Are health benefit plan notices required every year?

Some notices must be provided annually, while others are only required when employees become eligible, after qualifying events, or upon request. Employers should review their compliance obligations each year to ensure they meet all applicable deadlines.

What's the difference between an ICHRA notice and a QSEHRA notice?

Both ICHRAs and QSEHRAs require a written employee notice before the plan year begins. However, each notice includes different information based on the rules governing that type of HRA.

What happens if an employer doesn't provide required health benefit notices?

Missing required notices can lead to compliance issues, employee confusion, and potential penalties. For example, a group health plan or insurer that willfully fails to provide a required SPC may face a penalty of up to $1,000 for each failure6.

Can a small business offer a self-insured health plan?

Yes, but self-insured plans require employers to take on the financial risk of paying employee healthcare claims. Many small businesses choose alternatives, like the ICHRA or QSEHRA, to offer benefits with more predictable costs.

What's the difference between a self-insured health plan and an HRA?

With a self-insured plan, employers pay employee healthcare claims directly. With an HRA, employers set a fixed monthly allowance for eligible expenses, creating predictable costs without taking on claims risk.

How do I choose between a fully-insured health plan, a self-insured health plan, and an HRA?

It depends on your company's size, budget, and risk tolerance. Fully-insured plans offer simplicity, self-insured plans offer flexibility, and HRAs offer predictable employer costs while allowing employees to choose their own individual health insurance coverage.

Can you use a Section 125 premium-only plan (POP) with individual health insurance?

Generally, no. POPs are designed for employer-sponsored group health insurance premiums. However, employers can offer a POP alongside an ICHRA for employees who enroll in off-exchange individual health insurance plans.

What's the difference between a Section 125 plan and an HRA?

A Section 125 plan lets employees pay for qualified benefits with pre-tax salary reductions. An HRA is funded by the employer and provides tax-free employer contributions for eligible medical expenses and, in some cases, health insurance premiums.

Who should consider a Section 125 premium-only plan?

A POP is a good fit for employers that already offer group insurance and want employees to pay their share of premiums with pre-tax dollars. It’s also a great option for employers offering an ICHRA as long as employees enroll in off-exchange plans.

Can I pay the PCORI fee electronically?

Yes, you can pay the PCORI fee electronically. You can use the Electronic Federal Tax Payment System (EFTPS).

Do I owe a PCORI fee if I offer both an ICHRA and a group health plan?

Yes, you need to pay a PCORI fee if you offer an ICHRA. The PCORI fee for ICHRA is separate if the group plan is a fully-insured plan, as PCORI only applies to self-funded models. If you offer a self-funded plan alongside an ICHRA to different employees, and they share the same plan year, you can combine them for PCORI fee reporting purposes. Count the average number of participating employees and dependents for the self-funded plan plus the average number of participating ICHRA employees.

Is a QSEHRA worth it for small businesses?

For many small businesses, yes, a QSEHRA is worth it. A qualified small employer HRA (QSEHRA) offers a predictable way to provide health benefits without the cost and complexity of traditional group health insurance. Employers set a monthly allowance that fits their budget, while employees choose their preferred individual health insurance plan.

What are some potential drawbacks to consider when thinking about offering a QSEHRA?

The main potential downside to a QSEHRA is the IRS annual contribution limit. Unlike an individual coverage HRA (ICHRA), employers can't give employees more than the IRS-set maximum limit. QSEHRAs also have fewer customization options for varying employee contributions.

Can employees choose any health insurance plan with a QSEHRA?

Yes. Employees can generally purchase any ACA-compliant individual health insurance plan that best meets their needs through a local exchange, the federal Health Insurance Marketplace, a private insurer, or a licensed insurance broker. However, employees must have a health plan that provides minimum essential coverage (MEC) to participate in the QSEHRA.

Who is eligible to offer a QSEHRA?

A QSEHRA is available to employers with fewer than 50 full-time equivalent employees (FTEs). You can’t offer a traditional group health plan or group ancillary benefits alongside the QSEHRA. Employers must also comply with IRS rules regarding reimbursement limits and employee eligibility.

Can a QSEHRA reimburse more than individual insurance premiums?

