This document is a sample only. As the plan administrator, the Company has the obligation to provide participants with the summary plan description and/or plan document. Vitable is not a legal advisor. Vitable recommends that the Company’s counsel reviews and edits this document. Instead of the plan document, you may need an amendment to any existing wrap plan document to include the plan in your consolidated health plan Form 5500.
Qualified Small Employer Health Reimbursement Arrangement(QSEHRA)
Summary Plan Description & Plan Document
EFFECTIVE DATE: ___________________ (as stated in contract)
[Company.Name]:_______________________________
Introduction
[Company.Name]_____________________ (the "Company")is pleased to provide the Company Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) Plan (the “QSEHRA Plan”) for Eligible Employees. The QSEHRA Plan is integrated with coverage you have elsewhere, such as the Marketplace (or ACA Exchange), COBRA, or a spouse’s plan. Only Eligible Employees who have coverage elsewhere can become Participants in the QSEHRA Plan and receive credits to their QSEHRA Accounts.
This booklet describes the basic features of the QSEHRA Plan, how it operates, and how you can get the maximum advantage from it. This document will serve as both the ERISA-required Summary Plan Description (SPD) and the official QSEHRA Plan Document. Definitions of capitalized terms used in this Summary are contained in Part V.
PART I. General Information About the Plan
I-1. What is the purpose of the QSEHRA Plan?
The purpose of the QSEHRA Plan is to reimburse Participants, up to certain limits, for their own and their covered Spouses' and Dependents' Medical Care Expenses. Reimbursements for Medical Care Expenses paid by the QSEHRA Plan generally are excludable from taxable income. The Company does not maintain any other medical reimbursement coverage for any employees.
I-2. When did the QSEHRA Plan take effect?
The QSEHRA Plan became effective on the date listed in the contract, date to be provided by the employer. .
I-3. Who can become a participant in the QSEHRA Plan?
Employer to outline eligibility:
and you are covered by another health plan which provides Minimum Essential Coverage (MEC) as defined in the Affordable Care Act (ACA), you are an Eligible Employee and may become a Participant in the QSEHRA Plan. You must be a resident in the United States and have U.S. source income to be an Eligible Employee.
I-4. What Benefits are offered through the QSEHRA Plan?
Once you become a Participant, the QSEHRA Plan will maintain an "QSEHRA Account" in your name to keep a record of the amounts available to you for the reimbursement of Medical Care Expenses. Your QSEHRA Account is merely a recordkeeping account; it is not funded (all reimbursements are paid from the general assets of the Company), and it does not bear interest or accrue earnings of any kind.
Before the start of each Plan Year, the IRS determines the maximum annual amount that may be credited during that Plan Year to the QSEHRA Account of a Participant in the QSEHRA Plan. The Company determines the maximum annual amount available to you for the plan year, within the limits provided by the IRS. For each calendar month that you are a Participant, your QSEHRA Account will be credited with a pro rata portion of the maximum annual amount, so long as you maintain other medical coverage and you remain an Eligible Employee as of the first day of that month. For example, the maximum annual amount as determined by the IRS for 2022 is $5,450 for single coverage and $11,050 for family coverage. Therefore, if you had family coverage and if the Company has chosen to offer the maximum annual amount, your account will be credited with $920.83 at the beginning of each calendar month during which you are a Participant. Your QSEHRA Account will be reduced by any amount paid to you, or for your benefit, for eligible Medical Care Expenses incurred by you, your Spouse, or your Dependents. The amount available for reimbursement as of any given date will be the total amount credited to your QSEHRA Account as of such date, reduced by any prior reimbursements made to you as of that date.
After the end of the Plan Year, the unused amount (if any) in your QSEHRA Account generally will be forfeited.
The annual (or monthly) amount offered by the Company’s QSEHRA Plan is available in the Plan-at-a-Glance document, which is issued every plan year.
I-5. How will the QSEHRA Plan work?
