How can we help?

QSEHRA basic information, for employers

When offering benefits to employees, employers can choose between a group health insurance option (sponsored by the company) or they can set up a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA). 

QSEHRA is a way for small businesses that don’t offer company-sponsored insurance plans to reimburse employees for medical premium costs. 

  • You can read more about QSEHRA on our blog here.
  • If you’re still deciding, learn more here
  • For more information on whether or not your company is eligible to offer QSEHRA, click here

Contribution and reimbursements 

QSEHRA can only be offered to full-time employees and must be offered equally (i.e. you can't offer QSEHRA to just a select group of full-time employees. Reimbursements are specifically for qualifying health insurance plan premiums, not expenses related to healthcare. 

Companies can contribute a maximum of $437.50/individual or $883.33/family per month. Your company can change the contribution amount at any time, which will start the following month, as long as they’re within IRS requirements. Reach out to [email protected] to make any changes.

Employees are eligible to receive $5,250 per individual and $10,600 per family in tax-free reimbursements each calendar year. If they enroll in March, they’re allowed to request reimbursements for January and February, as long as they were eligible and employed at the company during that time.

If you choose to, you also have the flexibility to offer different reimbursement amounts to employees who have dependents (ex: you can reimburse $200 to employees with dependents, and $100 to those without). There are certain IRS requirements to the amounts you can offer—we’ll help you if you choose to take that route. 

Employee eligibility for QSEHRA through Gusto

To be eligible for QSEHRA through Gusto, employees must:

  1. Have health insurance that meets Minimum Essential Coverage (MEC) requirements. MEC plans include individual plans from a marketplace, government plans like Medicare and Medicaid, and student health plans. 
  2. Be working full time. If anyone on your team moves between full and part-time status or they’re dismissed, contact [email protected] ASAP so we can update their accounts and keep your company compliant.
  3. Not already be covered by a parent, or employer-sponsored plan. You are able to be covered on by a spouse's plan, however, as long as it's not sponsored by an employer.
  4. NOT be a 2% shareholder. Those employees should contact their personal tax advisor to find out their options.

New hires are eligible for QSEHRA reimbursements on the first day of the month following their hire date (if they’re hired on the first of the month, they're eligible on that day). The first bill that new hires submit for reimbursement must have a coverage date that is on or after the start date of their QSEHRA eligibility, and cannot be for a future date.

If you choose to set up QSEHRA with Gusto, we’ll let your team know. If they’re eligible, your employees can participate on the day that your QSEHRA starts and throughout their plan year by requesting reimbursements through their Gusto accounts. If the reimbursement documentation provided is complete and accurate, Gusto will approve the amount, and employees will see their reimbursement reflected in one or two paychecks.

Eligibility and ACA premium tax credits

If any of your employees are receiving tax credits through the ACA, this may reduce or eliminate their eligibility. We recommend they work with a tax advisor to learn more. 

Taxes and filings

What Gusto handles

  • As an employer, you’re required to report the total amount that employees were eligible to receive reimbursements (regardless of if they actually received them). Gusto includes that information on your teams’ W-2s for each month that the QSEHRA was administered through Gusto. 

What your company handles

  • If you offered a QSEHRA through a provider other than Gusto for any part of the calendar year, you’ll need to add those reimbursements amounts separately to each employee’s W-2. 
  • Companies are required to file Form 720 to report and pay Patient-Centered Outcomes Research Institute Fees, which is not something Gusto does on your behalf.

Please work with a tax advisor to make sure you’re reporting the correct information and staying compliant.

Already have a QSEHRA and want to switch? We can help.

Gusto can administer your QSEHRA (there are certain requirements and limitations). Contact [email protected] for Gusto to assist with your transfer.

Payroll, benefits, HR and more.