What is a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)?

A Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is a specific type of health reimbursement arrangement that allows small employers to reimburse their employees for qualified medical expenses, including premiums for individual health insurance coverage. This arrangement is designed primarily for small employers who do not offer a group health insurance plan.

With a QSEHRA, employers can provide a tax-free benefit to employees, helping them cover the costs of healthcare without the administrative burden of managing a group health plan. Employees can receive reimbursements for healthcare expenses that they choose, fostering greater choices in their healthcare decisions. The tax-free nature of the reimbursement makes it attractive for both the employer and the employee.

It is important to note that a QSEHRA is not a mandatory health plan; it provides an option for small employers to offer a flexible benefits solution instead of traditional group insurance. Additionally, it does not involve government-provided insurance but is a private arrangement between employers and employees. This confirms why the choice referring to the reimbursement aspect correctly defines what a QSEHRA is.