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A new study reveals that the average monthly allowance provided by employers offering Qualified Small Employer Health Reimbursement Arrangements (QSEHRA) through PeopleKeep — which provides personalized benefits for small and midsize organizations — has increased by almost 40% over the past four years. That data, PeopleKeep officials say, underscores the growth and viability of the health benefit, which is an often-overlooked asset within the Affordable Care Act.
The QSEHRA is a formal, IRS-approved health benefit that allows small businesses with fewer than 50 full-time equivalent employees to offer a tax-free reimbursement to their employees in all family status categories for their health insurance premiums and other qualifying health expenses.
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As the first company to deliver cloud-based QSEHRA administration, PeopleKeep has gathered and reported data on the benefit each year since it was available in 2017. This year's report demonstrates how small employers used QSEHRAs in 2022, including the average allowance amounts offered, the average amounts reimbursed, plan design choices, and more. It also reveals how employees of these companies used their benefits, including the most commonly reimbursed expenses.
Key findings include the following:
- The average monthly allowance offered by employers in 2022 rose to $412 from $402 in 2021.
- The longer companies offer QSHERAs, the higher the allowance they offer — an average of $448.42 at six years compared to $396.53 at one year.
- Companies with one to four employees have the largest allowance at $439, compared to larger companies with up to 49 employees.
- The percentage of companies that enabled Employer-Sponsored Premium Reimbursement — a feature to allow the reimbursement of another employer's group premiums so employees can be reimbursed for premiums they, their spouse, or eligible dependents have through another employer — reached 31% in 2022, an 8-point year-over-year increase.
"The 21st Century Cures Act gave small employers a more affordable way to support coverage for their employees through the QSEHRA," Victoria Glickman Hodgkins, CEO of PeopleKeep, said in a statement. "We can see through the data that companies that offer QSEHRAs utilize it more and better over time, committing to higher allowances and expanding offerings for their employees. Through the QSEHRA, small businesses can avoid the drawbacks of traditional group health insurance plans like expensive premiums, annual rate hikes, restrictive participation, and contribution requirements."
PeopleKeep is the only organization to collate an annual report on trends in the QSEHRA market, according to company officials. This year's report is based on more than 20,000 employees and utilizes data gathered from PeopleKeep's QSEHRA customers between Jan. 1 to Dec. 31, 2022.
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