Are you considering offering health insurance to your employees?

Are you already offering traditional group health insurance and frustrated with the cost and administration?

If you answered yes to one of the questions above, you may want to consider a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) or an Individual Coverage Health Reimbursement Arrangement (ICHRA) as a benefit for your employees.

In a highly competitive labor market being able to offer health care benefits is key to recruitment and retention of employees. HRAs allow small employers to reimburse their employees tax-free for health insurance premiums and qualified medical expenses.

How does an QSEHRA/ICHRA work?

• The employer offers a monthly allowance to their employees.
• Employees go out and purchase the individual health insurance that makes sense for them and their families.
• Employees provide proof of their expenses, and the employer reimburses employees up to their allowance amount.
• The employer can keep unused funds at the end of year or allow employees to rollover unspent balances from year to year.

What are the advantages?

• Cost – the employer decides how much of an allowance to offer employees.
• Fixed cost for budgeting with no annual rate hikes.
• Employer contributions are tax deductible.
• Helps to attract and retain employees.
• Employees get a personalized flexible tax-free benefit that meets their unique healthcare needs.

It is important to note that tax free reimbursement of health insurance premiums/medical expenses is not permitted outside of an HRA. Employers are subject to stiff penalties for this practice. Without an HRA, employers must include these types of reimbursements in the employee’s taxable income.

When you are ready to start offering health insurance benefits or are reviewing your current benefits, make sure you are considering a QSEHRA/ICHRA as another option to traditional group health insurance.
 

If you would like to learn more or are interested in setting up an HRA, please contact Laura Stover, Director of HR Advisory Services.