Through your company’s QSEHRA, your employer will reimburse you for your monthly insurance premiums. You must be covered by a Minimum Essential Coverage (MEC) health insurance plan in order to receive QSEHRA reimbursements. As long as you are covered by a Minimum Essential Coverage (MEC) health insurance plan, you are eligible to receive reimbursements through QSEHRA for certain types of insurance premiums. However, there are a few types of plans to be aware of that cannot be reimbursed through your company’s QSEHRA, even if you have a Minimum Essential Coverage Plan.
Below is an outline of which plans are eligible and not eligible for reimbursement through QSEHRA. Double check your company's plan documents for more information on your plan.
Major Medical Plans
Major Medical plans are those compliant with the Affordable Care Act (ACA) and qualify as Minimum Essential Coverage. If you purchased your plan through Healthcare.gov or your state’s public marketplace, your plan is a Major Medical plan, and your reimbursement through QSEHRA will be tax-free.
Spouse’s Employer Group Plan (varies by QSEHRA plan)
If you’re covered by your spouse’s group plan there are some nuances to know regarding premium reimbursement. First, only the portion of the group premium that is not paid for by your spouse’s company is eligible for reimbursement. Second, most group plans are already paid on a pre-tax basis from 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, so your QSEHRA claim for your premium may be paid on a taxable basis (plan depending). If you can verify that your premium is paid post-tax by your spouse (very rare), then you can still be reimbursed tax-free through QSEHRA!
Medicare, Medicaid, Tricare, and VA Care are all eligible healthcare plans and qualify as Minimum Essential Coverage. If you are on one of these plans and pay a monthly premium out of pocket, those can be reimbursed through QSEHRA tax-free.
Dental Insurance & Vision Insurance Plans
Monthly premiums paid for individual and dental insurance plans can be reimbursed tax-free through QSEHRA. If you have dental and vision benefits through your spouse’s employer, only the portion of the group premium that is not paid for by your spouse’s company is eligible for reimbursement. In addition, if your spouse pays the premiums for your dental and insurance plans pre-tax, you can only be reimbursed for these premiums on a taxable basis.
Limited Benefit Plans
Limited Benefit Plans are usually significantly cheaper than Major Medical plans but only provide a fixed amount of benefits (vs. unlimited benefits). These plans include short-term plans, fixed indemnity plans, accident plans, and any other plan that pays a medical benefit. As long as you also have a Minimum Essential Coverage health plan, and the limited benefit plan pays a medical benefit to the provider (not a cash benefit to you), the premiums on these plans can be reimbursed tax-free through QSEHRA.
Cash Benefit Plans
Cash Benefit Plans pay you cash if you’re sick or injured. These plans are sometimes called Critical Illness, Gap, or Out-of-Pocket plans. The premiums on Cash Benefit Plans are not eligible for reimbursement, because these plans by definition do not provide a medical benefit. If you have a policy that provides payments for other than medical care, you can include the premiums for the medical care part of the policy if the charge for the medical part is reasonable. The cost of the medical part must be separately stated in the insurance contract or given to you in a separate statement.
Health Sharing Plans
Health Sharing Plans are not technically insurance under the Affordable Care Act, and the “premiums” you pay to be a member of a Sharing Plan, typically referred to as a “monthly share” amount or similar, are not recognized by the IRS as being actual insurance premiums under IRS Section 213(D). Therefore, the monthly share amounts cannot be reimbursed through QSEHRA. However, your plan may allow for your monthly shares to be reimbursed on a taxable basis - check with your plan administrator to be sure.
Other Types of Insurance Plans
Additional insurance policies that do not pay a medical benefit and therefore cannot be reimbursed through QSEHRA include:
Life insurance policies
Policies providing payment for loss of earnings
Policies for loss of life, limb, sight, etc.