Employees with access to a qualified small employer health reimbursement arrangement (QSEHRA) continued to take full advantage of the benefit in 2018, according to results from The QSEHRA: Annual Report 2019 from PeopleKeep.
The report is our second yearly look at how small businesses and their employees use the QSEHRA. Not only did we find that businesses are increasing their offerings through the QSEHRA, but we also discovered that employees are using most of the tax-free allowances they’re given.
While small businesses increased QSEHRA allowances by 6 percent for single employees and 7 percent for employees with a family, employee utilization remained relatively steady. On average, employees used roughly 78 percent of the tax-free money made available to them throughout the year.
Employees also continued to use their QSEHRA allowances for critical health care expenses like health insurance and medical office visits.
In this post, we’ll examine these and other findings from The QSEHRA: Annual Report 2019 as they relate to employee use of the benefit.
Let’s get started.
How much of their QSEHRA allowances did employees use?
Employees with a QSEHRA used the majority of their allowances in 2018.
Across all groups, employees used an average 78 percent of their total yearly allowance amounts and one-third of employees used everything available.
This varied somewhat by family size; employees with larger families tended to use more of their allowance amount than did employees with larger families.
In this respect, employee use of the QSEHRA didn’t change materially from 2017 to 2018. Employees with a QSEHRA used an average 77 percent of their allowances in 2017 and a similar number used the entirety of their allowances during the year.
What did employees get reimbursed through the QSEHRA?
As in 2017, the single most popular expense employees had reimbursed through the QSEHRA was individual health insurance premiums.
Thirty-eight percent of employees with a QSEHRA submitted a health insurance premium for reimbursement, including 40 percent of single employees and 36 percent of employees with a family.
These premiums typically claimed the majority of employees’ QSEHRA allowances. The average premium reimbursement totaled $3,210 for the year for single employees and $6,343 for employees with a family, and these costs took up an average 80 percent of total allowance amounts for employees regardless of family size. Additionally, more than half (54 percent) of employees used their entire annual allowance amount on health insurance.
Because many employees have health insurance through a family member’s group policy, though, nonpremium expenses were also popular among employees with a QSEHRA.
Many items are reimbursable through the benefit, including prescription drugs and medical office visits, and thirty-seven percent of employees had these reimbursed through the QSEHRA.
Employees requested reimbursement for an average 12 nonpremium expenses during the year, and the most popular expenses reimbursed were:
- Medical office visits (requested by 51 percent of employees)
- Prescription drugs (43 percent)
- Dental care (40 percent)
- Eyeglasses (28 percent)
- Chiropractic care (21 percent)
Twelve percent of employees used the QSEHRA to reimburse both premium and nonpremium expenses.
Employees continued to get great value out of the QSEHRA in 2018. They received reimbursement for vital expenses like health insurance, medical office visits, and prescription drugs.
They also take advantage of everything their employer is willing to offer. The small increases in allowance amounts by small businesses last year encouraged employees to purchase more health care, increasing the utility of the benefit.
Small businesses considering using the QSEHRA can look to this information as a reliable measure of how employees use the tax-free money made available to them.
For more information, check out the complete version of The QSEHRA: Annual Report 2019 or ask us questions in the comments below!