The QSEHRA Plan will reimburse you for eligible Medical Care Expenses to the extent that you have a positive balance in your QSEHRA Account. The following procedure should be followed:
You must submit a claim to the Administrator and provide any additional information requested by the Administrator;
A request for payment must relate to Medical Care Expenses incurred by you, your Spouse, or your Dependent during the time you were a Participant under this Plan; and
A request for payment must be submitted by March 31 following the close of the Plan Year in which the Medical Care expense was incurred.
Claims must be submitted in writing (or electronically according to a procedure established by the Administrator). The Administrator may require that Participants submit claims on a form provided by the Administrator. The claim must set forth-
The individual(s) on whose behalf the Medical Care expenses were incurred;
The nature and date of the expenses so incurred;
The amount of the requested reimbursement; and
A statement that such Medical Care Expenses have not otherwise been reimbursed and are not reimbursable through any other source and that Health Flexible Spending Account coverage, if any, for such Medical Care Expenses has been exhausted.
Each claim must be accompanied by bills, invoices, or other statements from an independent third party (e.g., group health plan) showing that Medical Care expenses have been incurred and showing the amounts of such expenses, along with any additional documentation that the Administrator may request. Generally, there will be no minimum amount for a claim reimbursement to be made.
I-6. Are there any limitations on Benefits available from the QSEHRA Plan?
Only Medical Care Expenses are covered by the QSEHRA Plan. A Medical Care Expense is an expense that is considered a premium payment for MEC that is not reimbursed elsewhere. You must show the Plan Administrator proof of your coverage. If you fail to maintain MEC, you will no longer be an Eligible Employee and you will not receive reimbursements for the months in which you do not have proof of MEC.
I-7. How do I become a Participant?
If you meet the eligibility requirements described in Section I-3, you will become a Participant in the QSEHRA Plan on the first day of the calendar month following your submission of a properly completed enrollment form, including proof of medical coverage which is MEC.
I-8. What if I cease to be an Eligible Employee?
If you cease to be an Eligible Employee because you are no longer covered by a MEC plan, your participation will terminate when your MEC coverage ends. If you cease to be an Eligible Employee for any other reason (for example, if you die, retire, or terminate employment), your participation in the QSEHRA Plan will terminate at the end of the month in which the terminating event occurs. In either case, you will be reimbursed for any eligible Medical Care expense that is incurred prior to the date your participation terminates, up to your account balance in the QSEHRA Account, provided that you comply with the reimbursement request procedures required under the QSEHRA Plan (see Section I-5 for more information on the reimbursement request process). Any unused portions will be not be available after termination of employment.
I-9. Will I have any administrative costs under the QSEHRA Plan?
Generally, no. The Company is currently bearing the entire cost of administering the QSEHRA Plan while you are an Employee.
I-10. How long will the QSEHRA Plan remain in effect?
Although the Company expects to maintain the QSEHRA Plan indefinitely, it has the right to terminate the QSEHRA Plan at any time. The Company also reserves the right to amend the QSEHRA Plan at any time and in any manner that it deems reasonable, in its sole discretion. An amendment or termination of the Plan could result in the reduction or elimination of QSEHRA Account balances under this Plan.
I-11. Are my Benefits taxable?
The QSEHRA Plan is intended to meet certain requirements of existing federal tax laws, under which the Benefits that you receive under the QSEHRA Plan generally are not taxable to you. However, the Company cannot guarantee the tax treatment to any given Participant, since individual circumstances may produce differing results. If there is any doubt, you should consult your own tax advisor.
I-12. What happens if my claim for Benefits is denied?
If your claim for Benefits is denied, then you have the right to be notified of the denial and to appeal the denial, both within certain time limits. The rules regarding denied claims for Benefits under the QSEHRA Plan are discussed below.
A. When must I receive a decision on my claim?
You are entitled to notification of the decision on your claim within 30 days after the Administrator's receipt of the claim. This 30-day period may be extended by an additional period of up to 15 days if the extension is necessary due to conditions beyond the control of the Administrator. The Administrator is required to notify you of the need for the extension and the time by which you will receive a determination on your claim. If the extension is necessary because of your failure to submit the information necessary to decide the claim, then the Administrator will notify you regarding what additional information you are required to submit, and you will be given at least 45 days after such notice to submit the additional information. If you do not submit the additional information, the Administrator will make the decision based on the information that it has.
