A Simple Way for Small Employers to Assist Employees with Buying Health Insurance

Posted on December 18th, 2018

Are you having difficulty finding a good, affordable health care benefit plan for your small business? If so, have you considered using a QSEHRA as an alternative?

Congress created the QSEHRA, or Qualified Small Employer Health Reimbursement Arrangement, in 2016 as part of the 21st Century Cures Act. A QSEHRA allows small employers, including nonprofits, to set aside a fixed amount of money each month for employees to purchase their own individual health insurance. Employees choose plans that work best for them and also have the option to use the funds on documented medical expenses.

A QSEHRA is basically a Health Reimbursement Arrangement (HRA) employees can use for individual premiums. This type of arrangement was prohibited by the Affordable Care Act, but Congress reversed that regulation with the Cures Act.

Best of all, with QSEHRA, employers can make reimbursements to employees without incurring payroll taxes, and employees don’t have to recognize income tax. In addition, reimbursements made by the employer count as a tax deduction.

Another advantage of a QSEHRA is it allows employers to choose how much money they want to deposit in employees’ accounts, which eliminates the burden of skyrocketing annual premium rate increases.

Kiplinger, a business forecast publisher, predicts that employer health coverage costs will rise five percent in 2019. That would be the sixth consecutive year employers have seen a five percent increase. With a QSEHRA, the employer determines what they are able to afford for health benefits each year up to the maximum amount set by the Internal Revenue Service (IRS).

Interested? Here are a few things to consider before making a commitment.


Employer Requirements

  • An employer must have fewer than 50 full time equivalent employees. A full-time employee is considered anyone who works 130 hours per month or 30 or more hours per week for 120 consecutive days.
  • An employer already offering a group health plan to employees must cancel the plan before starting a QSEHRA.
  • Owners can only participate in a QSEHRA if they are considered an employee of the business. The employee status of the owner often is determined by the corporate structure of the business.
  • There is no minimum contribution amount, but there is a maximum. 2019 rates have not been set, but usually are increased for inflation. Take Command Health predicts it will be $5,150 annually for employees or $10,500 annually for employees with families.
  • Employers may or may not choose to offer reimbursements to part-time, seasonal employees younger than 26 years old and employees on a spouse’s group plan, although group premiums reimbursed become taxable income to the employee. [While the IRS does not allow for employer group plan premiums to be reimbursed through QSEHRA, they have made an exception (See Q48) that allows for employers to reimburse group plan premiums on a taxable basis. This reimbursement would be added to the employees taxable wages and reported as income on the employees W-2.]


Employee Requirements

  • To access money from a QSEHRA, employees must purchase a health insurance plan that meets minimum essential coverage. Short-term plans, indemnity and faith-based sharing plans do not qualify. If an employee purchases coverage from a state or federal Marketplace and receives tax credits, any tax credits they receive on their premiums will be reduced dollar for dollar by the QSEHRA.
  • Employees cannot contribute to a QSEHRA.
  • All employees who qualify for the QSEHRA will receive the same reimbursement amount, although the rates may vary by family size.


Getting Started

  • You may start your plan anytime, unless you already have a health plan. If you have a plan, cancel it first before starting your QSEHRA. To avoid a gap in coverage, set your cancellation date one day before your QSEHRA begins.
  • You must offer reimbursement to all full-time W-2 employees, but you must decide if you also want to offer it to part-time workers. If you decide to do that, you’ll need to reimburse them at the same rate as full-time employees.
  • Decide how much you’ll give employees to reimburse their medical expenses and premium costs.
  • Work with an administrator to complete the proper documents to comply with IRS and Department of Labor rules. The IRS requires small businesses to keep records up to seven years.
  • Inform your employees about the allowance and give them information about how and where to go for individual health insurance. They also will need a copy of the QSEHRA Summary Plan Description.


District Court Judge in Texas Strikes Down the ACA – But Law Remains In Effect for Now

Posted on December 17th, 2018

On Friday, December 14, a federal judge in Texas issued a partial ruling that strikes down the entire Affordable Care Act (ACA) as unconstitutional.  The White House has stated that the law will remain in place, however, pending the appeal process.  The case, Texas v. U.S., will be appealed to the U.S. Court of Appeals for the Fifth Circuit in New Orleans, and then likely to the U.S. Supreme Court.

The plaintiffs in Texas (a coalition of twenty states) argue that since the Tax Cuts and Jobs Act zeroed out the individual mandate penalty, it can no longer be considered a tax. Accordingly, because the U.S. Supreme Court upheld the ACA in 2012 by saying the individual mandate was a legitimate use of Congress’s taxing power, eliminating the tax penalty imposed by the mandate renders the individual mandate unconstitutional. Further, the individual mandate is not severable from the ACA in its entirety. Thus, the ACA should be found unconstitutional and struck down.

The court in Texas agreed, finding that the individual mandate can no longer be fairly read as an exercise of Congress’s Tax Power and is still impermissible under the Interstate Commerce Clause—meaning it is unconstitutional. Also, the court found the individual mandate is essential to and inseverable from the remainder of the ACA, which would include not only the patient protections (no annual limits, coverage of pre-existing conditions) but the premium tax credits, Medicaid expansion, and of course the employer mandate and ACA reporting.

Several states such as Massachusetts, New York and California have since intervened to defend the law. They argue that, if Congress wanted to repeal the law it would have done so. The Congressional record makes it clear Congress was voting only to eliminate the individual mandate penalty in 2019; the record indicates that they did not intend to strike down the entire ACA.

