Texas is a shining example of the rapid pace of growth for small businesses in the country. With almost half of the state's workforce employed by small businesses, how are these companies affording benefits for their staff? The truth is, they're not. But there's a new tax-advantaged tool that can change that.
Why Texas is a great place to start a business
There's a few good reasons why small businesses continue to thrive in the Lone Star State: excellent geographic location, a highly-skilled workforce, low tax burden, a reasonable cost of living, and a predictable regulatory environment, to name a few. There's also the legacy of being Wide Open for Business.
At Take Command, we know about the growing pains and immense opportunities of starting a small business firsthand.
We launched with a mission to bring awareness, advocacy, and transparency to the confusing world of health insurance for small businesses and individuals, two groups that often get left behind with the deals and breaks that larger corporations enjoy.
That's why we are committed to helping fellow Texas startups and small businesses when it comes to affording comprehensive benefits to their staff —a crucial step in competing with big corporations to recruit and maintain the best and brightest talent.
And in Texas, this is more important than ever. Small businesses hold almost half of the employment share. There are 2.6 million small businesses in a variety of industries that employ 4.6 million Texans, a number that represents almost 50% of the workforce.
A Texas-based startup helping Texas-based small businesses
With traditional group plans coming at an impossibly high price tag and inevitably creeping up year after year, offering group benefits just isn't a reality for many small businesses. And even worse, leaving the responsibility to rest on the shoulders of the employees is expensive, unpredictable and cumbersome for the individual.
How the QSEHRA works
QSEHRA (Qualified Small Employer Health Reimbursement Arrangement) is a tax-advantaged tool that not many people know about. Still relatively new, QSEHRA is designed as any great small business should be: it’s smart, it’s lean, it’s flexible, it’s tax-advantaged, it’s budget-friendly. By reimbursing for premiums and medical expenses through a QSEHRA, small businesses with less than 50 employees can enjoy the same tax benefits as larger corporations, thanks to recent bipartisan legislation called the 21st Century Cures Act.
What's more, employees can choose their own plan instead of confirming to one group plan that might not necessarily fit their needs. They choose their plan, submit a reimbursement, and you as an employer reimburse them without paying income tax or payroll tax. Plus, you can design the QSEHRA to fit the needs of your business and your budget. Want to just reimburse for premiums? Great. Want to add qualified medical expenses to the deal? Even better. Want to scale the contributions based on age, status, or family size? You can do that too (as long as it’s fair!).
In contrast to a group plan with costs that continue to creep up year over year, QSEHRA costs are predictable. Small businesses just choose an amount they can afford to offer all employees and can then sync it with payroll software. Accounts don't need to be pre-funded and leftovers go back to the company, not the employee.
Bright future for QSEHRAs in Texas
Due to increased support and clarification by Texas state government, things are looking strong for QSEHRA in the future. It was recently confirmed that QSEHRA is not subject to small employer group health plan regulations set forth by Insurance Code Section 1501.003. This is great news for Texas small business owners, non-profits, churches, and entrepreneurs! Following a recent endorsement from the Texas Attorney General Ken Paxton earlier this year and the fact that the 21st Century Cures Act supersedes all other legislation, this step isn't surprising.
Move forward with your small business
Your small business is making a great economic impact in your community. It's time to make a big economic impact when it comes to healthcare for your employees as well — and a QSEHRA fits the bill. If you have any questions or just want to learn more, please email firstname.lastname@example.org and ask us any questions you may have. We are more than happy to help.
In the meantime, take a look at our new QSHERA guide to learn more about unlocking huge savings potential for your company!
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!