Qualified Small Employer Health Reimbursement Arrangements: What’s New for Small Business?

For employers that are looking for an approach to employee health benefits that provides cost control and better choices, one option that is building in popularity is the Qualified Small Employer Health Reimbursement Arrangement model, or QSEHRA.

Why is the QSEHRA approach so popular?

Download our Gravie Guide to QESHRAs to learn more, but in short, the appeal of this approach is that it provides a “defined contribution” method of funding employee benefits, which means an employer decides on their budget for each employee, which provides predictability for budgeting. With this model, the employer contribution is tax-free for employees. Employees use those HRA funds to shop for a health plan via a service like Gravie (web-based marketplace + licensed advisor support). Employees find the best plan for their needs, while employers control costs and get out of the hassle of administering a traditional group plan.

What’s new for QSEHRAs in 2018?

The QSEHRA was made possible by legislation passed at the end of 2016 and has had a few recent changes that employers should be aware of. We’d be happy to discuss how a QSEHRA approach to benefits could work for you, and here’s a summary of what’s new:

The employer contribution limits have been increased. For 2018, to qualify as a qualified small employer health reimbursement arrangement, the arrangement must provide that the total amount of payments and reimbursements for any year cannot exceed $5,050 ($10,250 for family coverage).
https://www.irs.gov/pub/irs-drop/rp-17-58.pdf

A recent notice from the IRS also stipulated the following responsibilities for employers:

• Reactivated the requirement that employers send out a written notice 90 days prior to the first day of the plan year of the QSEHRA
• Clarified that QSEHRA plan participants will need to provide proof that they have a “Minimum Essential Coverage” plan in place when they enroll and for attestation with each claim
• Confirmed that an HRA must be offered on the “same terms” to all eligible employees with variance allowed for age and family size
• Clarified that all expenses submitted for reimbursement will need to be fully substantiated

We’ve worked with many employers to get a QSEHRA in place, so let us know what questions you have. We’re here to help reinvent benefits to make them more affordable and with better choices – the QSEHRA is a great way to do just that.

Contact us today to learn more about the QSEHRA and other options for employee health benefits!