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QSEHRA Guide 2023: Maximize Benefits for Your Small Business

QSEHRA Guide 2023: Maximize Benefits for Your Small Business

As we're moving into 2023, it's super important for business owners and decision-makers to get up to speed on the latest QSEHRA Guide. QSEHRAs, or Qualified Small Employer Health Reimbursement Arrangements, are a fantastic way for small businesses to offer healthcare benefits while keeping costs in check.

In this guide, we'll cover what QSEHRAs are all about, who's eligible, and the many perks of using them in 2023. We're talking cost control, customizable plans, and tax-free reimbursements for everyone involved.

We won't leave you hanging, either. We've got tips and best practices for setting up your QSEHRA, like figuring out who's eligible, setting annual contribution caps for each employee category, and even adjusting salaries based on reimbursements. Plus, we'll look into spousal plan options if your employees have access to traditional group health insurance through their partners.

And don't worry, we'll make sure you stay on top of any changes in regulations or guidelines for QSEHRAs in 2023. Just keep an eye on IRS announcements and seek professional advice when needed, and you'll be good to go!



Understanding Qualified Small Employer HRAs (QSEHRAs)

Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs) are a tax-advantaged health reimbursement arrangement designed for small businesses to reimburse employees for eligible medical expenses, including individual health insurance premiums. These arrangements were introduced as part of the Affordable Care Act in 2010 and have been enforced by the IRS since late 2015. Let's dive deeper into what QSEHRAs are, their purpose, and eligibility criteria.


Definition and Purpose of QSEHRAs

QSEHRAs are employer-funded plans designed for small businesses to help out their employees with healthcare costs, without having to provide traditional group health insurance plans. Employees can get reimbursed for things like doctor visits, prescriptions, dental and vision care, and even individual health insurance premiums bought through the Health Insurance Marketplace.

The main idea behind a QSEHRA is to let employers keep healthcare costs under control while still offering great benefits. By using this type of arrangement instead of a traditional group plan, employers can better predict their yearly healthcare spending since they set their own contribution limits.

Here at Accountingprose, we've got a QSEHRA in place, so our remote team members can all have health insurance coverage—no matter where they live or if they're already covered through their partner's plan.


Eligibility Criteria for Employers and Employees

To set up a QSEHRA program at your organization, here's what you need to know:

  • Your business shouldn't offer any other group health insurance coverage.

  • You must have 50 or fewer full-time employees over a period of at least six months. Keep in mind, both full-time and part-time hours worked count.

  • Offer the QSEHRA benefit to all eligible employees, but feel free to exclude those in their first 90 days of employment, under age 25, or covered by a collective bargaining agreement.

For employees to join a QSEHRA, they must:

  • Have an individual health insurance plan that meets the ACA's MEC standards and not have access to other group health coverage through their or their spouse's employer.

  • Not have access to any other group health insurance coverage through their employer or spouse's employer.

Understanding Qualified Small Employer HRAs is super important for small businesses that want to offer healthcare benefits without going broke. Once you know what QSEHRAs are, why they exist, and who's eligible, you'll be in a better position to decide if this tax-friendly setup is the way to go for your organization.

QSEHRAs can be a real lifesaver for small businesses looking to provide tax-free benefits to their team. With the right plan design in 2023, employers can keep costs under control and tailor their QSEHRA plans just the way they like.


Benefits of Implementing a QSEHRA in 2023

Implementing a QSEHRA has a ton of benefits for the employer and it's employee. Let's break it down a bit...


Cost Control 

QSEHRAs let you set contribution limits for each employee category (like single vs family coverage), so you can manage your healthcare budget and still support your team.

Flexible Plan Design

With a QSEHRA, you can customize your plan based on your needs, like choosing which medical expenses are reimbursable or setting different annual caps for different job roles.

Tax-Free Reimbursements for All

Employers get tax-deductible business expenses, and employees don't count reimbursements as taxable income when used for qualified medical expenses. It's a win-win!

Happy Employees

Offering a QSEHRA shows you care about your employees' wellbeing and gives them more healthcare choices, leading to happier, more loyal staff.

Easier Administration 

Managing a QSEHRA is simpler than a traditional group health plan. Just set up eligibility guidelines, contribution limits, inform employees, and process reimbursements. Plus, Accountingprose LLC can help make it even easier by handling all aspects of accounting, payroll, and more for you.


Setting Up Your QSEHRA - Tips & Best Practices

It's important to set up a QSEHRA program that works well and follows the rules while giving your small business the most benefits. Just follow these simple steps to create a great health reimbursement plan for your employees.


Check Your Eligibility 

Make sure your organization fits the bill. You should have fewer than 50 full-time equivalent employees and not offer a group health plan. Once you know you're good to go, set clear rules for which employees can join the program.

Set Contribution Caps

Decide how much you'll contribute for each employee category, keeping in mind the 2023 IRS limits of $5,450 for individuals and $11,050 for families, tax-free. Consider things like employee demographics and average healthcare costs when making your decision.

Talk to Your Team

Keep your staff in the loop by creating easy-to-understand materials about the QSEHRA program, holding meetings or webinars, and being open to questions or concerns. Good communication will help your team feel confident about their new healthcare benefits.


Don't forget to follow all the rules, like HIPAA privacy and timely reimbursements. With a solid QSEHRA program, you'll be giving your employees great healthcare options while keeping costs down. Plus, adjusting salaries based on reimbursements can help keep your overall compensation package competitive.



