PeopleKeep, a Salt Lake City provider of software for personalized employee benefits programs for small-to-midsize organizations, has released its sixth annual report on Qualified Small Employer Health Reimbursement Arrangements (QSEHRA). The report found that the average monthly allowance provided by employers offering QSHERAs has increased by almost 40 percent in the past four years.
The QSEHRA is a provision of the Affordable Care Act and is a formal, IRS-approved health benefit allowing small businesses with fewer than 50 full-time equivalent employees to offer a tax-free reimbursement to their employees in all family-status categories for their health insurance premiums and other qualifying health expenses.
PeopleKeep has gathered and reported data on the benefit each year since it was available in 2017. This year’s report demonstrates how small employers used QSEHRAs in 2022, including the average allowance amounts offered, the average amounts reimbursed, plan design choices and more. It also revealed how the employees of these companies used their benefits, including the most commonly reimbursed expenses.
The study found that the longer companies offer QSHERAs, the higher the allowance they offer — an average of $448.42 at six years compared to $396.53 at year one. Companies with four or fewer employees have the largest allowance at $439 compared to larger companies with up to 49 employees.
The percentage of companies who enabled Employer-Sponsored Premium Reimbursement (ESPR) — a feature to allow the reimbursement of another employer’s group premiums so that employees can be reimbursed for premiums they, their spouse or eligible dependents have through another employer — reached 31 percent in 2022, an 8-point year-over-year increase.
“The act gave small employers a more affordable way to support coverage for their employees through the QSEHRA,” said Victoria Glickman Hodgkins, CEO of PeopleKeep. “The QSEHRA 2023 Report highlights the legislation’s achievement by showing the growth in popularity and efficacy of the benefit over time. We can see through the data that companies that offer QSEHRAs utilize it more and better over time, committing to higher allowances and expanding offerings for their employees. Through the QSEHRA, small businesses can avoid the drawbacks of traditional group health insurance plans like expensive premiums, annual rate hikes, and restrictive participation and contribution requirements.”