QSEHRAs Help Small Employers Offer Health Benefits

Seventy-one percent of small businesses that offered the new qualified small employer health reimbursement arrangement (QSEHRA) in 2017 had not offered health benefits previously, according to “The QSEHRA: Annual Report,” from PeopleKeep, a provider of benefits for small businesses. Only 6% previously offered traditional group health benefits, and nearly 20% gave employees a taxable stipend for health care.

Created through the 21st Century Cures Act, QSEHRAs make it possible for small businesses to offer personalized health benefits by giving employees a tax-free monthly allowance that they can then use to purchase health care. Businesses granted employees an average of $391 a month for health care, which is between 38% and 47% cheaper than what they would have paid for group health insurance premiums.

In addition, QSEHRAs permit employees to use their allowances for both premium and non-premium expenses, which is not possible under a group health benefit.

The allowance that employers gave to singles in 2016 averaged $280.20. For employees with a family, that was $476.56. Twenty-two percent of singles received the federal maximum monthly allowance of $412.50, and 22% of those with a family received the maximum allowance of $833.33.

Companies comprised of only one person gave $387.50 to employees; for those with families, that was $645.58. For companies with between 31 and 50 employees, that decreased to $246.07 per self-only employee and $309.85 for employees with a family.

In 2017, 40% of employees submitted at least one premium expense for reimbursement. That was slightly higher for individuals (41%), and slightly less (39%) for those with a family.

When employees received a monthly stipend of $100 or less, only 25% submitted a premium for reimbursement. When the stipend was between $301 and $412.50 a month, 48% submitted a premium for reimbursement.

Seventy-three percent of employees who submitted at least one premium expense for reimbursement did not submit a non-premium expense. Among those who did submit a non-premium expense, the average number was eight, with an average total sum of $1,298.59.

In 2017, employees used an average of 78% of their QSEHRA allowance. This rose slightly to 79% for individuals and dipped to 77% for those with a family. Fifty-two percent used 100% of their QSEHRA allowance, including 24% of those who received the maximum allowance.

PeopleKeep’s full report can be downloaded here.