The Qualified Small Employer HRA
The Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) enables eligible employers with fewer than 50 full-time employees to help cover out-of-pocket healthcare costs, including the cost of qualifying monthly insurance premiums.
When the Affordable Care Act (ACA) was adopted, the door was closed on any tax-preferred reimbursement of non-employer sponsored healthcare premiums. However, the Small Business Healthcare Relief Act (SBHRA) restores stand-alone Health Reimbursement Arrangements (HRA) for small employers.
To qualify, the employer cannot offer a group health plan and the HRA must:
- Be provided on the same terms to all eligible employees
- Be funded solely by the employer (no employee contributions)
- Require “proof of coverage” before any reimbursement of benefits
- Limit annual payments to $4,950 for individuals and $10,000 for families
- Be offered only to full-time employees age 25 and over, with 90 days of service
While eligible employees must provide proof of incurred and paid eligible medical expenses, and several reporting requirements apply, the QSEHRA offers an opportunity to help employees cover healthcare costs, including the cost of Minimum Essential Coverage.