Health Reimbursement Arrangements (HRAs) for small employers

Certain small employers—generally those with less than 50 employees that don ’ metric ton offer a group health plan—can contribute to their employees ’ health manage costs through a Qualified Small Employer Health Reimbursement Arrangement ( QSEHRA ) .
A QSEHRA allows small employers to provide non-taxed reimbursement of sealed health care expenses, like health indemnity premiums and coinsurance, to employees who maintain minimum all-important coverage, including an individual Marketplace plan. In many states, QSEHRAs allow small employers to provide their employees extra plan choices without managing group health plan coverage .
Begin highlighted text Is your small business eligible to offer a QSEHRA?

To qualify for a QSEHRA, a modest employer by and large must :

  • Have fewer than 50 full-time employees
  • Provide the arrangement on the same terms to all full-time employees (reimbursement amounts may only vary based on age and the number of individuals covered)
  • Not offer a group health plan, like SHOP coverage or a flexible spending account (FSA)

end highlighted text Note: A QSEHRA international relations and security network ’ t a traditional group health plan. For little businesses concerned in offering traditional group coverage, learn more about SHOP plans and find out if SHOP is available in your state of matter. Enrolling in SHOP is generally the only way to qualify for the Small Business Health Care Tax Credit, which can save eligible employers up to 50 % of their employer contribution for 2 straight years .

QSEHRA contributions

With a QSEHRA, belittled employers can decide what they ‘ll contribute to their employees ’ health manage costs, up to an annual utmost that is set by the IRS. Employees pay their supplier or policy company for their health wish costs, then submit proof of payment to be reimbursed by the QSEHRA. Reimbursement is tax-exempt. If an employee doesn ’ thymine submit a claim, the employer keeps the money, though they may choose to roll it over from year to year while the employee is inactive employed by the business. typically, QSEHRA amounts claimed by employees are paid monthly by their employer .

Year Maximum employee only contribution Maximum for employees & households
2018 $ 5,050 ( $ 420 monthly ) $ 10,250 ( $ 854 monthly )
2019 $ 5,150 ( $ 429 monthly ) $ 10,450 ( $ 870 monthly )

2020 $ 5,250 ( $ 437.50 monthly ) $ 10,600 ( $ 883.33 monthly )
2021 $ 5,300 ( $ 441.67 monthly ) $ 10,700 ( $ 891.67 monthly )

by and large, the QSEHRA amount you provide to your employees will affect the total of premium tax recognition your employees are eligible for with their Marketplace coverage. If you provide the QSEHRA to employees ’ dependents, then it will affect the dependent ’ south premium tax credit eligibility, a well. They may be eligible for some or no tax credit depending on the QSEHRA sum you provide. Visit the IRS web site to find out more about QSEHRA rules .

How to start a QSEHRA

small employers can set up a QSEHRA at any time. To provide a QSEHRA you ’ ll need to give written notice to your newfangled employees equally soon as they ’ re eligible to participate and 90 days before the beginning of each plan year for current employees. This notice is required to include certain information–to learn more about what this notice must include, see IRS Notice 2017-67 ( PDF, 211 KB ). Note: Employees must have qualifying health coverage to use their QSEHRA measure .
You may want to consider how your employees can get qualifying health coverage when picking a start date. For example, providing a QSEHRA starting on January 1 allows employees to choose coverage during the individual market ’ s annual Open Enrollment Period, and in most cases, plan deductibles reset on January 1 each year. If you ’ rhenium newly providing a QSEHRA, your employees may qualify for a special Enrollment Period. newly hired employees who gain access to the QSEHRA may besides qualify for a especial Enrollment Period to enroll in or change individual health indemnity coverage outside of Open Enrollment. To enroll in coverage through this limited Enrollment Period, employees can submit an lotion on HealthCare.gov and include information about when their HRA can start .
Get help: talk to a license tax professional, benefits specialist, or health indemnity agent/broker to find out if group coverage or QSEHRAs are right field for your small business.

Exploring coverage options?

Compare QSEHRAs to early products and services that may be available to help you cover your employees .
Take me to the HRA decision lead

Employees: Understanding QSEHRAs

If you ’ re an employee who has been provided a QSEHRA by your employer, learn more about QSEHRAs and the Marketplace .

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