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Qualified Small Employer HRA (QSEHRA)

A newer form of HRA, the QSEHRA was created out of the 21st Century Cures Act of 2016 and became effective starting January 1, 2017. In order to sponsor a QSEHRA, the employer must meet a number of requirements:

  • The employer must not be an Applicable Large Employer (ALE) under the ACA. That is, the employer cannot have 50 or more full-time plus full-time equivalent employees.
  • The employer cannot offer any form of group health plan to any employee other than an excepted benefit such as a dental or vision plan.
  • It must be provided on the same terms to all eligible employees of the employer. For example, an employer would be able to provide one amount of contributions for employees who had an individual deductible and a higher amount for those who purchased family coverage, as long as that coverage was not provided by a group.
  • The maximum amount that an employer is allowed to contribute for any employee is limited. For 2020, that amount may not exceed $5,250 for an employee with single coverage, and $10,600 for an employee with family coverage.
  • The employer must provide all eligible employees with an annual notice. Kushner & Company assists its clients with preparing this notice.

QSEHRAs provide a powerful tool to small employers who do not offer a group health plan to their employees but wish to provide some tax-free dollars toward medical expenses.

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