HRA – QSEHRA- ICHRA
Health Reimbursement Arrangements have been around for a while, but changes in the last 2 years make them more attractive to small businesses. The following two alternatives are relatively new to the marketplace, but might work for you if you don’t want a group insurance plan, but want to reimburse your employees for health insurance.
The QSEHRA Option
QSEHRA (pronounced “Q-Sarah”) is a new, more efficient way for small businesses to offer health insurance to their employees.
It stands for “Qualified Small Employer Health Reimbursement Arrangement”, and allows small employers to set aside a fixed amount of money each month that employees can use to purchase individual health insurance or use on medical expenses, tax-free. This means you get to offer benefits in a tax-efficient manner without administering a traditional group plan, and employees can choose the plan they want. It allows you to contribute to health insurance that fits your budget and your employees’ needs.
The ICHRA Option
If you’re willing to zero-base your entire health benefit strategy, you might consider an “Individual Coverage Health Reimbursement Arrangement” (ICHRA). Instead of having your own company health plan to cover employees, with an ICHRA, you simply reimburse all employees eligible for health benefits for their cost of securing coverage on their own.
ICHRAs have been available only since 2020 and are subject to strict IRS regulations to assure compliance with the Affordable Care Act.
Both of the above plans are fairly new to the market and require specialized paperwork for correct plan setup.
As always, let us know if we can be of help.