRA requirements are fairly straightforward for both employers and employees.
Businesses must be less than 50 full-time employees in order to be eligible to participate in a QSEHRA.
A business is not permitted to offer a QSEHRA while offering a group health care plan. If a business decides they want to participate in a QSEHRA, they must contact their health care provider and schedule a date to cancel their existing plan.
All employees participating in a QSEHRA must be covered by their own health care plan
Employees must submit claims for reimbursement. Businesses must get verifiable proof of your expenses before reimbursing any of your health care expenses.
While it isn’t difficult to qualify as an eligible employee, you as an employer can determine employee eligibility further based on a few additional factors. You are permitted to not allow employees to participate in the QSEHRA if your:
As we mentioned above, health insurance compliance is regulated by the IRS and they absolutely do not mess around when it comes to making sure your business is keeping up with legal requirements. Errors made at any stage of set up or maintenance can, at the very least, cost a business $100 per day per employee.
Many businesses opt for a QSEHRA administrator, like Take Command, to eliminate the possibility for error along the way. Whether or not you decide to administer your business’s QSEHRA with the help of administration software, it’s helpful to stay informed.
While the benefits of implementing a QSEHRA for your business are pretty substantial, it is important to take a look at reimbursement limits. Each year, the IRS announces updated reimbursement limits. We’re still pretty early in 2024, so make sure you’re up to date on recent changes before setting up or renewing your QSEHRA plan.
QSEHRA limits for 2024 effectively increased the overall reimbursement amounts for employers (yay!). This year, businesses with less than 50 employees can contribute a maximum of $6,150 for individual employees and $12,450 for employees with a family.
What exactly is a QSEHRA provider? A quick caveat, as we mentioned above, we highly recommend consulting with a QSEHRA plan administrator to help make sure you’re in compliance with IRS regulations.
A QSEHRA plan administrator can help with all things QSEHRA from beginning to end. A good plan administrator will:
At Take Command, our QSEHRA providers do all the heavy lifting while you can stay busy running your business. We help by:
We’re excited for you as you begin to take this next step in your business’s journey! If you decide you need a teammate to walk with you, you can easily schedule a free call with one of our QSEHRA administration experts.