Benefits April 5, 2019

Small Employers Boosting Benefits Provided in QSEHRAs

An analysis from PeopleKeep also found in 2018, employees used an average 78% of their available QSEHRA allowance, and one-third used all of their allowance.

Reported by

Seventy-one percent of small businesses that offered the new qualified small employer health reimbursement arrangement (QSEHRA) in 2017 had not offered health benefits previously, according to last year’s “The QSEHRA: Annual Report,” from PeopleKeep, a provider of benefits for small businesses.

Its 2018 report shows that, in the second year of QSEHRA availability, small businesses using the health benefit in 2018 offered an average monthly allowance of $297 for single employees and $445 for employees with a family. These organizations offered 26% of single employees and 10% of employees with a family the maximum monthly allowance amounts of $420.83 and $854.16, respectively. These average allowances represent increases of 6% and 7%, respectively, among QSEHRA users since 2017.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

PeopleKeep found by business size, organizations with fewer employees tended to offer larger allowance amounts. Those with fewer than 10 employees offered averages of $299 for single employees and $452 for employees with a family, for example, compared to organizations with more than 25 employees, which offered an average $264 for single employees and $406 for employees with a family.

Employees are taking advantage of these low-cost benefits for employers. In 2018, employees used an average 78% of their available QSEHRA allowance—about on par with 2017’s 77% utilization rate. One-third of employees used all of their allowance.

According to PeopleKeep, individual insurance premiums claimed the largest portion of employees’ allowances. Thirty-eight percent of employees had an insurance premium reimbursed through the QSEHRA, which claimed an average 80% of their allowance. Fifty-four percent of employees spent all of their allowance on insurance premiums.

Many employees used the QSEHRA differently, however. Because many employees have health insurance coverage through a spouse’s or a family member’s employer-sponsored group policy, these employees frequently used their QSEHRA allowances exclusively for nonpremium items. The most popular nonpremium items reimbursed through the benefit were:

  • Medical office visits (requested by 51% of employees);
  • Prescription drugs (43%);
  • Dental care (40%);
  • Eyeglasses (28%); and
  • Chiropractic care (21%).
Twelve percent of employees used their QSEHRA to reimburse both premium and nonpremium expenses.
Compliance April 5, 2019

Senators Propose Requiring Employers to Contribute to Workers’ Savings Accounts

The Saving for the Future Act would require employers to contribute 50 cents to a savings account for each worker for every hour worked, or more than $1,000 a year, with the goal of helping workers prepare for emergencies and retirement.

Reported by

Senators Amy Klobuchar (D-Minnesota) and Chris Coons (D-Delaware) have introduced the Saving for the Future Act, a bill designed to ensure that Americans have savings for an emergency and, possibly, help with their retirement savings. Like the minimum wage, the bill would require employers to contribute 50 cents for every hour their employees work. This amounts to $20 a week and $1,040 a year.

The Senators note that 30% of Americans do not have access to a workplace retirement plan, and among those who do, 45% do not participate. They say that the Saving for the Future Act would help all Americans, even those working part-time, have some savings put away for retirement and emergency situations.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

The law would apply to companies with 10 or more employees and direct the employer’s contribution to a retirement plan such as a 401(k). Employers that do not offer a retirement plan would direct the money to federally provided “UP Accounts,” modeled after the Thrift Savings Plan for federal workers. UP Accounts would have low fees, be easily transferable from job to job and be tailored to the employee’s age and savings needs.

Businesses of all sizes would receive tax credits for their contributions, with companies of 15 or fewer employees receiving credits covering half of their required contributions. Independent workers and employees at the smallest companies would have access to UP Accounts and an individual tax credit to help them contribute.

“Hardworking families in America often don’t have enough money in their savings account for an emergency—let alone retirement down the road,” Klobuchar said. “The Saving for the Future Act will help close the wealth gap, prepare families in case of an emergency and set workers up for a successful retirement.”

Coons added that one-third of Americans who have not yet retired have no retirement savings at all, and 40% of adults don’t have enough cash savings to meet a $400 emergency expense. “We need big, bold proposals to make our economy work for everyone—not just a few wealthy people at the top—and I believe this bill can not only create that change, but also has a chance of eventually becoming law,” Coons said.

A summary of the bill can be viewed here.

«