Small businesses increased average QSEHRA contributions in 2018, new PeopleKeep report shows

Written by: Caitlin Bronson
Apr 2, 2019 10:41:49 AM

Salt Lake City, Utah – April 2, 2019 — Small businesses increased their offerings through the qualified small employer health reimbursement arrangement (QSEHRA) in 2018 by allocating an average $297 a month to single employees and $445 to employees with a family. In turn, employees used their increased allowances to reimburse critical health care items, including health insurance premiums, medical office visits, and prescription drugs.

These are key findings from The QSEHRA: Annual Report 2019 from PeopleKeep, the leader in personalized benefits for small businesses. They illustrate how QSEHRAs help small businesses balance the need for budget control with their desire to provide value to employees.

Drawing on data from nearly 1,400 small businesses and 8,300 employees, The QSEHRA: Annual Report 2019 offers the industry’s first look at how the QSEHRA benefit was used in 2018.

The QSEHRA, which was created through the 21st Century Cures Act in December 2016, is an alternative to traditional group health insurance. With a QSEHRA, organizations offer employees a tax-free monthly allowance. Employees then choose and pay for health care, including insurance policies, and the business reimburses them up to their allowance amount.

The PeopleKeep report found that organizations with existing QSEHRAs increased their value to employees by offering an average 6 percent more to single employees and 7 percent more to employees with a family in monthly allowance amounts compared to 2017.

Additional key findings in the report include:

  • Twenty-six percent of single employees and 10 percent of employees with a family received the federal maximum monthly allowance of $420.83 and $854.16, respectively.
  • Smaller organizations typically offered higher allowance amounts to employees than did larger organizations.
  • Industries with the highest average allowance per employee were technology, accounting, and legal.
  • Employees used an average 78 percent of their QSEHRA allowances for the year. One-third of employees used their entire allowance amount.
  • Thirty-eight percent of employees used their QSEHRA allowances on insurance premiums, 37 percent used it on nonpremium medical expenses, and 12 percent used it on both.
  • Employees requested reimbursement for an average 12 nonpremium expenses each during the year.
  • The most popular nonpremium reimbursements were for medical office visits, prescription drugs, and dental care.

Download the full report here and check out an infographic displaying top-level trends here.

About PeopleKeep

PeopleKeep helps small businesses offer competitive benefits at a price they can afford. Personalized benefits automation software from PeopleKeep allows businesses to manage their benefits in minutes per month. PeopleKeep automates benefits compliance and employee support. Employees receive tax-advantaged reimbursements to pay for health insurance and other medical, dental, and vision expenses. Today more than 3,000 companies across the United States trust PeopleKeep to automate their benefits and keep employees happy. PeopleKeep is based in Salt Lake City, Utah.

Topics: QSEHRA

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