Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)
Some small employers (fewer than 50 employees) can now offer a new type of employee benefit called a “qualified small employer health reimbursement arrangement” (QSEHRA). This type of benefit is tax free and can help cover the costs of your medical expenses, including your health insurance premium.
However, if you qualify for a premium tax credit through Washington Healthplanfinder, and your employer offers this benefit (even if you do not use it), your premium tax credit amount will be reduced or eliminated by the federal government in accordance with federal law. To reduce the chance that you will owe money after you file federal taxes next year, you can take action in Washington Healthplanfinder.
Please take the following steps:
Step 1: Determine if you are receiving premium tax credits through Washington Healthplanfinder.
- To determine if you are eligible for tax credits, select “View Current Eligibility Results” from the Quick Links menu on your dashboard.
Step 2: Determine if your employer offers a QSEHRA.
- If your employer offers a QSEHRA, you will receive a written notice from your employer. The notice contains important information regarding your QSEHRA permitted benefit (the dollar amount available to you to pay for medical expenses). You will need this information to determine how the QSEHRA will affect your premium tax credits. You will also need this information when you file your taxes.
- Your premium tax credit will be affected even if you do not use the QSEHRA.
Note: A QSEHRA is different from a Health Savings Account or a typical Health Reimbursement Arrangement. A QSEHRA is a special type of HRA that does not have to be paired with a health insurance plan offered by the employer.
Step 3: If you are receiving premium tax credits (step 1) and your employer offers a QSEHRA (step 2), determine the impact of your QSEHRA on your premium tax credits.
- Federal law prohibits you from receiving a tax-free QSEHRA benefit from your employer and a full federal premium tax credit. Your premium tax credit amount will be reduced or eliminated based on a federal formula after you file your taxes.
Reminder: In Washington Healthplanfinder, you can adjust the amount of tax credits you take each month by selecting “Update Your Tax Credit Options” from your dashboard. If you were offered a QSEHRA and are eligible for a premium tax credit, you can reduce the amount you will owe after you file federal taxes next year by lowering the amount of premium tax credit you take each month.
- To calculate the impact on your tax credit contact Washington Healthplanfinder at 1-855-923-4633 for assistance. Tell them you are a small business employee, you have received a notice from your employer, and you have questions about how the information in the notice impacts your premium tax credits. You will need to upload or provide information included in your employer notice.