Last year, 2018, marked the second full year small businesses had access to the qualified small employer health reimbursement arrangement (QSEHRA). PeopleKeep examined this period recently in our original study, The QSEHRA: Annual Report 2019.
In many ways, small businesses used the QSEHRA much the same way as they did in 2017. In total, they offered similar allowance amounts and their employees used about the same percentage of their available allowance as they did last year.
However, with an additional year of data behind us, we can draw new conclusions about how small businesses are using the QSEHRA now and what that means for reimbursement-based health benefits in the future.
Employees with access to a qualified small employer health reimbursement arrangement (QSEHRA) continued to take full advantage of the benefit in 2018, according to results from The QSEHRA: Annual Report 2019 from PeopleKeep.
The report is our second yearly look at how small businesses and their employees use the QSEHRA. Not only did we find that businesses are increasing their offerings through the QSEHRA, but we also discovered that employees are using most of the tax-free allowances they’re given.
While small businesses increased QSEHRA allowances by 6 percent for single employees and 7 percent for employees with a family, employee utilization remained relatively steady. On average, employees used roughly 78 percent of the tax-free money made available to them throughout the year.
Employees also continued to use their QSEHRA allowances for critical health care expenses like health insurance and medical office visits.
Here are 10 FAQs outlining common health reimbursement account rules.
A health reimbursement account (HRA), also known as a health reimbursement arrangement, is an IRS-approved, tax-advantaged, health benefit plan that reimburses employees for out-of-pocket medical expenses and individual health insurance premiums.
The HRA is 100 percent funded by the employer and the terms of these arrangements can provide first dollar medical coverage until the funds are exhausted or insurance coverage kicks in. The contribution amount per employee is set by the employer.
Here's a brief overview of the HRA account rules we'll be covering:
Employees might need health insurance to participate in an HRA.
The business owns the HRA.
Only the business can put money into the HRA.
HRA rollover depends on the type of HRA and the business's decision on whether to allow it.
HRA funds don't earn interest.
HRAs can reimburse anything in IRS Publication 502.
The business determines how much is contributed to the HRA.
Maximum reimbursement amounts depend on the type of HRA.
Unused HRA money stays with the company.
HRA money can be used to pay for family medical expenses.
With a QSEHRA, businesses offer employees a monthly allowance. Employees then choose and pay for health care, including insurance policies. The business then reimburses employees tax-free up to their allowance amount.
At PeopleKeep, we provide the industry’s first and only look at data from real businesses offering the benefit. According to our findings in The QSEHRA: Annual Report 2019, businesses offered an average $297 a month to single employees and $445 to employees with a family in 2018—an increase of 6 percent and 7 percent, respectively, since 2017.
In this report, we’ll dive more fully into those findings by examining the allowance amounts offered by businesses across company size, state, and industry.
The creation of the individual coverage health reimbursement arrangement (ICHRA) has many organizations excited. The new benefit, available beginning January 1, 2020, allows groups of any size to reimburse employees tax-free for individual health insurance and other health care expenses.
The prospect of setting up the benefit can be intimidating, though. Getting started with group health insurance is easy, but because HRAs are less familiar, there can be a learning curve.
Fortunately, getting started with any HRA—including the ICHRA—is actually very simple.
In this post, we’ll go over the six steps required to set up an individual coverage HRA and start offering the benefit to employees. We’ll also discuss the advantages of using ICHRA administration software.
Set to debut in January 2020, the ICHRA allows businesses of any size to reimburse employees tax-free for health care, including individual health insurance policies. The basic ICHRA structure works like any HRA, but there are unique guidelines businesses should consider when evaluating it for their organization.
In this post, we’ll explore how the ICHRA works. We’ll also go over how ICHRA administration works with a software automation provider to help you make the best choice for your organization.
Employee classes, which allow businesses to draw distinctions among employees in benefits, have been tightly regulated in HRAs since the stand-alone HRA was eliminated in 2013.
When the ICHRA becomes compliant in January 2020, it will restore that feature. The ICHRA comes with nine different employee classes businesses can leverage while structuring benefit eligibility and allowance amounts. When used well, these classes will help businesses more effectively use their benefit to hire and keep valuable employees.
In this post, we’ll explain what the nine employee classes are as well as how to use them to define ICHRA eligibility and allowance amounts so they match your goals for health benefits.
As the Trump administration continues to scale back the Affordable Care Act (ACA), many small businesses have raised questions about which portions of the law are still in effect in 2019.
In large part, small business health benefits requirements are the same in 2019 as they were in 2018. Small businesses are still not required to offer group health insurance, and they still have several options for compliantly providing health benefits to their employees.
In this post, we’ll go over what you need to know to comply with the ACA in 2019. We’ll also discuss benefits options for small businesses that are compliant both this year and in coming years.
Created through new regulation from the Departments of the Treasury, Labor, and Health and Human Services, the ICHRA is a partial restoration of the old stand-alone HRA. With the ICHRA, businesses can reimburse employees tax-free for individual health insurance and other medical expenses.
Here at PeopleKeep, we expect the ICHRA to help thousands of small businesses offer health benefits for the first time. But which businesses are eligible to offer the benefit, and which employees can participate?
In this post, we’ll cover ICHRA eligibility for businesses, their employees, and employees’ families.