Perhaps for one reason or another, you can’t provide your employees with a group health insurance plan. Luckily, they can purchase a plan on their own or through the Covered California exchange. But… maybe they have trouble covering the premiums. Maybe they need a prescription medication, device, or service not covered by the insurance plan. Now what?
Whatever the situation, these problems can frustrate your employees. They might also have trouble staying healthy, and that’s a problem that can carry over to the workplace. You want to help your employees, and ensure that they can access benefits they need. But how?
A Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) might be the answer to your quandary. Due to federal regulations passed in December, small businesses can access this provision to help care for their employees, if you meet the following requirements:
- You employ fewer than 50 full-time workers
- You do not offer a group health insurance plan
- You will offer the HRA to all full-time employees, on the same terms
How an QSEHRA works. A Health Reimbursement Arrangement allows you to make contributions to a tax-advantaged account. That money is used to reimburse the worker for eligible healthcare-related expenses, like their premiums.
How an HRA benefits you. You can offer this valuable benefit to employees, without having to pay payroll taxes on your contributions to the account. They don’t pay taxes on the contributions, either. And of course, happy, healthy employees are always a benefit!
An HRA might be subject to limits. Under Small Business HRA rules, you can contribute up to $4,950 for a single employee and $10,000 for those with families. These limits may be adjusted in the future to account for inflation.
Even if you can’t afford to fully fund a group health insurance plan, you can help your employees pay for their own plans (and keep them happy and healthy at the same time). As with any other health insurance related issue, QSEHRAs can be complex and often require some explaining. Give us a call if you have questions, and we can help you decide if this type of benefit is right for your company.