Are you looking to offer benefits for the first time? Or are you tired of the hassles associated with administering your group medical insurance? There is a new cost-effective way to provide health benefits.
The 21st Century Cures Act provides a new opportunity for small employers (under 50 full-time employees) to help employees pay for health insurance on a pre-tax basis. Employer allocations through the QSE-HRA are deductible to you and reimbursements from the QSE-HRA are excludible from your employee’s income. Because the QSE-HRA allows businesses to set their own budget on a per-employee basis, business owners can control costs, eliminate the administrative nightmare, and allow the employees full choice of many options available. Individual insurance can be cheaper than group policies, and allocations can cover more of an employees’ premium while cutting the employer’s expenses.
“Take Yourself Out of the Medical Insurance Business”
What Are the Benefits to the Employer?
Cost Control: eliminates the element of surprise, “your rates are going up,” inherent with group policies, allows businesses to control cost while offering a formal benefit.
More Value to Employee: besides being a tax-free benefit, employees have more freedom in how they choose to plan their healthcare coverage.
Less Complexity: Complexity and administrative time are among the most important factors in determining whether small businesses offer health benefits. More than 8% of employer’s time is spent on health benefit administration. The QSE-HRA eliminates this issue.
Gives Your Employees What They Want: Majority of employees want a choice in selecting their health benefits, yet small businesses offer on average, maybe two plan choices for group health insurance. Employees will never be stuck without a choice.
Are There Limits on Reimbursable Expenses?
Yes. In 2017, the reimbursement may not exceed $4,950 annually for single coverage, and $10,000 annually for family coverage.
How Are GSE-HRAs Funded?
QSE-HRAs are funded solely by the employer. Employees need not contribute on a pre- or post-tax basis.
What Benefits Does a GSE-HRA Cover?
Reimbursable expenses include premiums for health, dental or vision policies. Copays, deductibles, and other medical expenses defined in IRS Publication 502 are also eligible.
Are There Contribution Limits?
Yes. For single employees, an employer may contribute up to $4,950; for employees with a family plan, employers may contribute up to $10,000 annually.