Are you having difficulty finding a good, affordable health care benefit plan for your small business? If so, have you considered using a QSEHRA as an alternative? Congress created the QSEHRA, or Qualified Small Employer Health Reimbursement Arrangement, in 2016 as part of the 21st Century Cures Act.
A QSEHRA allows small employers, including nonprofits, to set aside a fixed amount of money each month for employees to purchase their own individual health insurance. Employees choose plans that work best for them and also have the option to use the funds on documented medical expenses. A QSEHRA is basically a Health Reimbursement Arrangement (HRA) employees can use for individual premiums.
This type of arrangement was prohibited by the Affordable Care Act, but Congress reversed that regulation with the Cures Act. Best of all, with QSEHRA, employers can make reimbursements to employees without incurring payroll taxes, and employees don’t have to recognize income tax.
In addition, reimbursements made by the employer count as a tax deduction. Another advantage of a QSEHRA is it allows employers to choose how much money they want to deposit in employees’ accounts, which eliminates the burden of skyrocketing annual premium rate increases.
Kiplinger, a business forecast publisher, predicts that employer health coverage costs will rise five percent in 2019. That would be the sixth consecutive year employers have seen a five percent increase. With a QSEHRA, the employer determines what they are able to afford for health benefits each year up to the maximum amount set by the Internal Revenue Service (IRS).