PeopleKeep, the leader in personalized benefits for small to midsize organizations, released its sixth annual report on Qualified Small Employer Health Reimbursement Arrangements (QSEHRA), showing that the average monthly allowance provided by employers offering QSHERAs through PeopleKeep has increased by almost 40% in the last four years, underscoring the growth and viability of the health benefit, an often-overlooked asset within the Affordable Care Act.
“The 21st Century Cures Act gave small employers a more affordable way to support coverage for their employees through the QSEHRA”
The QSEHRA 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.
As the first company to deliver cloud-based QSEHRA administration, 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.
Other key findings from the report include the following:
- 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 1-4 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% in 2022, an 8-point year-over-year increase.
- The average monthly allowance offered by employers in 2022 rose to $412 from $402 in 2021—covering nearly all of an average lowest-cost self-only silver plan premium of $428 for a person age 40—as reported by the Kaiser Family Foundation.
“The 21st Century Cures 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.”
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Hodgkins adds, “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.”
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