Small Employers Boosting Benefits Provided in QSEHRAs

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.

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.