Thursday, April 5, 2018
Small businesses gave an average $391 monthly to each employee to reimburse premiums and other medical expenses, the 2018 QSEHRA report shows.
More than 70 percent of small businesses that used the new qualified small employer health reimbursement arrangement (QSEHRA) in 2017 did so to offer employee health benefits for the first time. This is a key takeaway from The QSEHRA: Annual Report 2018 from PeopleKeep, the leader in personalized benefits for small businesses.
Drawing on data from more than 600 small businesses and nearly 4,000 employees, The QSEHRA: Annual Report 2018 offers the industry’s first look at how the new QSEHRA benefit is being used. The report also examines how the QSEHRA compares to traditional group health benefit options, like group health insurance.
The QSEHRA, which was created through the 21st Century Cures Act in December 2016, is an important new vehicle small businesses can use to offer personalized health benefits. With a QSEHRA, businesses offer employees a tax-free monthly allowance. Employees then choose and pay for health care, including insurance policies, and the business reimburses them up to their allowance limit.
There are no minimum contribution requirements, and small businesses can offer different allowances to employees based on whether they have a family.
For the vast majority of small businesses that used the new benefit, the QSEHRA provided a way to offer health benefits for the first time. More than 70 percent of businesses that used the QSEHRA previously offered no health benefits, and the average allowance amount chosen by businesses ($391 per month) represents a maximum cost of between 38 percent and 47 percent less than what small businesses contributed to group health insurance premiums in 2017.
At the same time, more than a quarter of employees that used the QSEHRA were reimbursed for both premium and non-premium expenses—something not possible under a group health benefit.
Small businesses will use The QSEHRA: Annual Report 2018 to help them make the best choices when evaluating strategies to hire and keep their employees.
Key findings in the report include:
- Among businesses that offered a QSEHRA in 2017, 71 percent did not previously offer employee health benefits. Nearly 20 percent previously gave employees a taxable stipend for health care, and 6 percent previously offered traditional group health benefits.
- Small businesses gave an average monthly allowance of $391.06 per employee in 2016, or $280.20 per self-only employee and $476.56 per employee with a family. Nearly a quarter (22 percent) of employees received the federal maximum monthly allowance of $412.50 per self-only employee and $833.33 per employee with a family.
- Smaller companies typically offered higher allowance amounts, with 1-person companies offering an average $387.50 per self-only employee and $645.58 per employee with a family. That’s compared to companies with 31 to 50 employees, which offered an average $246.07 per self-only employee and $309.85 per employee with a family.
- U.S. states offering the highest average allowance per employee were South Dakota ($833.33), Connecticut ($638.22), West Virginia ($648.48), Delaware ($564.06), and Maine ($536.36).
- In 2017, 40 percent of employees submitted at least one premium expense for reimbursement, including 41 percent of self-only employees and 39 percent of employees with a family.
- Employees were much more likely to submit a premium for reimbursement if they received a larger monthly allowance amount. For example, just 25 percent of self-only employees who received $100 or less submitted a premium as compared to 48 percent who submitted a premium while receiving between $301 and $412.50 a month.
- Because premiums are so expensive, 73 percent of employees who submitted at least one premium expense didn’t submit a nonpremium expensive. Among those who did submit a nonpremium expense, the average number of expenses was eight, and the average annual sum of all expenses submitted was $1,298.59.
- Employees in 2017 used an average 78 percent of their QSEHRA allowance, or 79 percent among self-only employees and 77 percent among employees with a family. More than half (52 percent) of employees used 100 percent of their QSEHRA allowance, including 24 percent of employees who received the federal maximum allowance.
- U.S. states with the highest average utilization rates were South Dakota (100 percent), the District of Columbia (100 percent), Wyoming (98 percent), Massachusetts (96 percent), and New Mexico (96 percent).
- Average QSEHRA allowance amounts are 38 percent smaller than average business contributions to the group premium for single coverage and 47 percent smaller than average business contributions to the group premium for family coverage.
Download the full report here, check out an infographic displaying top-level trends, and join report author Caitlin Bronson for a webinar Tuesday, March 27, analyzing these findings and detailing considerations for small businesses.
About PeopleKeep Report:
PeopleKeep has created a new way to offer benefits called personalized benefits. 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. For more information, see www.peoplekeep.com.