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Section 105 plans for dummies

There are many different section 105 plans you can use to offer health benefits to your employees, including the QSEHRA and ICHRA. Learn about them here.

Section 105  |  Josh Miner

5 Steps to a Successful QSEHRA Launch

Wtitten by: Sue Thurber
Nov 20, 2020 3:53:07 PM

Your work isn’t done once you’ve decided to offer a QSEHRA as your new health benefit. As with any health benefit, launching a QSEHRA requires some planning.

We’ve spoken with thousands of our customers about what they wish they had done before offering a QSEHRA.

This step-by-step guide is the result and walks you through all the decisions that need to be made to ensure a successful launch.


Step 1: Define your goals

It may seem trivial, but the first step is to make sure you understand your motivations for offering a QSEHRA so you can measure success. Whatever your goals may be, knowing your priorities will help you design the benefit to meet those needs.

Here are some common goals employers are seeking to achieve with a QSEHRA:

  • Take care of your employees.
  • Increase offer-to-hire and employee retention rates by offering a quality health benefit.
  • Control costs with a health benefit you design.
  • Keep things simple with a health benefit you can manage in minutes per month.

Step 2: Design your QSEHRA benefit

One of the main benefits of using a QSEHRA is its simplicity. But simple doesn’t mean weak—you have plenty of ways to tailor the benefit to your needs. Here are some elements you can customize to make it a perfect fit:

  • Employee eligibility. You must offer the benefit to all full-time W-2 employees, but you can choose whether or not to offer it to your part-time employees too.
  • Allowances. You get to choose how much you want to offer your employees based on their marital status and if they have dependents, up to the annual limit for each category.
  • Eligible expenses. You have the option of reimbursing your employees for their health insurance premiums and out-of-pocket expenses or just their premiums.

Step 3: Prepare and generate required legal documents

The QSEHRA is subject to rules and regulations from the IRS, Department of Labor, and HIPAA. To comply with these regulations, you’ll need to prepare and generate the required paperwork: a plan document that covers all of the nitty-gritty legal details and an employee-facing Summary Plan Description, or SPD, that summarizes the plan document and makes it easy for your employees to understand.

Common ways you can do this include QSEHRA administration software, hiring a lawyer, or purchasing online templates. The one you choose will depend on your budget, timeline, and required level of customization.

Step 4: Decide how to administer your QSEHRA

You have options when it comes to QSEHRA administration. Each method varies in cost and the amount of work you’ll handle in-house vs. outsource. Choose the one that works for you:

  • Full self-administration: All responsibilities lie with your organization.
  • Partial self-administration via QSEHRA administration software: Outsource most responsibilities like legal document generation, documentation review, and employee communication to a partner and retain responsibility for approving verified expenses and adding reimbursements to payroll.
  • Fully outsourced: Your organization will outsource all responsibilities to a partner like a third party administrator, or TPA, but sacrifice control over your benefit and plan design flexibility. Poor customer service and long wait times are common among fully outsourced solutions since these companies tend to have many other clients they’re working with, providing services ranging from payroll and timekeeping to employee training.

Step 5: Communicate the benefit to employees

Make sure you get this step right. You’re offering a QSEHRA as a benefit to your employees, but if they don’t understand how it works or see its value then it won’t be successful.

Here are some suggestions on how to talk to your employees about your QSEHRA:

  1. Hold an all-hands employee meeting to let them know you are offering a QSEHRA and explain how it works. You should:
    • Communicate deadlines for both QSEHRA and the enrollment period for your employees to purchase their individual health insurance plan. Note that offering a QSEHRA for the first time will make your employees eligible for a special enrollment period (SEP).
    • Provide education and resources about premium tax credits so your employees understand how to coordinate them with their QSEHRA allowance.
    • Inform them which types of insurance policies they will need to purchase to be eligible for tax-free reimbursements.
    • Explain where and how to shop for individual health insurance so they don’t have to go it alone.
    • Help them understand the reimbursement process, how to submit expenses for reimbursement, and who to go to if they need help.
  2. Send employees a formal notification to comply with regulatory requirements.
  3. Follow up with your employees before the deadlines. You can verify that they understand how the benefit works; its impact on their premium tax credits, if applicable; and benchmark their sentiment about the QSEHRA to see how it changes over time.

You just successfully launched your QSEHRA! Now what?

Once your QSEHRA has launched, you’ll need to continue to follow up with your employees. Ask if they have questions about how to submit expenses and how they receive reimbursements, or which expenses are eligible for reimbursement. If you are using administration software, check to ensure they have signed up, logged in, and know how to use it.

This step may vary in length depending on your health benefits situation prior to offering a QSEHRA. For companies transitioning from not offering any health benefit or giving employees a taxable stipend for healthcare expenses, we’ve found that employees get the hang of their new benefit pretty quickly.

For those switching from a group health insurance plan, it can take a bit longer. Plan on a 60-90 day learning curve as employees adjust to the reimbursement model. If you use PeopleKeep, our customer service team is available to answer any questions and offer all the help your employees need.

 

Thinking of offering a QSEHRA but still have questions? Leave a comment below or email us at blog@peoplekeep.com.

 

Topics: Qualified Small Employer HRA

Learn more about each HRA

QSEHRA

Employers with 1-49 employees

A simple, controlled-cost alternative to group health insurance.

Learn More

ICHRA

For employers of all sizes

A flexible health benefit solution that can be used alone or alongside group health insurance.

Learn More

GCHRA

For employers offering group coverage

A group health supplement to help employees with out-of-pocket expenses.

Learn More