Employees enrolled in Medicaid can generally participate in a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) because Medicaid is typically considered Minimum Essential Coverage (MEC).
Does Medicaid qualify me for QSEHRA participation?
Yes. Most Medicaid coverage qualifies as Minimum Essential Coverage (MEC), which allows employees to participate in a QSEHRA and receive tax-free reimbursements.
To receive tax-free QSEHRA reimbursements, you must maintain qualifying MEC coverage.
If you lose qualifying coverage, your reimbursements may no longer be eligible for tax-free treatment.
Can I have Medicaid and a QSEHRA at the same time?
Yes. Employees may be enrolled in Medicaid and participate in a QSEHRA at the same time.
A QSEHRA can reimburse eligible medical expenses and, when applicable, eligible insurance premiums according to your employer's plan design.
Having Medicaid does not automatically disqualify you from participating in a QSEHRA.
What expenses can be reimbursed through a QSEHRA if I have Medicaid?
Eligible expenses depend on your employer's QSEHRA plan design.
Common reimbursable expenses may include:
Qualified medical expenses allowed under IRS Section 213(d)
Copays
Deductibles
Prescriptions
Other eligible out-of-pocket healthcare expenses
Your employer determines which expenses are eligible for reimbursement under the QSEHRA.
Will a QSEHRA affect my Medicaid eligibility?
Possibly.
Medicaid eligibility is determined by state and federal rules, including household income and other factors. Participation in a QSEHRA may affect eligibility for certain public assistance programs depending on your circumstances.
Because Medicaid rules vary by state, employees should contact their state Medicaid agency or benefits administrator if they have questions about how a QSEHRA may impact their benefits.
What if I move from Medicaid to another health plan?
You can generally continue participating in the QSEHRA as long as you maintain Minimum Essential Coverage (MEC).
Examples of MEC include:
Medicaid
Medicare
Employer-sponsored group health plans
Individual major medical plans
Coverage through a spouse's employer plan
If your coverage changes, update your health insurance information when requested by Take Command.
What coverage does not qualify for QSEHRA participation?
The following coverage types generally do not satisfy QSEHRA MEC requirements by themselves:
Health care sharing ministries
Most short-term medical plans
Fixed indemnity plans
Other non-MEC coverage
Employees who only have non-MEC coverage are not eligible for tax-free QSEHRA reimbursements.
Key takeaway
Employees enrolled in Medicaid can generally participate in a QSEHRA because Medicaid typically qualifies as Minimum Essential Coverage (MEC). As long as qualifying coverage is maintained, employees may receive tax-free reimbursements for eligible expenses under their employer's QSEHRA plan.