Yes. Employers can design the benefit to allow employee reimbursements for health insurance premiums only or for premiums plus other IRS-qualified out-of-pocket medical expenses. This includes deductibles, copays, over-the-counter drugs, prescription medications, and other eligible expenses.

Can I administer a QSEHRA myself?

While employers can self-administer a QSEHRA, doing so can be time-consuming and risk compliance penalties. Many employers use an HRA administrator, like PeopleKeep, to automate plan documents, review reimbursement requests, maintain required records, and help ensure compliance with IRS and HIPAA requirements.

Why is employee engagement important for health benefits?

Employee engagement helps ensure workers understand, use, and appreciate the health benefits available to them. When employees participate in their benefits program, employers often see higher job satisfaction, better retention, and a stronger return on their benefits investment.

How can employers increase participation in health benefits?

Employers can increase participation by communicating regularly, educating employees about their options, offering personalized benefits, creating wellness initiatives, providing incentives, and gathering employee feedback. These strategies help employees better understand and use their benefits.

How do HRAs improve employee engagement?

Health reimbursement arrangements (HRAs) give employees more choice and flexibility by allowing them to select the individual health insurance coverage that best fits their needs. This personalized approach can increase benefit utilization and employee satisfaction while helping employers control healthcare costs.

How can employers reduce employee benefit costs without cutting benefits?

Employers can reduce benefit costs by offering more cost-controlled options, such as health reimbursement arrangements (HRAs), evaluating underutilized benefits, and consolidating multiple perks into flexible stipend programs. These strategies can help lower expenses while maintaining employee satisfaction.

How can an HRA help during a recession?

An HRA can help employers manage healthcare spending during economic uncertainty by providing predictable monthly costs and eliminating unexpected group health insurance renewal increases. This allows organizations to maintain valuable health benefits while protecting their budgets.

Is an HRA cheaper than traditional group health insurance?

For many employers, an HRA can be more affordable than traditional group health insurance because there are no minimum contribution requirements or participation requirements, and employers have complete control over their benefit budget by using a defined contribution model. Actual savings depend on company size, employee demographics, and benefit design.

Can an HRA replace group health insurance?

Yes. A qualified small employer HRA (QSEHRA) or individual coverage HRA (ICHRA) can serve as an alternative to traditional group health insurance. Employees use the benefit to purchase their own qualifying individual health coverage and receive tax-free reimbursements from their employer for premiums and out-of-pocket medical costs.

What employee benefits do workers value most during economic uncertainty?

Health insurance, healthcare benefits, retirement savings programs, paid time off, flexible work arrangements, and long-term disability insurance are consistently among the most valued employee benefits. During periods of economic uncertainty, benefits that help employees manage healthcare, living, and household expenses become even more important.

What is the main difference between an HDHP and an LDHP?

The primary difference is the deductible. A high deductible health plan (HDHP) requires you to pay more out of pocket before your insurance begins covering costs, while a low deductible health plan (LDHP) has a lower deductible but typically comes with higher monthly premiums.

Is a high deductible health plan better than a low deductible health plan?

It depends on the individual consumer’s needs. An HDHP may be a good choice for healthy individuals who don't expect many medical expenses and want lower premiums. An LDHP is often better for people who need frequent medical care and prefer lower out-of-pocket costs when they receive treatment.

Can you have a health savings account (HSA) with a low deductible health plan?

No. To contribute to an HSA, you must enroll in an HSA-qualified HDHP. Most low deductible health plans aren't eligible for HSA contributions.

Can employers offer both HDHP and LDHP options to employees?

Yes. Employers can offer multiple plan options through a traditional group health insurance program. Alternatively, employers can provide a QSEHRA or ICHRA, which allows employees to choose the individual health plan, including an HDHP or LDHP, that best fits their medical needs.

How can employers help employees with out-of-pocket healthcare costs?

Employers can supplement health coverage with benefits such as health savings accounts (HSAs), group coverage HRAs (GCHRAs), qualified small employer HRAs (QSEHRAs), or individual coverage HRAs (ICHRAs). These benefits can help employees pay for out-of-pocket medical expenses on a tax-free basis to make healthcare more affordable.

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