QSEHRA

  • Employers with fewer than 50 employees can offer the Qualified Small Employer HRA (QSEHRA). Other group health insurance cannot also be offered.

    • Participants must maintain individual medical benefits that meets Minimum Essential Coverage (MEC) requirements to use the funds, or the QSEHRA reimbursements may be includible in gross income (Section 5000A) — see https://www.cms.gov/cciio/programs-and-initiatives/health-insurance-market-reforms/minimum-essential-coveragefor MEC information and Appendix A in n-17-67.pdf (irs.gov)for types of MEC - MEC does not include coverage consisting solely of excepted benefits (such as stand-alone vision and dental plans, worker’s compensation, specified disease or illness)

    • Individual health insurance coverage can be bought on-Exchange through the Marketplace or off-Exchange. Use our portal to purchase here BenefitsAssist, inc. | Fast, Easy ACA Enrollment (healthsherpa.com).

    • Employer must not be categorized as an Applicable Large Employer (Section 4980H(c)(2) - Cannot have 50 or more FTEs in the prior calendar year to qualify for this QSEHRA option

    • Employer cannot offer any Group Health Benefits (such as Medical, Dental, Vision, Health FSA) to any current employees

    • 2025 Max Benefit is $6,350 Individual / $12,800 Family (including carryovers if applicable)

      • Benefit amounts can be determined based on Coverage classes, EE, ES, EC, Family with different amounts as long as not discriminatory

      • Benefit amounts are pro-rated for mid-year plan entry and termination (rounded to nearest $50 below max)

      • COLA adjustment / indexing will apply

      • Percentage of premium not permitted

    • QSEHRA must be provided (and cannot be waived) to all eligible employees and is funded solely by Employer. Part-time employees (customary weekly employment is less than 25 hours) and seasonal employees (customary annual employment is less than 7 months) can be excluded. Retirees are ineligible.

    • Must substantiate enrollment in MEC (annually and ongoing for each claim) - attestation is allowed. Attestation is by employee that those claiming reimbursements have MEC, the date coverage began and the name of the provider of coverage

    • Employers must report contributions on employees W-2s box 12 code FF (excluding carryover)

    • Annual notice 90 days before start of plan year

    • The QSEHRA is not subject to Federal COBRA.

    **Specific rules apply in regard to premium tax credits for participating employees. Consult with legal or tax counsel in regard to Affordable coverage and premium tax credit rules.

    NOTE: This is not a complete listing of Qualified Small Employer HRA rules. Please see IRS notice HR 34-Section 18001 or consult your legal or tax counsel for complete details - see n-17-67.pdf (irs.gov) for guidance on QSEHRAs. See Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs) | HealthCare.gov

  • Participants must maintain individual medical benefits that meets Minimum Essential Coverage (MEC) requirements to use the funds, or the QSEHRA reimbursements may be includible in gross income (Section 5000A) — see https://www.cms.gov/cciio/programs-and-initiatives/health-insurance-market-reforms/minimum-essential-coverage for MEC information and Appendix A in n-17-67.pdf (irs.gov) for types of MEC - MEC does not include coverage consisting solely of excepted benefits (such as stand-alone vision and dental plans, worker’s compensation, specified disease or illness)

    Individual health insurance coverage can be bought on-Exchange through the Marketplace or off-Exchange. Use our portal to purchase here BenefitsAssist, inc. | Fast, Easy ACA Enrollment (healthsherpa.com).

    The employer is able to deduct claim reimbursements while the employee is not taxed on the eligible disbursements. Reimbursable expenses can include the below:

    • Health insurance premiums. Subject to plan design - reimbursement for coverage under a group health plan sponsored by the employee’s spouse is taxable

    • Subject to plan design - 213(d) expenses such as:

      • Doctor’s office and prescription drug co-pays

      • Medical deductibles and co-insurance

      • Approved over-the-counter items

      • Vision and dental costs

      • Chiropractic services