Health care costs increase yearly at an average rate of 5.5% (cms.gov). Every business feels it, but certainly more than anyone is the small business with 50 or fewer employees. So, what can a small business owner do if they want to provide their employees with health care coverage, but cannot afford to? Set up a Qualified Small Employer HRA (QSEHRA).
The BASE® Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) allows small employers with less than 50 full-time employees to set aside a fixed amount of money each month, tax-free, that employees, who maintain Minimum Essential Coverage (MEC), can use to purchase their individual health insurance or use on out-of-pocket health care.
With the help of BASE®, employers can be assured they have a compliant benefit option when offering a group health plan is not an option. Plus, employees will know how much they will have available to them for reimbursement of qualified medical expenses. BASE® makes enrolling in the QSEHRA simple and helps save thousands in valuable tax dollars. How it works is simple:
- Design the Plan – the employer chooses the limit on how much to reimburse their employees and what kind of health care expenses, such as insurance premiums and qualified health care expenses to reimburse. For 2020, the maximum contribution limits for self-only are $5,250 and for family are $10,600.
- Employee Pays for Health Care – employees pay for health insurance and out-of-pocket health care costs, then submit for reimbursement.
- Employer Reimbursement – once submitted and substantiated, the employer reimburses up to the maximum contribution based on what they established.
The BASE® QSEHRA not only benefits the employer, but the employee and their dependents as well. The employer is able to retain and attract employees with an increased benefits package, deduct all reimbursements as a business deduction, establish better control of funding limits, and have peace of mind knowing that all legal and administrative concerns are taken care of by BASE®. The employee now has additional money each month to help with the rising costs of their health care, realize more take-home pay with reimbursements as non-taxable income, and have an easy, and convenient, way to pay for their health care expenses.
Stacey Davis, a BASE® Sales Representative gets to talk to a lot of businesses interested in the QSEHRA and finds that it is a great fit for smaller business owners, such as mom & pop stores, and business owners with up to 49 employees. Stacey reminds employers that employees must have Minimum Essential Coverage (MEC) to qualify but can be covered by their spouse’s employer and still get reimbursed for their health care expenses. A great point is that all expenses reimbursed to the employee are 100% tax deductible through the business and helps to save the employer on payroll taxes.
At the end of the day, there are so many reasons as to why a small business owner would want to enroll in the BASE® QSEHRA. The top 2 reasons? 1) the employer is no longer able to provide a group health plan due to cost, and 2) the employer wants to offer their employer a means of paying for out-of-pocket health care spending.
For more information on the QSEHRA and how it can save a business owner thousands in valuable tax dollars while still providing an attractive, and competitive, benefits package, call BASE® at 888-386-9680 or visit www.BASEonline.com.