How the QSEHRA Works for Employees

[Pages:25]How the QSEHRA Works for Employees

Putting the benefit in the context of everyday life

Our story

Offering traditional group benefits sucks. Why? They're too expensive, too complex, and too one-size-fits-all. PeopleKeep is a new way to offer benefits called personalized benefits. Most people believe benefits are the services a company offers, such as a health insurance plan or 401k. With personalized benefits, it's the opposite. Companies give people tax-free money to spend on the consumer services they find most valuable. It's as simple as wages. For small businesses that think offering traditional group benefits sucks, PeopleKeep is personalized benefits automation software that makes offering benefits simple, painless, and personal for everyone. Today more than 3,000 companies use PeopleKeep to hire and keep their people across the United States. PeopleKeep is based in Salt Lake City, Utah. To learn more about PeopleKeep, visit .

Ready to see how PeopleKeep can work for your company? Visit demo to preview our software or click below to have a Personalized Benefits Advisor contact you.

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How the QSEHRA Works for Employees 20171017 V3.R1

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Introduction

There's nothing more crucial to small businesses than the ability to hire and keep talented workers. Offering great benefits, particularly health benefits, is a proven way to do so.

Employees who are satisfied with their

benefits are almost four times more likely to be happy in their jobs.1 By contrast, nearly one-third of the workforce has turned down a job due to lackluster benefits,2 and close

Traditional group insurance imposes a one-size-fits-all plan.

to 60 percent of employees are likely to A QSEHRA sets all

look for new jobs in the next year if they're unhappy with their current package.3

So what makes one benefit succeed where another fails?

The bottom line is that in order for a

employees free to use their benefits on the medical needs they consider most important.

health benefit to help small businesses, it

needs to provide real value to employees.

What's more, that benefit can't provide value to just a few--it needs to address

a multitude of employee circumstances to be truly useful for everyone

it covers.

A new benefit created by Congress in December 2016 does just that. A Qualified Small Employer Health Reimbursement Arrangement (QSEHRA), or Small Business HRA,4 enables all employees to receive value from their company's benefits program. While traditional group insurance imposes a one-size-fits-

1U.S. Employee Benefit Trends Study, Metlife, May 2015, 4. 2"One in Three Millennials Has Turned Down a Job in Part Because of Poor Insurance Offerings," BusinessWire, May 1, 2017, home/20170501005990/en/Millennials-Turned-Job-Part-Poor-Insurance-Offerings. 3 2016 Aflac Workforces Report: Employee Overview, Aflac, April 2016, 7. 4"Why choose the Small Business HRA," Zane Benefits, .

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all plan that's helpful only to some, a QSEHRA sets all employees free to use their benefits dollars on the insurance they want and the medical needs they consider most important. Regardless of whether an employee has coverage under a spouse's plan, has no insurance at all, or falls into some other category, a QSEHRA can help.

The logistics are simple.

Under a QSEHRA, a small business offers employees a monthly

allowance to reimburse health insurance and medical expenses

for themselves and their families. Small businesses may offer

different allowance amounts to employees based on such

$

criteria as whether they're single or have a family or the cost of individual health insurance. Employees and their dependents

choose and pay for their own health insurance and out-of-

pocket expenses, and then submit proof of those expenses.

The small business then reimburses them up to the set

allowance amount.

Reimbursements are free of payroll tax for both company and employees, and free of income tax for employees as long as they have insurance. Employees who don't have insurance must report reimbursements as taxable income at the end of the year.

Because of this unique approach, QSEHRAs deliver value to employees in nearly all situations.

In this eBook, we'll explain how QSEHRAs works for small business employees, from prospective hires to business owners themselves. We'll also cover a number of special circumstances and how a QSEHRA responds to each.

How the QSEHRA Works for Employees 20171017 V3.R1 Copyright ? PeopleKeep, Inc. 2017. PeopleKeep? is a registered trademark of PeopleKeep, Inc.

Table of contents

Introduction

iii

Prospective employees

1

Employees with existing major medical insurance

4

Employees without insurance

5

Employees belonging to a health care sharing ministry

7

Employees covered under a spouse's employer-sponsored

8

insurance plan

Employees married to other QSEHRA-eligible employees

9

Employees eligible for premium tax credits

10

Employees with an HSA

13

Using a QSEHRA as a spouse or dependent

15

Using a QSEHRA as a business owner

16

C-corporation owners

16

Sole proprietors

16

Partners

17

S-corporation owners

17

Conclusion

19

About Zane Benefits

20

Copyright ? PeopleKeep, Inc. 2017. PeopleKeep? is a registered trademark of PeopleKeep, Inc.

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Prospective employees

Health benefits are an important part of any conversation with a prospective hire. While a QSEHRA can be one of a small business's most powerful recruiting tools, it is a new benefit, and few interviewees will be familiar with it. This is a small business's opportunity to position themselves not only as an expert in new benefits, but also as the prospective hire's best choice for employment, thanks to the QSEHRA's uniquely helpful structure.

Potential hires should walk away from an interview with a full understanding of how a QSEHRA works and its advantages over traditional options like group health insurance.

In your conversations, emphasize that a QSEHRA provides choice and value for employees in any situation.

Emphasize to potential hires that a QSEHRA provides choice and value for employees in any situation.

See page 2 and page 3 for templates you can use to explain QSEHRAs to prospective employees.

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Figure 1: Sample benefits letter Dear _______________________: Thank you for considering employment with ______________________. As part of our compensation package, full-time employees with __________________ are eligible to participate in a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA), a personalized, tax-free health benefit. If employed with __________________, you will receive an allowance of $____ per month through the QSEHRA to fund insurance premiums and other qualified out-of-pocket medical expenses. This is equivalent to $__________ per year of additional compensation. With a QSEHRA, you, your spouse, and your dependents can be reimbursed each month for your insurance premiums and medical expenses. Your allowance accrues month over month until the end of the year, and large expenses can be paid down throughout the year. See IRS Publication 502, or an expense eligibility guide, for a full list of expenses eligible for reimbursement under the QSEHRA. We have found that our employees at _________________ appreciate the personalization and flexibility of a QSEHRA. If you have any questions about this health benefit, don't hesitate to reach out at (___) ___-____ or _________@_______.com. Sincerely, _____________________

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Figure 2: Sample text for offer letter Employee benefits. As a regular employee of the Company, you will be eligible to participate in a number of Company-sponsored benefits as detailed in the Company's Employee Handbook. You will receive a QSEHRA allowance of $750 per month to fund health expenses, equivalent to $9,000 per year of tax-free* compensation.

* Tax-free status is contingent upon Employee's enrollment in an insurance policy providing minimum essential coverage. Expenses incurred without a policy in place can still be reimbursed, but must be reported on the Employee's income tax at year's end.

How the QSEHRA Works for Employees 20171017 V3.R1 Copyright ? PeopleKeep, Inc. 2017. PeopleKeep? is a registered trademark of PeopleKeep, Inc.

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