PSA: This is not an in-depth overview of the QSEHRA. If that’s what you’re after, our comprehensive QSEHRA guide is your best friend. Consider this the SparkNotes version.
Who it’s for
QSEHRA stands for qualified small employer health reimbursement arrangement—try to say that three times fast. As the name implies, it was created specifically for small employers with fewer than 50 full-time equivalent employees. You’re not allowed to offer any group plan alongside a QSEHRA, so this is for employers wanting to use this as their only health benefit.
What it does
With a QSEHRA in place, employers can reimburse employees tax-free for health care expenses like insurance premiums, copays, and prescription drugs. Check out our eligible expense tool to see what’s covered.
How it works
You’ll need to have legal plan documents to keep everything compliant, so drafting those will be your first step. The QSEHRA is all about simplicity, so the only considerations you need to make are choosing who to offer it to and how much to offer in allowances. The QSEHRA gives you the choice of offering the benefit to both full- and part-time employees or only full-time employees. For allowances, you can offer everyone the same allowance or vary allowances based on your employees’ family status.
When all that’s in place, you can start reimbursing your employees. Once an employee incurs an eligible expense, they’ll submit documentation that includes the dollar amount, date of service or purchase, and a description of the service or product. It’s important to note that some expenses also require a doctor’s note or prescription to be reimbursed. If the documentation is in order and the expense is eligible, all that’s left to do is pay the employee. Most reimbursements are added to payroll as a non-taxable line item, but you can cut a separate check if you like.
When it can be offered
You can start offering a QSEHRA at any time throughout the year. Once you’ve notified your employees, they qualify for a special enrollment period (SEP) and have 60 days to get insured even if it’s not during the annual open enrollment period.
Where it’s available
Only employers with a presence in the US are eligible to offer a QSEHRA, but employees in all 50 states can participate.
Why you should consider it
If you’re offering a health benefit for the first time or wanting to transition off of a group health plan, the QSEHRA can be a great fit. Employees get to choose their own plans based on their specific needs and employers get to decide exactly what they can afford.
Watch our demo to learn more about PeopleKeep’s QSEHRA software and how we make health benefits hassle-free for more than 3,000 employers.