Adjusting Employee Salaries Based on Reimbursements

As a small business owner, you've got to find the sweet spot between offering great healthcare benefits and sticking to your budget. One path you can take is to adjust employee base salaries to account for expected reimbursements from the QSEHRA program. While it may be better for your team (and morale) to not go down this path, you can keep overall compensation levels and still provide solid healthcare support should you take it. 


Check Out the Impact of Salary Adjustments 

To figure out how salary adjustments might affect your employees and finances, take a look at current salary structures and compare them with possible reimbursement amounts. Think about things like the average cost of individual health insurance premiums in your area, your company's contribution limits, and the tax impact for both you and your employees.

Find the Perfect Balance Between Pay and Healthcare 

It's important to strike the right balance between employee compensation and healthcare benefits. Keep these tips in mind when adjusting salaries based on QSEHRAs:

Be Transparent

Make sure you clearly communicate any changes in salaries due to QSEHRA reimbursements. Being open helps build trust with your team.

Know the Competition:

Do some research on what other companies in your industry offer for salaries and benefits, so you stay competitive. Keep tabs on how satisfied your employees are with their pay and benefits, including QSEHRA reimbursements.

Listen to Your Employees

Check in regularly to see how your employees feel about their compensation packages. Their feedback can help guide future adjustments and improvements.


By following these steps, you'll strike a balance between pay and healthcare benefits that keeps your employees happy and your business financially healthy. Comparing QSEHRA reimbursement vs. a spouse's group plan premiums is another great way to make the best decision for your business.



Getting Group Health Insurance Through Spouses

Your employees might have access to traditional group health insurance plans through their spouses. This can be a great option if their employer doesn't offer coverage, allowing them to get comprehensive medical care without huge out-of-pocket costs. Let's talk about how to evaluate spousal plan options and compare QSEHRA reimbursement vs. spouse's group plan premiums.


Looking at Spousal Plan Options

Your employees should compare group health insurance plans offered by their spouse's employer to make the best choice. Things like premium costs, deductibles, copayments, coinsurance rates, and network restrictions are important factors to consider.

Here's how you can help them make a well-informed decision:

  • Tell them to ask their spouse's HR department for detailed info on available healthcare plans.

  • Suggest checking out online resources like or state-based marketplaces for more guidance.

  • Recommend talking to a licensed insurance agent who specializes in individual and family coverage for personalized advice.


Comparing QSEHRA Reimbursement vs. Spouse's Group Plan Premiums

To figure out if participating in a QSEHRA program or joining a spouse's group health plan is more cost-effective for your employees:

  • First, have them calculate the total annual cost of premiums under their spouse's group plan, including any employer contributions.

  • Then, ask them to compare this number with the max annual QSEHRA reimbursement amount they're eligible for from your organization.

  • If the QSEHRA reimbursement covers or comes close to their spouse's group plan premium costs, it might be better for employees to choose your company's program instead of a traditional health insurance policy through their spouse's employer.

By giving clear guidance and support during this decision-making process, you can help your employees make smart choices about their healthcare coverage options. This not only keeps them happy but also lets you and your team get the most out of both QSEHRAs and traditional group health insurance plans.

Accessing traditional group health insurance through a spouse's plan is a fantastic way to provide employees with coverage while saving money. Keeping up with QSEHRA regulations and guidelines can be a challenge, but it's important for employers to stay in the loop about any new developments that might affect their plans.


Keeping Up with Changes in QSEHRA Regulations & Guidelines

You can make sure your program is compliant and take full advantage of its benefits by regularly checking IRS publications, chatting with tax professionals, and joining industry forums. Doing so will help you keep your QSEHRA program running smoothly.

Keep an eye on IRS updates about QSEHRAs by subscribing to their newsletter or following them on social media platforms like Twitter and LinkedIn. Don't forget to check out the Affordable Care Act Tax Provisions page for a comprehensive breakdown of ACA-related topics, including QSEHRAs.

If you're ever unsure about how certain changes might affect your QSEHRA plan or need help understanding complex guidelines, it's a good idea to reach out to professionals like accountants or attorneys who specialize in healthcare law and tax matters. They can help you navigate compliance requirements and offer valuable advice on optimizing your plan design.

Some tax professionals you can consult include Certified Public Accountants (CPA) and Enrolled Agents (EA). In the healthcare law field, consider reaching out to Employee Benefits Attorneys or Healthcare Compliance Consultants who can help with audits, policy development, and training programs to ensure your organization adheres to the relevant guidelines.

In short, staying informed about QSEHRA regulations and guidelines is crucial for maintaining a compliant program that reaps all its potential benefits. Keep a close watch on IRS announcements, seek expert advice when needed, and actively engage in industry events or forums to stay well-equipped for any updates affecting your company's health reimbursement arrangement.




Providing a comprehensive and compliant QSEHRA program is a crucial aspect of supporting your employees' healthcare needs while managing your organization's financial health.

By staying up-to-date with changes in regulations and guidelines, seeking professional guidance when necessary, and actively participating in industry forums and events, you can ensure that your health reimbursement arrangement is both compliant and optimized for maximum benefit. You will also be better equipped to make informed decisions, attract and retain top talent, and create a positive work environment where employees feel valued and supported in their healthcare choices.

Keep learning, adapting, and optimizing your QSEHRA program to make a lasting impact on your organization's success and your employees' well-being.


Amazing Accounting Team | Accountingprose

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