QSEHRA Case Study: Helping Clients Save Money
A small-business employer we work with was interested in offering better benefit options to their employees, as an alternative to a significant salary increase. By establishing a QSEHRA, the client was able to provide a tax-free benefit and still offer a smaller salary increase. This made it possible for full-time employees to receive greater after-tax compensation at a lesser cost to the employer, due to savings in payroll taxes.
The employer has 12 employees, 8 of which are full-time, working at least 30 hours per week on a regular basis. Only full-time employees are eligible for the QSEHRA.
Qualifying Expenses — The following expenses are eligible for reimbursement
- Individual medical insurance premiums. Allowable premiums include only those paid for non-group medical coverage that qualifies as minimum essential coverage as defined by the Affordable Care Act. The maximum monthly reimbursement for premiums incurred in a particular month is $200. Excess premiums can’t be carried over to the next month.
- Out-of-Pocket Medical / Dental / Vision Expenses Under Group Insurance. If an employee is covered by group insurance, he or she is reimbursed for certain out of pocket medical, dental and vision expenses which are incurred by the Participant and/or his or her covered family members. These would include drugs obtained through a prescription, and insulin. The expenses, which qualify, are those permitted by Section 213 of the Internal Revenue Code. The maximum reimbursement per month is $100 per month. Expenses incurred in a month that exceeds $100, can be carried over to the following month, as long as the following month is during the current Plan Year.
- Out-of-Pocket Dental and Vision under HSA. If an employee and/or his or her spouse is also an employee in a Health Savings Account he or she can be reimbursed for out-of-pocket dental and vision expenses which are incurred by him or her and/or their other covered family members during the Plan Year. The maximum reimbursement amount per month is $100. Expenses incurred in a month that exceeds $100, can be carried over to the following month, as long as the following month is during the current Plan Year.
Other QSEHRA Facts
- The Harrison Group’s proprietary debit card, The HG Advantage card, is available to pay for all eligible expenses. Eligible expenses can also be submitted for reimbursement either by check or direct deposit to the employee’s checking or savings account.
- Any funds remaining at the end of the Plan Year can’t be carried over to the next Plan Year.
- Employees have up to 60 days after the Plan Year to submit expenses for reimbursement.
Do you have a small business client who may be interested in a QSEHRA for their employee benefit options? Please let us know how we can be of help.