B. What information will a notice of denial of a claim contain?
If your claim is denied, the notice that you receive from the Administrator will include the following information:
Information about your claim, including the claim amount and details, to the extent such information is available;
The specific reason for the denial;
A reference to the specific QSEHRA Plan provision(s) on which the denial is based;
Any denial code (and its corresponding meaning) that was used in denying the claim;
A description of any additional material or information necessary for you to perfect your claim and an explanation of why such material or information is necessary;
A description of the QSEHRA Plan's internal and external review procedures and the time limits applicable to such procedures, including a statement of your right to bring a civil action under ERISA §502(a) following a denial on review; and
If the Administrator relied on an internal rule, guideline, protocol, or similar criteria in making its determination, either a copy of the specific rule, guideline, or protocol, or a statement that such a rule, guideline, protocol, or similar criterion was relied upon in making the determination and that a copy of such rule, guideline, protocol, or similar criterion will be provided to you free of charge upon request.
C. Do I have the right to appeal a denied claim?
Yes, you have the right to an internal appeal and, if applicable, an external review to an independent review organization.
D. Do I have to appeal a denied claim before I can go to court?
You will not be allowed to take legal action against the Plan, the Company, the Administrator, or any other entity to whom administrative or claims processing functions have been delegated unless you exhaust your internal appeal rights.
E. What are the requirements of my internal appeal?
Your internal appeal must be in writing, must be provided to the Administrator, and must include the following information:
Your name and address;
The fact that you are disputing a denial of a claim or the Administrator's act or omission;
The date of the notice that the Administrator informed you of the denied claim; and
The reason(s), in clear and concise terms, for disputing the denial of the claim or the Administrator's act or omission.
You should also include any documentation that you have not already provided to the Administrator.
F. Is there a deadline for filing my internal appeal?
Yes. Your internal appeal must be delivered to the Administrator within 180 days after receiving the denial notice or the Administrator's act or omission. If you do not file your internal appeal within this 180-day period, you lose your right to appeal. Your internal appeal will be heard and decided by the Committee.
G. How will my internal appeal be reviewed?
Any time before the internal appeal deadline, you may submit copies of all relevant documents, records, written comments, testimony, and other information to the Committee. The QSEHRA Plan is required to provide you with reasonable access to and copies of all documents, records, and other information related to the claim. When reviewing your internal appeal, the Administrator will take into account all relevant documents, records, comments, and other information that you have provided with regard to the claim, regardless of whether or not such information was submitted or considered in the initial determination.
If the Administrator receives new or additional evidence that it considered, relied upon, or generated in connection with the claim, other than evidence that you have provided to it, you will be provided with this information and given a reasonable opportunity to respond to the evidence before the due date for the Administrator's notice of final internal adverse benefit determination. Similarly, if the Administrator identifies a new or additional reason for denying your claim, that new or additional reason will be disclosed to you and you will be given a reasonable opportunity to respond to that new rationale before the due date for the Administrator's notice of final internal adverse benefit determination.
The internal appeal determination will not afford deference to the initial determination and will be conducted by a fiduciary of the QSEHRA Plan who is not: (1) the individual who made the original determination; (2) an individual who is a subordinate of the individual who made the initial determination; or (3) an individual whose terms and conditions of employment are affected by the results of his or her decision.
H. When will I be notified of the decision on my internal appeal?
The Committee must notify you of the decision on your internal appeal within 60 days after receipt of your request for review.
I. What information is included in the notice of the denial of my internal appeal?
If your internal appeal is denied, the notice that you receive from the Committee will include the following information:
Information about your claim, including the claim amount and details, to the extent such information is available;
The specific reason for the denial upon review;
A reference to the specific QSEHRA Plan provision(s) on which the denial is based;
Any denial code (and its corresponding meaning) that was used in denying the claim;
A statement providing that you are required to receive, upon request and free of charge, reasonable access to and copies of all documents, records, and other information relevant to your claim for Benefits;
If an internal rule, guideline, protocol, or similar criterion was relied upon in making the review determination, either the specific rule, guideline, or protocol, or a statement that such a rule, guideline, protocol, or similar criterion was relied upon in making the review determination and that a copy of such rule, guideline, protocol, or similar criterion will be provided to you free of charge upon request; and
A statement of your right to bring an external appeal or a civil action under ERISA §502(a).
