Has your employer recently informed you of a new health benefit they will be providing called QSEHRA? It stands for Qualified Small Employer Health Reimbursement Arrangement, and it is a special HRA designed specifically for employers with fewer than 50 full time employees. They are completely funded by your employer (you do not need to add money to your account) and are designed to reimburse employees for eligible health insurance premiums and medical expenses (plan depending) TAX FREE! A QSEHRA is not considered income, so it will not increase your taxable income amount if you meet eligibility requirements (see below).
Learn more about how this new health benefit works! Understanding QSEHRA is the first step to fully reap the benefits. For more detailed information, check out our complete QSHERA guide!
The good news is there is only one requirement for employees to meet in order to participate in a QSEHRA and receive the tax-free benefits! Employees must be covered by Minimum Essential Coverage (MEC) to receive QSEHRA reimbursements. Most plans today meet MEC requirements, including: plans purchased from the marketplace, employer group plans, COBRA, TRICARE, MEDICARE (A or C), Medicaid, and more. While faith-based sharing plans are exempt from MEC requirements, the QSEHRA regulations do require MEC, and sharing plans therefore do not qualify for tax-free reimbursement through QSEHRA without a supplemental MEC plan. You can read more about that here!
Plans that do not qualify as MEC include: critical illness, indemnity, short-term plans, vision or dental only, or plans that only offer discounts on medical services.
Enrolling in your QSEHRA is easy with Take Command Health. All employees will receive an email inviting them to sign up. It takes just a few minutes to complete your enrollment information and upload your proof of insurance coverage. Take Command Health will verify your eligibility.
Submitting Expenses for Reimbursement
Your QSEHRA could be set up either to reimburse premiums only or to reimburse premiums + medical expenses. Your employer will be able to tell you which type of plan you have or you can look in your detailed Plan Summary.
Health, Dental, and Vision insurance are eligible for premium reimbursement. Through your member portal, you can set up these monthly premium payments as recurring expenses by providing proof of your premium. Once we have confirmed your premium amount, Take Command Health will set up your premium for automatic reimbursement each month, saving you the task of remembering to submit your monthly premium for reimbursement!
It's also important to remember that Critical Illness, Life Insurance, and Indemnity Plans are not eligible for reimbursement.
If you’re covered by your spouse’s group plan there are some nuances to know regarding premium reimbursement:
First, most group plans are already paid on a pre-tax basis on your spouse’s paycheck. This is great! However, the IRS doesn’t want you to “double dip” and also get a pre-tax QSEHRA reimbursement. As a result, your QSEHRA claim will be reimbursed on a taxable basis unless you can show 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!
Next, only the portion of the group premium that is not paid for by your spouse’s company is eligible for reimbursement.
Finally, verify whether your QSEHRA includes taxable reimbursements in order to be reimbursed for your premium through your spouse's group plan.
If your QSEHRA does not allow for taxable reimbursements but does allow for medical expense reimbursement, read on! Your spouse's group plan does qualify as MEC and you can use your entire allowance to be reimbursed for medical expenses TAX-FREE!
If your QSEHRA is set up to reimburse for one-time medical expenses in addition to monthly premiums, you can submit receipts for reimbursement through your member portal.
You will need to provide the date of service, cost, and submit a receipt.
For an expense to be eligible for reimbursement, it must have been incurred on or after your QSEHRA start date (not the date billed).
You can submit an expense that is larger than your monthly allowance. The balance will be paid off in the future months.
If you are unable to use your entire balance one month, it will carry forward each month until year end.
Take Command Health will track your expenses for your employer. We'll provide reports to your employer indicating how much employees have claimed for reimbursement. After the employer has reviewed the report they will reimburse employees tax-exempt. Please note: Take Command Health will not be reimbursing employees.
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