Now that you have decided to offer your employees a QSEHRA benefit, you may be wondering what documents need to be created before your small business HRA (QSEHRA) begins. There are two main documents that need to be written, one for the employer (Legal Agreement) and one for the employees (Plan Summary).
Here's the QSEHRA plan documents you'll need to get started:
Many small businesses are opting to offer their employees a benefit called QSEHRA to reimburse employees for health insurance premiums and medical expenses. The great feature of this specially designed HRA for small businesses is that the reimbursements are tax exempt for both the employee and employer!
Many employees may wonder how to use the new benefits offered to them, and sometimes the best advice comes from those similar to us in our community. So if you find yourself googling "how I use my QSEHRA," here's one mom's story of her new QSEHRA.
President Trump issued an executive order, allowing short-term plans to be sold for longer periods and to be renewed by consumers. Rather than only being covered by a short-term plan for three months, he has extended the allowable coverage to 364 days. They can then reapply for short-term health coverage at the end of their 364 days.
In essence, people could start to use these temporary plans as their actual health insurance—a situation that the Obama administration had really tried to avoid.
If you are considering using short-term plans for a prolonged period of time, it's probably a good idea to keep reading. If your circumstances necessitate this type of temporary coverage, keep reading as well!
Small business HRAs known as QSEHRAs were defined in December 2016 as part of the 21st Century Cures Act. The idea behind QSEHRA is that small employers with fewer than 50 full-time employees can offer their employees reimbursement for health insurance premiums and eligible medical expenses tax-free. Since its inception, the IRS has issued guidance outlining how QSEHRA is set up and run.
Here's the QSEHRA rules to know before getting started.
As patients, we trust our physicians to order us tests and procedures that are necessary and important. When we get the bills, sometimes it’s a shock, but we typically pay because of the trust built with our provider. However, what do you do when you receive a bill that is unexpectedly thousands and thousands of dollars? Be your own advocate. Read carefully. Then call a medical bill negotiator.
Here's one patient's story and what she did to set things straight.
Its no secret that benefits are a major factor when someone is looking for a job. Benefit packages also play a big role in establishing loyalty to a company for current employees. But for many small businesses and startups, it's too expensive and too much trouble to offer competitive perks like a big corporation would do.
Good news for QSEHRAs in Minnesota: MNsure, Minnesota's state-based exchange, recently added a special enrollment period (SEP) for Qualifying Small Entity Health Reimbursement Arrangements (QSEHRAs), a tax-friendly benefits option for small businesses created by the 21st Century Cures Act at the end of 2016.
What this means is that if an employee starts working at a company that offers a small business HRA or if a small business starts offering small business HRAs to existing employees, it prompts a SEP, giving those individuals 30 days to choose a new plan, instead of having to wait until the next open enrollment period.
It's exciting to see states amending their laws to accommodate such a great tool for small businesses that allows them to offer competitive, tailored benefit packages at a price they can afford. This is a trend our team at Take Command Health hopes to see across the country!
Yesterday, QSEHRAs in Texas got a major endorsement when Texas Attorney General Ken Paxton issued Opinion KP-0179 in response to a recent question posed by Senator Charles Perry relating to the question whether the 21st Century Cures Act, a recent federal law creating and implementing QSEHRAs (Qualifying Small Entity Health Reimbursement Arrangements) preempts Texas Insurance Code Sec. 1501.003 and also the Commissioner's Bulletin B-0028-06. The recent changes in federal law specifically permit a health reimbursement arrangement, stating that a QSEHRA is not a group plan and thus does not comply with the federal requirements for group plans, which includes some crazy provisions that would be virtually impossible for a small business to accommodate.
So what does that mean for the future of small business HRAs in Texas? Good news for fans of QSEHRAs, Attorney General Paxton's endorsement is a big step for the state, given that Texas has been lagging behind other states in this regard. Most states don't have old laws or memos that might prevent small business HRAs from being offered. And if they did, they quickly amended their laws to accommodate them. We are excited to see Texas getting on board!
To understand Attorney General Paxton's thought process and get to the root of the issue, we should start with a little history lesson. Brace yourself, this gets a little complicated.
Have you heard about the small business HRA Employee Notice deadline that is quickly approaching on February 19, 2018? The deadline pertains to small business HRAs that started between Jan 1, 2017 and Jan 1, 2018. Employers with QSEHRA plans under this date range must provide their employees the initial Employee Notice of the QSEHRA benefit by February 19, 2018. Employers who fail to provide Employee Notices to employees will be penalized $50 per employee (up to the maximum $2,500 per calendar year per eligible employee. Plans starting after Jan 1, 2018 must provide the QSEHRA Employee Notice on or before the HRA start date.
A friendly reminder: Please note that we are not licensed tax professionals. Our mission is to empower small business owners and entrepreneurs to make smart decisions when it comes to health insurance.
One of the questions we receive most from employers and employees is how QSEHRA (small business HRA) affects premium tax credits for plans purchased through the marketplace.
In general, small business HRAs will reduce employees premium tax credits dollar for dollar. Basically the employee will be exchanging the tax benefit from the government with the tax benefit from the employer. The employee may still access their tax credits if the benefit is less than the premium tax credit (PTC) available to them.
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