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how to set up a qsehra
Small Business

How to set up a QSEHRA

Wondering how to set up a QSEHRA? It's easier than you think. Boost employee morale and retention rates by reimbursing your employees tax-free for health insurance and medical expenses with a Small Business HRA (QSEHRA). If you're looking for instructions on how to set up a QSEHRA, here's how QSEHRA setup works in seven easy steps.

How to set up a QSEHRA

QSEHRA plan setup is easy with the right QSEHRA administration platform like Take Command. You won't be alone, either.  QSEHRAs have doubled in size on the market last year as an alternative to group health insurance for small business, according to the HRA Council, and they continue to gain momentum.

Here's what to do to set up a QSEHRA plan. 

Setting up a QSEHRA in seven steps:

  1. Pick a start date. The first step to setting up a QSEHRA is pretty easy-establish a start date! If your company currently does not offer a group plan, you can start your plan ASAP. However, if you already have a plan in place you will need to cancel it before you begin your HRA.  

  2. Set a cancellation date for your group policy (if applicable). This step is only for business owners currently offering group health insurance. You will need to cancel the group plan coverage before the start date of the new HRA. In order to avoid any gaps in coverage, ensure the group plan ends one day before the HRA begins. 

  3. Confirm who will be eligible. You are required to offer the HRA to all full-time employees. You have the option to offer the HRA to part-time employees as well, but it is not required. 
  4. Determine a budget and set allowances. Your next step is to determine how much you’ll give employees to reimburse them for premium costs and medical expenses. You can set a monthly allowance (such as $200/month) for all employees for vary rates by family size. There is no minimum contribution amount to participate in a small business HRA. You can learn more about QSEHRA reimbursement design options in the "Reimbursement Rules" section of our online guide.  Note that there are 2023 QSEHRA contribution limits that you'll need to comply by. 

  5. Establish legal plan documents. The IRS and Department of Labor have a variety of rules to follow regarding HRAs. Failure to comply with the rules will result in penalties. Your legal plan documents must include the HRA policies including monthly reimbursement amounts and reimbursement eligibility.     

  6. Communicate your new benefit to employees. Since you are going through the work to set up the HRA employee benefit you want to make sure your employees know how to use it. Practical information to include: start date, annual HRA allowance, and how to obtain coverage.  Our team at Take Command can help onboard your team for you, plus here's a handy post on how to communicate QSEHRA to your employees.

  7. Provide resources for employees to purchase individual health insurance. Choosing a health insurance plan is a daunting task. As an employer, you can provide your employees with tools and information to guide their decision maker. Just beware, federal rules prohibit employers from being involved in the actual decision making when it comes to choosing a provider or policy.  Take Command can provide the best on- and off-market options for your employees based on their needs, their budget, their preferred doctors and their prescriptions. 

Ready to learn how much you can reduce benefits cost?

Need help with QSEHRA setup? 

Does this sound confusing, expensive or both? Don't worry. That's where Take Command's QSEHRA administration platform can help. We'll handle all the accounting and legal legwork, take care of onboarding each of your employees, and make tax-time easy and painless. You'll never have to hassle with receipts or worry about setting up a health plan again.

Have QSEHRA administration questions? 

We have all kinds of resources for you if you are ready to get started setting up a QSEHRA to reimburse employees for health insurance tax-free. Take Command's QSEHRA administration platform makes things easy and simple.

Learn more about our award-winning QSEHRA administrator platform here.

In fact, most of our clients report spending less than an hour a month administering their QSEHRA health insurance. Sweet!

If you want to explore what types of small business HRAs are right for your company, our Small Business HRA Strategy Guide is another great place to start for optimizing your tax savings. 

Want to see if an HRA could work for your small business? Want to determine the best small business health insurance option for your company? Learn more about your options for small business health insurance or schedule a call with one of our small business HRA experts today.

This post was originally published in 2017 and has been updated with new information and insights for 2023. 

Get started with QSEHRA today!

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