By Pension and Benefits Editorial Staff
Small businesses increased their offerings through the qualified small employer health reimbursement arrangement (QSEHRA) in 2018 by allocating an average $297 a month to single employees and $445 to employees with a family. Employees used those allowances to reimburse critical health care items, including health insurance premiums, medical office visits, and prescription drugs. These are key findings from The QSEHRA: Annual Report 2019 from PeopleKeep,
Drawing on data from nearly 1,400 small businesses and 8,300 employees, the report offers the industry's first look at how the QSEHRA was used in 2018.
The QSEHRA, created in 2016 through the 21st Century Cures Act, is an alternative to group health insurance. With a QSEHRA, organizations offer employees a tax-free monthly allowance. Employees then choose and pay for health care, including insurance policies, and the business reimburses them up to their allowance amount.
The PeopleKeep report found that organizations with existing QSEHRAs offered an average 6 percent more to single employees and 7 percent more to employees with a family in monthly allowances compared to 2017.
Additional findings in the report include:
- Twenty-six percent of single employees and 10 percent of employees with a family received the federal maximum monthly allowance of $420.83 and $854.16, respectively.
- Smaller organizations offered higher allowance amounts than did larger organizations.
- Industries with the highest average allowances were technology, accounting, and legal.
- Employees used an average 78 percent of their QSEHRA allowances for the year. One-third used their entire allowance amount.
- Thirty-eight percent of employees used their QSEHRA allowances on insurance premiums, 37 percent used it on nonpremium medical expenses, and 12 percent used it on both.
- The most popular nonpremium reimbursements were for medical office visits, prescription drugs, and dental care.
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