One of the most important benefits a company can provide their employees is health insurance. However, many small businesses just simply cannot afford to offer a group health policy to their employees. But in 2017, a new option was put into law with the QSEHRA. The Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) allows employers to reimburse their employees, who maintain minimum essential coverage (MEC), for their qualified health insurance premiums or qualified health care expenses. This plan allows employers the means to help employees pay for their personal health plan costs, in turn providing more affordable health care.
The BASE® QSEHRA is for businesses who want to offer a compliant health benefit when providing insurance is no longer an option.
Who is the QSEHRA designed for?
The QSEHRA is designed for any business, with less than 50 full-time employees, who do not offer a group health plan to any employees.
The QSEHRA is designed for any full-time employee, and their families.
How is the QSEHRA designed and how much can be saved?
A QSEHRA is designed to have an employee purchase their own insurance on or off the marketplace and then to be reimbursed by their employer for that expense. To see how much can be saved, let’s check out a QSEHRA example: the employer, Dane with Southwest Towing, has chosen to sponsor a QSEHRA and has 10 employees.
To see how much his employees can save with the QSEHRA, let’s first look into what the cost is for just one employee with a Qualified Subsidy without the QSEHRA. The monthly cost for the Silver Plan on the Exchange is $500 a month, $6,000 annually. The employee only receives $150 monthly, $1,800 annually with the Premium Tax Credit. With the $500 monthly premium to be enrolled in the Silver Plan on the Exchange and the $150 Premium Tax Credit, the employee will still have to pay $350 a month, $4,200 annually for their health premiums.
Next, let’s look at Dane’s employees with the QSEHRA. Dane has decided to reimburse each employee the annual maximum of $5,450. For one employee with the Employer-Sponsored QSEHRA, the Silver Plan on the Exchange is still a $500 a month premium, $6,000 annually. The employee receives $454 a month with the QSEHRA that equals $5,448 annually. With taking the $500 monthly to be enrolled in the Silver Plan on the Exchange and the $454 QSEHRA, the employee will have to pay $46 a month, $552 annually for their health premiums.
Dane’s employees are looking at saving $304 a month on premiums, $3,648 annually by Dane offering the BASE® QSEHRA.
The businesses that participate in the QSEHRA can deduct 100% of all reimbursements to employees as a business deduction, set a budget or allowance caps, giving more control and predictability, over health care costs. The employers can attract and retain employees with an expanded business package and have peace of mind knowing that all the legal and administrative procedures are handled by BASE®. Participants in the QSEHRA, now have additional money to help with the rising cost of health care and have more options and flexibility with their choice of health care. The employees have the choice to secure the right type of health care coverage that works best for them on or off the Marketplace.
Contact BASE® at 888.386.9680 or visit www.BASEonline.com for more information on the Qualified Small Employer HRA.