Has your employer recently informed you of a new health benefit they will be providing called QSEHRA? It stands for Qualified Small Employer Health Reimbursement Arrangement, and it is a special HRA designed specifically for employers with fewer than 50 full time employees. They are completely funded by your employer (you do not need to add money to your account) and are designed to reimburse employees for eligible health insurance premiums and medical expenses (plan depending) TAX FREE! A small business HRA is not considered income, so it will not increase your taxable income amount if you meet eligibility requirements (see below).
Learn more about how this new health benefit works! Understanding QSEHRA is the first step to fully reap the benefits.
The good news is there is only one requirement for employees to meet in order to participate in a small business HRA and receive the tax-free benefits! Employees must have health insurance that meets Minimum Essential Coverage (MEC). Most plans today meet MEC requirements, including: plans purchased from the marketplace, employer group plans, COBRA, TRICARE, MEDICARE (A or C), Medicaid, and more. While faith-based sharing plans are exempt from MEC requirements, the IRS regulations are still unclear as to whether plan participants are eligible for QSEHRA participation.
Plans that do not qualify as MEC include: critical illness, indemnity, short-term plans, vision or dental only, or plans that only offer discounts on medical services.
Enrolling in your small business HRA is easy with Take Command. All employees will receive an email inviting them to sign up. It takes just a few minutes to complete your enrollment information and upload your proof of insurance coverage (insurance card or bill).
Submitting Expenses for Reimbursement
There are two different ways your small business HRA can be set up either to reimburse premiums only or to reimburse premiums + medical expenses. Your employer will be able to tell you which type of plan you have or you can look in your detailed Plan Summary.
Health insurance, Dental, and Vision insurance are eligible for premium reimbursement. During your enrollment, we will request a copy of your insurance bill to confirm your monthly premium rate. Once we have confirmed your premium amount, Take Command Health will set up your premium for automatic reimbursement each month, saving you the task of remembering to submit your monthly premium for reimbursement!
Please note: Employees who have insurance from an Employer Group Plan (usually through a spouse’s employer) are generally not eligible for premium reimbursement. EGP premiums paid with pre-tax dollars are not eligible for reimbursement per the IRS. If your premiums are paid post-tax on an Employer Group Plan just let us know so we can adjust your account settings to guarantee your reimbursement.
It's also important to remember that Critical Illness, Life Insurance, and Indemnity Plans are not eligible for reimbursement.
You will need to provide the date of service, cost, and submit a receipt.
- For an expense to be eligible for reimbursement, it must have been incurred on or after your small business HRA start date (not the date billed).
- You can submit an expense that is larger than your monthly allowance. The balance will be paid off in the future months.
- If you are unable to use your entire balance one month, it will carry forward each month until year end.
Each month Take Command will send your employer a reimbursement report indicating how much employees have claimed for reimbursement. After the employer has reviewed the report they will reimburse employees tax-exempt. Please note: Take Command will not be reimbursing employees.
Want to learn more about your small business HRA plan? We have a variety of articles on our blog to help answer many of your questions including: how to use multiple QSEHRAs in one family, W-2 reporting, filing taxes, and what to do if you do not have health insurance.
If you have a question we have not answered, please feel free to contact us!
I wrote this blog because I love helping people decode confusing insurance jargon and understand the fine print. I'm a licensed health insurance professional and specialize in simplifying health insurance for individuals and small businesses. My QSEHRA articles have been featured regularly on Accounting Today, Accounting Web, HRWeb, and other industry publications. I'm also a member of Take Command Health's client success team and a full-time mom. Learn more about me and connect with me on our about us page. Thanks!