J. Do I have the right to seek a review of a denied claim to an external third party?
You have the right to request an external review of the Administrator's denial of your internal appeal unless the Benefit denial was based on your (or your Spouse's or Dependent's) failure to meet the QSEHRA Plan's eligibility requirements.
K. What are the requirements of my external review?
The external review may be conducted according to either a state process or a federal process (which may be a federally administered process or a private accredited independent review organization (IRO) process meeting specified federal standards). For information about which process applies to your plan, including information about how to request an external review, contact the Administrator.
L. Is there a deadline for filing my external appeal?
Yes. Your external review request must be filed with the external reviewer within 4 months of the date you were served with the Administrator's response to your final internal appeal. If you do not file your external review request within this 4-month period, you lose your right to external review. For example, if you received the internal appeal decision on January 3, 2020, you must request external review of the decision by May 3, 2020 (or, if that is not a business day, the next business day thereafter). The external reviewer will determine whether the request is eligible for external review.
M. When will I be notified of the decision on my external appeal?
The external reviewer must notify you and the Administrator of its decision on your claim within 45 days after its receipt of your request for external review. The external reviewer's decision is binding upon the parties unless other State or Federal law remedies (which may include judicial review) are available.
I-13. Who is the Administrator?
The Company is the Administrator and the named fiduciary for the QSEHRA Plan.
PART II. Administrative Information
The Administrator administers the QSEHRA Plan and has the discretionary authority to interpret all QSEHRA Plan provisions and to determine all issues arising under the QSEHRA Plan, including issues of eligibility, coverage, and Benefits. The Administrator's failure to enforce any provision of the QSEHRA Plan shall not affect its right to later enforce that provision or any other provision of the QSEHRA Plan. The Administrator may delegate some of its administrative duties to agents.
Administrative Information | Administrative Information |
Name of Plan | [Company.Name]_________________ Qualified Small Employer Reimbursement Arrangement |
Sponsoring Employer | [Company.Name]__________________ |
Plan Administrator | [Company.Name]__________________ |
Contact Person | |
Plan Administrator’s Telephone Number | |
Plan Administrator's Employer Identification Number (EIN) | |
Plan Number | 001 |
Plan Year | through December 31st |
Agent for Service of Process | Service may be made on the Administrator at the address listed above. |
Agent for Service of Process: Service may be made on the Administrator at the address listed above.
The financial records of the QSEHRA Plan are kept on a Plan Year basis, starting on January 1st. The Plan Year ends on each December 31st.
Type of Plan: The QSEHRA Plan is intended to qualify as an
-provided medical reimbursement plan under Code §9831(d) and the regulations issued thereunder.
Type of Administration: The Administrator pays applicable Benefits from the general assets of the Company.
Funding: The QSEHRA Plan is paid for by the Company out of the Company's general assets. There is no trust or other fund from which Benefits are paid.
PART III. ERISA Rights
As a Participant in the QSEHRA Plan, you may be entitled to certain rights and protection under the Employee Retirement Income Security Act (ERISA). ERISA provides that all plan participants are entitled to:
Examine, without charge, at the Administrator's office and at other specified locations (such as worksites and union halls), all plan documents, including insurance contracts, collective bargaining agreements, and copies of all documents filed by the QSEHRA Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration, such as detailed annual reports;
Obtain copies of all plan documents and other plan information upon written request to the Administrator (the Administrator may charge a reasonable amount for the copies); and
Receive a summary of the QSEHRA Plan's annual information report (the Administrator is required by law to furnish each Participant with a copy of this summary annual report).
You are entitled to continue health care coverage under COBRA for yourself, your Spouse, or your Dependents if there is a loss of coverage under the QSEHRA Plan as a result of a qualifying event. You, your Spouse, or your Dependents may have to pay for such coverage. Review this summary plan description and the documents governing the QSEHRA Plan for the rules governing your COBRA continuation rights.
