QSEHRA: The 21st Century Cures Act Health Care Plan Option for Small Businesses

There are very few small businesses that don’t want to provide health insurance for their employees, but there is a large number that are unable to do so. When the Affordable Care Act passed, employers didn’t have the option to give money to their employees to purchase non-employer health coverage. In December 2016, President Obama signed a new act into law to help alleviate these issues.

The 21st Century Cures Act (Cures Act) now allows small employers to give employees pretax money to pay for premiums and medical expenses under the “qualified small employer health reimbursement arrangement” (QSEHRA). Previously, Employee Payment Plans (EPPs) were used to finance employees’ medical coverage and constituted as employer-provided group health plans. However, these plans didn’t meet the ACA’s health insurance reforms.

Now that this new law has passed, many employers are unaware of how a QSEHRA could help them.

Can I Offer QSEHRAs?

If you are an employer with fewer than 50 fulltime equivalent employees and don’t have a group health plan, you can offer QSEHRAs to your staff. To qualify as fulltime, an employee must work 130 hours each month or 30-plus hours every week for 120 consecutive days.

What Will the QSEHRA Cover?

A QSEHRA can cover any documented health care expense and can be used to pay for an individual health insurance premium. However, all costs covered under a QSEHRA must be documented, including both medical expenses and insurance premiums. This is the ensure the money is being allocated properly.

What are the Contribution Limits?

If your employee is single under their insurance plan, you can offer up to $4,950 each year. For your staff members with family expenses, the limit increases to $10,000 each year.

Do I Have to Offer it to Everyone?

There are some exclusions from offering QSEHRAs to your staff. This includes:

  • Seasonal and part-time workers
  • Workers protected by a collective bargaining agreement
  • Employees who have less than 90 service days
  • Employees under the age of 25
  • Some non-resident aliens

What are the Administrative Requirements?

Employers must give their staff written information at least 90 days before the start of the plan year, including:

  • Amount in QSEHRA benefit
  • Consequences of not purchasing MEC
  • How to notify in the event of exchange of the QSEHRA if they intend to apply for a subsidy

If you are not being offered health care options by your employer unlawfully, contact one of our Philadelphia employment lawyers at Erik B. Jensen & Associates today. We will review your case and work to ensure your employee rights are protected.