Does reimbursing employees for health benefits tax-free sound like a good fit for your business? If so, it's best to outsource the administration functions of the HRA. This is not the time to go to DIY route. Here's what to know about how to choose a QSEHRA administrator.
The benefits of Qualified Small Employer HRAs (QSEHRA) help small businesses afford benefits for their teams. With tax-free reimbursements, business owners with less than 50 employees save on benefits while employees get to choose the plan that works best for them. It's a more efficient model of benefits, sometimes referred to as defined contribution or 401(K) style benefits.
To get started, all you have to do as a business owner is decide:
- How much to reimburse
- What to reimburse
- Whether to include part-time employees
- Whether or not to implement waiting periods
- When to start
That's it. Your work is done here!
From there, you outsource certain administrative functions to save you time, energy, and in some cases, legal troubles.
What a QSEHRA administrator should do for you
Remember: not all QSEHRA administrators are created equal. You'll need to do your research to make sure the QSEHRA administrator tool you choose will make your life easier and protect you from costly missteps.
Here's what an HRA administrator should do.
1. Handle compliance, notifications, and reporting.
- QSEHRA Legal Plan Documents
- Employee MEC Verification
- IRS Deadlines
- Form 720 (PCORTF)
- Year-end W-2 Reporting
- HIPAA and Privacy Compliance
2. Support your employees
- Provide helpful educational material to communicate to your employees the benefits of their new HRA and how to get the most out of it
- Support employees while they shop for an individual health insurance plan to use with their QSEHRA
- Robust onboarding process
- Answer questions along the way
- Easy platform to request reimbursements (like simply snapping a picture and uploading on phone)
3. Support business owners
- Easy and quick online signup process
- A customized admin portal to review and approve HRA documents, view monthly reimbursement reports, add/remove employees, manage subscriptions, update payment information, and see overview information about HRAs.
Why you can't administer a QSEHRA yourself
We get asked this question a lot: Can I administer a QSEHRA myself? The answer is not really. There are a few very valid reasons why that isn't a great idea.
- PRIVACY: Given the nature of a QSEHRA and the private health information involved filing reimbursements for qualified medical expenses, privacy is a big issue, even before we get into the whole HIPAA aspect of it (more on that below). As an employer, you would have access to personal information about your employees' health. This could be potentially uncomfortable for everyone involved.
- PAPERWORK: It's a hassle for employers to keep up with medical receipts and time-consuming to maintain them in a secure way.
- HIPAA COMPLIANCE: Because small business HRAs are designed for companies with less than 50 employees, it doesn’t technically fall within many of the federal laws that affect health plans built for larger corporations. But that doesn't mean you are off the hook when it comes to HIPAA (the Health Insurance Portability and Accountability Act of 1996). Some parts of HIPAA still apply to small business HRAs. Why? Because all health plans, including those reimbursed through a QSEHRA, must observe the HIPAA Privacy Rule, regardless of the company's size. This rule protects patients' personal health information (PHI), meaning the hard documentation, emails, and telephone calls regarding an individual's health information. Examples include things like a bill from a doctor's visit, an MRA scan, lab work results, etc. More on HIPAA and QSEHRA here.
Why compliance is no joke
Penalties for HIPAA noncompliance are serious business. Fom the relatively less-serious "Reasonable Cause" to the more-serious "Willful Neglect," civil penalties can range from $100 to $50,000 per incident with no jail time to more serious offenses resulting in up to $250,000 in fines and 10 years in prison, especially if information was taken under false pretenses or disclosed on purpose.
If that wasn't enough of a deterrent, state laws could impose additional penalties for the same offenses. Also, even if you didn't intend for noncompliance to occur or it was an accident, you are still liable.
Pro-tip: Take Command's platform drafts plan documents with HIPAA compliant language and instant updates, and takes care of QSEHRA administration requirements like reviewing documents that contain protected health information.
Take Command is ready to be your QSEHRA administrator
Our small business experts will take care of the details so you can go back to managing your business. Here's how.
To help your employees, we offer a data-driven platform to help them pick the best on- or off-exchange plan based on their preferred doctors, unique needs and prescriptions.
Pro-tip: we are the only QSEHRA administrator that also offers individual health plans.
Our customized portal allows your employees to enroll in the HRA online, access their HRA documents, submit medical expenses, look up their membership benefits, and upload proof of coverage for compliance checks.
For your business, we do all the heavy lifting:
- We handle all the legal work and make tax season easy and painless
- Employee onboarding
- An easy and quick online signup process
- A customized admin portal for your business allows you to review and approve HRA documents, view monthly reimbursement reports, add/remove employees, manage subscriptions, update payment information, and see overview information about HRAs.
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.
I wrote this blog because I care about ideas (big and little) that can help fix our healthcare system. I used to work on projects for Kaiser Permanente and the Parkland Health & Hospital System so I've seen the system inside and out. It's so important that consumers keep up with industry shifts and changing health insurance regulations. I'm also Take Command Health's Content Editor and a busy mom. Learn more about me and connect with me on our about us page. Thanks!