Growing pains are one of the many challenges faced by startups and small businesses around the globe. One of the most daunting growing pains stems from providing benefits to attract the best and brightest. Luckily, a recent policy change provides a solution for small businesses wanting to offer competitive "big company" benefit packages. It's called QSEHRA. Our team at Take Command Health is here to help you make sense of it and take advantage of a wide range of benefits our small business portal has to offer. Read on to learn more!
What is QSEHRA?
The Qualified Small Employer Health Reimbursement Arrangements (QSEHRA) is a way for small employers, defined as those with less than 50 full-time employees, to provide medical assistance to their employees. This HRA is only possible if this small employer does not offer a group health plan to any of its employees. If this is the case, a pre-tax contribution can be offered for insurance premiums and health expenses to all eligible employees. It is not subject to ACA coverage requirements or income and employment taxes. For those employers who do not offer any coverage, the HRA essentially provides some benefit for both premium payment and out of pocket expenses.
How does the QSEHRA work?
An employer can contribute to the HRA and reimburse the employee for individual health insurance premiums and other qualified medical expenses, thus giving the employer the ability to control and customize. Employers can contribute no more than $4,950 annually for an employee (or $10,000 annually if expenses are also to be paid/ reimbursed for families). As an employer, salary deductions aren't allowed and you must provide the exact options to every single eligible employee.
The employee must have their own individual health insurance in order to qualify for the arrangement with the employer and must provide appropriate documentation. Choosing their own individual plans puts a lot of pressure on the employees, so our team at Take Command Health is here to help employees choose the best plan for their family, their specific needs and their preferred doctors.
This QSEHRA will reimburse any documented insurance premiums and healthcare expense for those employees who are covered on their own individual health insurance. Examples include dental expenses, co-pays & coinsurance amounts deductibles, prescribed (and most over-the-counter) medication costs, procedures, medical equipment & supplies, and vision services.
What's not reimbursable?
Expenses that promote general health but aren't prescribed by a physician for a specific medical ailment aren't reimbursable. A few examples include cosmetic procedures, exercise equipment, multivitamins or massage therapy.
How much can be saved?
Here 's an example of a dental office with five full time and two part time employees. The designated reimbursement rates for these employees totals $2,300 per month. Without offering an HRA, around $460 would be taken out of the employees' paychecks for that same amount for income tax (~20%), a ~15% payroll tax would take another $345 each month from the employer's pockets, and no benefits are offered. With an HRA, no income taxes or payroll taxes are paid on the reimbursed amount. The only cost is the HRA fee of $20 per person, costing the employer $140 a month. The result? Approximately $665 per month in tax savings with better benefits. We call that a win-win!
Take Command Health can help!
Does all of this sound complicated? Expensive? Here's some good news. With our help, this can be easy and the best part is, it starts at $0 a month. Our new small business platform is here to help employers roll out company-wide benefit plans, offering a personalized employee benefits portal, options to provide "big company" perks like dental, vision, 24/7 doctor help line, medical bill negotiation , and options to upgrade to a tax-free reimbursement HRA. Running a business is hard. Let Take Command Health handle your company's benefits so you can get back to work.