How to get a QSEHRA Exchange Special Enrollment Period (SEP) Midyear

The Qualified Small Employer Health Reimbursement Arrangement or QSEHRA Special Enrollment Period option (for 60 days) is allowed when an employer elects to start a QSEHRA.

Did you miss the last Exchange open enrollment period?  Starting a QSEHRA is an easy way to get another Special Enrollment Period midyear.

A QSEHRA is a health reimbursement arrangement that is available to small employers (fewer than 50 employees) who want to help their employees pay for individual health insurance premiums and other qualified medical expenses.

Here’s a breakdown of what the QSEHRA Special Enrollment Period entails:

Key Concepts of QSEHRA:

1. What is QSEHRA?
   • QSEHRA stands for Qualified Small Employer Health Reimbursement Arrangement.
   • It allows small businesses (with fewer than 50 employees) to reimburse employees for health insurance premiums and qualified medical expenses.
   • The primary advantage for employees is that they can use the QSEHRA to buy individual health insurance plans (either through the Health Insurance Marketplace or outside it) and get tax-free reimbursement for premiums and other qualified expenses like copayments, deductibles, etc.
2. Special Enrollment Period (SEP) for QSEHRA:
   • The Special Enrollment Period (SEP) is a period outside the regular Open Enrollment Period during which employees who are offered a QSEHRA by their employer can enroll in a Health Insurance Marketplace plan or make changes to their existing plan.
   • This option is available because an employee is offered a QSEHRA. It provides an opportunity to get health insurance or adjust current coverage when it might otherwise be unavailable, especially if the employee didn’t have insurance through their employer before.
   • The SEP is triggered when the QSEHRA is first offered or if there is a change in the reimbursement amount.
3. Who is eligible for the QSEHRA SEP?
   • Employees who are offered a QSEHRA by their employer.
   • Employees who did not have health insurance coverage through their employer previously or those who want to adjust their current Marketplace coverage because they are newly eligible for a QSEHRA.
4. How Does It Work?
   • When an employer offers a QSEHRA, the employee may qualify for an SEP, which allows them to buy or change an individual health plan outside the regular open enrollment period.
   • The SEP typically lasts 60 days after the employer first offers the QSEHRA or after a change in the amount of the QSEHRA (e.g., if the reimbursement amount is increased or decreased).
   • If an employee enrolls in a Marketplace plan during this SEP, the employer will then reimburse the employee for the premiums under the QSEHRA (up to the employer’s reimbursement limit).
5. What Happens During the SEP?
   • The employee can shop for an individual health insurance plan through the Health Insurance Marketplace or directly from an insurance company.
   • If they purchase a plan, the QSEHRA will reimburse them for their premiums up to the limits specified by the employer. In addition, the employer can reimburse other qualified medical expenses (e.g., deductibles, co-pays).
   • Reimbursement under the QSEHRA is tax-free for both the employer and the employee.
6. Benefits of the QSEHRA SEP:
   • Flexibility for Employees: Employees can choose the health plan that best fits their needs from the Health Insurance Marketplace or through individual providers, rather than being limited to a group plan.
   • Affordability: Employees can receive tax-free reimbursements for health insurance premiums, which can significantly lower their out-of-pocket costs.
   • No Group Health Plan Required: Employers don’t need to provide a traditional group health insurance plan, which is often expensive and complicated to manage. The QSEHRA gives small businesses a simpler and more affordable way to offer health benefits.

Example Scenario of a QSEHRA SEP:

1. Step 1: Employer Offers QSEHRA
   • Imagine you work for a small company (fewer than 50 employees), and your employer offers a QSEHRA.
   • Your employer provides a fixed amount each month, say $300, to help you pay for an individual health insurance plan.
2. Step 2: SEP Activation
   • Once the employer offers the QSEHRA, you are eligible for a Special Enrollment Period in the Health Insurance Marketplace, which allows you to apply for individual coverage outside the regular open enrollment period.
   • This SEP lasts 60 days from when the QSEHRA is first offered.
3. Step 3: Choose and Enroll in a Marketplace Plan
   • You can use this 60-day window to shop for an individual health plan through the Health Insurance Marketplace, picking a plan that suits your needs.
   • Once you select a plan, you’ll submit proof of premium payments to your employer, and they’ll reimburse you for the premiums under the QSEHRA (up to the $300 limit, for example).
4. Step 4: Reimbursement and Coverage
   • Your employer reimburses you up to $300 each month for the premium of your Marketplace plan.
   • You are also eligible for reimbursement for out-of-pocket medical expenses (e.g., copays, deductibles), if they are qualified medical expenses under the QSEHRA.

Contribution Limits for QSEHRA:

The maximum amount an employer can reimburse for a QSEHRA depends on whether the employee has individual or family coverage.

For 2025, the maximum is $6,350 for individual coverage and $12,800 for family coverage. These amounts are subject to annual adjustments.

These limits are per employee, and employers are allowed to adjust reimbursement amounts depending on family size or other factors.

Things to Keep in Mind:

Employees who are eligible for other employer-sponsored coverage (like group health insurance) cannot use the QSEHRA SEP for Marketplace plans.

If the QSEHRA is not offered in conjunction with individual coverage (i.e., the employer offers a group plan instead), then the SEP would not apply, and employees would have to use the regular Open Enrollment Period.

In Summary:

The QSEHRA Special Enrollment Period provides a 60-day window for employees of small businesses who are offered a QSEHRA to enroll in or change their individual health insurance coverage through the Health Insurance Marketplace. This feature makes it easier for small employers to provide health benefits to their employees, offering flexibility and financial support for employees purchasing individual coverage while helping small employers avoid the complexity and expense of group health insurance.

Let me know if you’d like to dive deeper into any part of this or if you have any follow-up questions!

Source:  https://www.healthcare.gov/job-based-help/qsehra/

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