In addition to creating rights for plan participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefits plan. The people who operate your QSEHRA Plan, called "fiduciaries" of the QSEHRA Plan, have a duty to do so prudently and in the interest of the QSEHRA Plan Participants and beneficiaries. No one, including your Company, your union, or any other person, may discriminate against you in any way to prevent you from obtaining a Benefit from the QSEHRA Plan or from exercising your rights under ERISA.
If your claim for a Benefit is ignored or denied in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules. Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request materials from the QSEHRA Plan and do not receive them within 30 days, you may file suit in a federal court. In such a case, the court may require the QSEHRA Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the QSEHRA Plan Administrator. If you have a claim for Benefits that is denied or ignored in whole or in part, and if you have exhausted the claims procedures available to you under the QSEHRA Plan, then you may file suit in state or federal court. In addition, if you disagree with the QSEHRA Plan's decision or lack thereof regarding the qualified status of a domestic relations order or a medical child support order, you may file suit in federal court.
If it should happen that plan fiduciaries misuse the QSEHRA Plan's money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees (for example, if it finds that your claim is frivolous).
If you have any questions about the QSEHRA Plan, you should contact the QSEHRA Plan Administrator. If you have any questions about this part of the Summary Plan Description or about your rights under ERISA, or if you need assistance in obtaining documents from the QSEHRA Plan Administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory, or the Division of Technical Assistance and Inquiries, Employee Benefits Security
Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.
PART V. Definitions
In this document, the following terms, when capitalized, shall have the following meanings unless a different meaning is clearly required by the context.
Administrator. The Company.
Benefits. The reimbursement benefits for Medical Care Expenses described in the QSEHRA Plan.
Code. The Internal Revenue Code of 1986, as amended.
Dependent. A dependent is a Participant's child as defined in Code §152(f)(1) who has not attained age 26, or a dependent as defined in Code §105(b); provided, however, that any child to whom Code §152(e) applies shall be treated as a dependent of both parents. Note that the Code §105(b) definition is similar to the Code §152 definition that is used to determine your tax dependents, except that an individual's status as a Dependent is determined without regard to the gross income limitation for a "qualifying relative" and certain other provisions of Code §152. The QSEHRA Plan will provide Benefits in accordance with the applicable requirements of any qualified medical child support order, even if the child does not meet the definition of Dependent.
ERISA. The Employee Retirement Income Security Act of 1974, as amended.
QSEHRA Account. The recordkeeping account established in your name by the Company on the basis of which your eligible Medical Care expenses will be paid or reimbursed.
Medical Care Expenses. See Section I-6 for a description of Medical Care Expenses.
Minimal Essential Coverage (MEC). Any medical insurance plan that meets the Affordable Care Act requirement for having health coverage. To avoid the penalty that under the ACA for not having insurance you must be enrolled in a plan that qualifies as minimum essential coverage (sometimes called “qualifying health coverage”). Examples of plans that qualify include: Marketplace plans; job-based plans; Medicare; and Medicaid & CHIP.
Participant. An Eligible Employee who has become and not ceased to be a Participant in the Plan.
Plan Year. The 12-month period ending on December 31.
Spouse. An individual who is treated as a spouse for federal tax purposes.
PART VI. Miscellaneous
A.Effect of the QSEHRA Plan on Your Employment Rights
The QSEHRA Plan is not to be construed as giving you any rights except those expressly described in this document. The QSEHRA Plan is not a contract of employment between you and the Company.
B.Prohibition Against Assignment of Benefits
No Benefit payable at any time under the QSEHRA Plan shall be subject in any manner to alienation, sale, transfer, assignment, pledge, attachment, or encumbrance of any kind.
C.Overpayments or Errors
If it is later determined that you and/or your Spouse or Dependent(s) received an overpayment or a payment was made in error, you will be required to refund the overpayment or erroneous reimbursement to the QSEHRA Plan. If you do not refund the overpayment or erroneous payment, the QSEHRA Plan and the Company reserve the right to offset future reimbursement equal to the overpayment or erroneous payment or, if that is not feasible, to withhold such funds from your pay.