Qualified Small Employer HRA

In 2016, the 21st Century Cures Act legislation passed into law. This law allows small employers that do not offer any group health plan to their employees to instead adopt the Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) to reimburse their employees for individual health insurance premiums on a tax-free basis. This is a 100% deductible expense for the employer, and is tax-free for the employee. This is essentially a standalone healthcare program and not a part of the Affordable Care Act (ACA). Therefore, it is not subject to the strict market reform requirements, yet it enables employers to provide essential relief for employees. QSEHRA is expected to remain valid regardless of any repeal or replacement of the ACA.

Click here to download the Qualified Small Employer HRA Flyer.

Here are some of the major points surrounding the QSEHRA:

1. To Qualify for a QSEHRA, the employer:
   1. Must employ between 2-49 full-time employees
   2. Must not offer group health insurance
2. Funding:
   1. Must be solely funded by the employer
   2. No employee funding is allowed
3. Reimbursement Maximums:
   1. $4,950 for individual coverage
   2. $10,000 for family coverage
   3. Amounts may be pro-rated for new eligible employees
4. Reimbursable Expenses:
   1. Health Insurance Premiums on or off the Marketplace
   2. All other Section 213(d) expenses (Out of pocket medical expenses)
5. Plan Design: Plan must be offered in the same terms to all “eligible” employees
   1. 30 hours/wk is the maximum eligibility criteria
   2. 25 years of age is the maximum eligibility criteria
   3. Maximum waiting period and entry period of 90 days
6. Employees must have a minimum essential covered plan
7. The regulations are very clear that every expense must be substantiated prior to being reimbursed
8. Notices are required to be given to all participants in the QSE HRA
   1. Summary Plan Description must also be provided
   2. Penalties will be enforced for not providing three required notices and additional penalties of $100.00/day/employee for non-compliance.

To learn more about how both your company and your employees can enjoy the benefits of a QSEHRA, contact Carte Hall today at: (304) 637-2369.