Looking for an Alternative to a Group Health Plan?

Cardinal Services Now Offers a QSEHRA Plan

Oregon employers now have another option to assist employees in paying for health coverage and other medical expenses. This new coverage option is called a Qualified Small Employer Health Reimbursement Arrangement.

The catchy acronym, QSEHRA, is sometimes pronounced by saying the letter Q followed up with the name Sarah.

While the original plan was rolled out at the national level in 2016, it took Oregon some time to get in sync with the Federal Government. QSEHRA plans qualify as an excepted benefit under the Affordable Care Act (ACA).

A QSEHRA plan is a company-funded, tax-free health benefit used to reimburse employees for personal health care expenses. With a QSEHRA, a business will offer their employees a monthly allowance and employees buy what health plans fit their needs.  The company sets a monthly allowance per each employee; and with their own money, the employee buys the health care products and services they want. This monthly allowance amount represents the maximum amount of tax-free money a business will pay each employee for health care. In 2019, you can offer up to $5,150 annually for self-only employees and $10,450 for employees with a family.  

Note that this is a reimbursement plan—the employee must pay out of pocket and request reimbursement. These expenses could include the purchase of health insurance; and payments of copays, deductibles, and prescription and nonprescription drugs. The Internal Revenue Service provides a detailed list of these “qualified” expenses that can be reimbursed under this program. After incurring a qualified expense, employees submit proof of their purchase to the company—or a Third Party Administrator of a QSEHRA plan. The company or a Third Party Administrator will review the employees’ documentation and will approve the expense for reimbursement. Reimbursements are paid free of payroll tax and can be free of income tax, too, if the employee has minimum essential coverage.

Evaluating the pros and cons of using a QSEHRA plan:

The primary advantage to a QSEHRA is the ability to pay for an employee’s individual health insurance premium. Paying out expenses in this manner provides the employer a tax break. This is particularly attractive to employee groups that fail to meet eligibility standards such as a minimum percentage of employees participating in a medical plan.

Another advantage to employers is that only what is reimbursed to the employee is paid out by the employer. Generally not all employees will use the maximum funds set by the employer. Of course this being a government program, there are a variety of requirements that you as the employer must have in place to implement a QSEHRA which will necessitate using a third party administrator’s expertise so this extra cost must be factored into your decision.

Cardinal Services now offers a QSEHRA plan. By definition, the QSEHRA is a reimbursement benefit for “qualified small employers.” To offer the QSEHRA, a business must have fewer than 50 full-time employees, and not offer a group insurance benefit, including health, dental, or vision. Call Cardinal today for a complimentary evaluation on how you can offer QSEHRA plan.