Traditional Health Insurance
Traditional health insurance plans are the standard group coverage that businesses offer their employees. As a small business owner, you would typically work with an insurance broker to set up a plan, and your business would cover a significant portion of the insurance premiums.

Costs and Control
The cost of traditional health insurance varies widely, depending on factors like the type of plan, coverage level, and geographical location. Remember, administrative costs may add up when managing the health insurance plan. In terms of cost control, businesses often have less command over annual premium increases, which are set by the insurance carrier.

Tax Benefits
One advantage of traditional health insurance is the tax benefit it offers. Both the employer and employee contributions to premiums are tax-deductible. Additionally, employees' contributions are often made with pre-tax dollars, which reduces their taxable income.

A Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is a specific type of Health Reimbursement Arrangement (HRA) that can be used by small businesses with fewer than 50 full-time employees to reimburse employees for qualified healthcare expenses. 

Qualifications for a QSEHRA:

1. The business has fewer than 50 full-time employees.
2. The business does not offer a group health plan to any of its employees.

A QSEHRA allows the employer to reimburse employees for insurance premiums and other qualified medical expenses tax-free, up to a certain limit. It provides a high degree of flexibility in plan design, which is one of its major benefits.

1. Employer Control Over Costs:With a QSEHRA, employers can set a specific monthly allowance for employees, giving them control over their healthcare spending. This allows them to budget for healthcare expenses effectively, as the costs are fixed and predictable.
   1. The 2023 Maximum amounts are $5,850 for individual employees (this adds up to $487.50 per month) and a contribution of $11,800 for employees with a family (this adds up to $983.33 per month).  Remember this is the MAX!  You can choose a flat amount lower than this as well. 
2. Employee Choice: QSEHRA gives employees the flexibility to choose the health insurance plan that suits their needs. They can purchase a plan from the open market or a state exchange and get reimbursed up to the set limit. This makes QSEHRA a popular choice for businesses with a diverse workforce that has varied health care needs across several states.
3. Coverage Types:The business can decide what type of expenses to cover under the QSEHRA. This can include premiums for individual health insurance policies, out-of-pocket medical costs, prescription drugs, and other IRS-qualified medical expenses.
   1. Example 1 = Plan design only allows for premium reimbursements.  You educate the EEs on the possibility of setting up an HSA to pay for any out of pocket medical
   2. Example 2 = Plan design allows for BOTH premiums AND OOP Medical.  Remember, the sum of the two can never go over the IRS CAP.

Remember that all reimbursements through QSEHRAs must be substantiated (i.e., the employee must provide proof that the expense is a qualified medical expense) before the employer can reimburse them.

You can choose to reimburse monthly, quarterly and or even annuals.  Most of our Anomaly clients tend to do this monthly for cash flow purposes.

The best QSEHRA Plan provider is Take Command Health

If you have any questions, drop us a note on Soraban!