Yes, those covered on a spouse's employer group plan can participate in the QSEHRA. Remember: You must be covered by Minimum Essential Coverage (MEC) to receive QSEHRA reimbursements, and coverage through a spouse's group plan does qualify as MEC.
If your employee is covered by his or her spouse’s group plan there are some nuances to know regarding premium reimbursement:
- As the employer, you can choose whether or not to include or exclude those covered under spouse's group plans.
- Only the portion of the group premium that is not paid for by the spouse’s company is eligible for reimbursement.
- Most group plans are already paid for on a pre-tax basis. This is great! However, the IRS doesn’t want people to “double dip” and also get a pre-tax QSEHRA reimbursement. As a result, QSEHRA reimbursements for premiums on an employer group plan will likely be paid on a taxable basis, unless your employee can show that the premiums were paid post-tax by your spouse (very rare).
See IRS Notice 2017-67 Q48 if you’d like to dive into the weeds!
If you have chosen for your QSEHRA to reimburse for both premiums and medical expenses, those covered on a spouse's employer group plan can submit claims for one-time medical expenses and be reimbursed for those on a tax-free basis.
If your QSEHRA allows for the reimbursement of both premiums and medical expenses, but it does not allow for taxable reimbursements, then employees on their spouse's group plans can use their entire allowance to go towards tax-free reimbursements of their medical expenses.