It is worth noting that the Trump administration filed a brief early in 2018 encouraging the court to uphold the ACA but strike down the provisions relating to guaranteed issue and community rating.

The ACA has largely survived more than 70 repeal attempts and two visits to the U.S. Supreme Court.  We anticipate it will survive this one too, in time.  While the Supreme Court lineup has changed, all five justices who upheld the ACA in 2012 are still on the bench.  Moreover, the Supreme Court may be reluctant to strike down a federal law as expansive as the ACA, particularly when it has been in place for nearly nine years and affects millions of people.  Notably, the Supreme Court was not required to rule on the “severability” issue in 2012.  Given a strong tradition of the Supreme Court to avoid, if possible, broad rulings of unconstitutionality in established laws, it is not unlikely that the current Court, if this case makes it that far, will find a way to hold that even if the Court’s 2012 logic with respect to the individual mandate is no longer applicable, the rest of the law is severable and saved, thus avoiding once again a broad ruling on the ACA’s constitutional soundness.    The bottom line:  employers should continue to comply with the ACA, as its provisions (including the employer mandate and associated reporting) remain the law for the foreseeable future.


About the Authors.  This alert was prepared for Alera Group by Marathas Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act.  Contact Peter Marathas or Stacy Barrow at pmarathas@marbarlaw.com or sbarrow@marbarlaw.com.

The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients.  This is not legal advice.  No client-lawyer relationship between you and our lawyers is or may be created by your use of this information.  Rather, the content is intended as a general overview of the subject matter covered.  This agency and Marathas Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein.  Those reading this alert are encouraged to seek direct counsel on legal questions.

© 2018 Marathas Barrow Weatherhead Lent LLP.  All Rights Reserved.

Alera Group Acquires Bailey & Company

Posted on December 12th, 2018

DEERFIELD, IL (December 12, 2018) — Alera Group, a leading national insurance firm, today announced that it has acquired Bailey & Company Benefits Group, a prominent employee benefits firm in Ohio. Terms of the transaction were not disclosed.

Headquartered in Cincinnati, Ohio, Bailey & Company specializes in a wide variety of employee benefit programs. The firm helps its clients – ranging from mid-sized privately held businesses to publicly traded companies – maximize the return on their employee benefits investments by customizing a plan for each client’s individual needs. Beyond traditional employee benefits solutions, Bailey & Company has significant expertise in private exchanges, partially self-funded benefit plans, and captive-based reinsurance programs.

“We are excited to welcome Bailey & Company to Alera Group. Grant and his team are a terrific addition, bringing significant expertise to our national platform. This is a great opportunity for us to enhance the client experience both by tapping into Bailey & Company’s expertise and by adding Alera Group’s resources to Bailey & Company’s practice,” said Alan Levitz, CEO. “Their firm’s dynamic teamwork and professionalism is an excellent fit for our collaborative national culture.”

“We are excited to be an Alera Group company. As part of this remarkable organization, we are even better equipped to meet our clients’ needs with world-class resources, expertise, and technology,” said Grant Bailey, Managing Partner of Bailey & Company. “We look forward to our collaborative growth together as we continue to develop unique benefits strategies for all of our clients.”

Alera Group was formed in early 2017 and is one of the nation’s foremost independent insurance agencies. For more information on partnering with Alera Group, visit Partnership Opportunities at www.jmjwebconsulting.com.


About Alera Group
Based in Deerfield, IL, Alera Group’s over 1,500 employees serve thousands of clients nationally in employee benefits, property and casualty, risk management and wealth management. Alera Group is the 15th largest independent insurance agency in the country. For more information, visit www.jmjwebconsulting.com or follow Alera Group on Twitter: @AleraGroupUS.

M&A Contact
Rob Lieblein, Chief Development Officer
Email: rob.lieblein@aleragroup.com
Phone: 717-329-2451

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Email: jtiller@weisspr.com
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How to Keep Employees Safe While Traveling

Posted on December 4th, 2018

Americans took more than 462 million business trips in 2017, according to the U.S. Travel Association. Most trips are 250 miles or less away from home. But even those trips create risk exposures.

State laws govern workers’ compensation coverage. Although most policies limit coverage to injuries or illnesses that occur in the U.S., its territories or Canada, most states will extend benefits to workers injured outside their borders, as long as they were hired in that state or had their principal workplace in that state and are working outside that territory only temporarily.

To ensure coverage for employees who make short-term business trips, you can purchase a voluntary workers’ compensation policy and employers liability endorsement. This policy addition will allow you to offer state benefits to workers who are injured or become ill while traveling out of state or out of the country. If the employee rejects these benefits and files suit, the employers’ liability portion of your policy would apply.

Risks of Foreign Travel

Workers who venture abroad can become exposed to malaria, parasites, viruses (such as Zika) and other diseases that rarely occur in the U.S. Even if a more routine accident or illness occurs, language barriers, lack of access and other problems can make even a minor problem escalate into a serious health condition. Before traveling, please check the Center for Disease Control’s website, www.cdc.gov/travel, for updated information on health risks abroad.

Before sending an employee abroad on a business trip, you will want to check whether your state provides extraterritorial coverage. Most policies will provide basic coverage for workers traveling abroad for a short term for business purposes. If your policy provides only basic coverage, you can provide better protection to your traveling workers by buying a foreign voluntary workers’ compensation policy and a travel accident policy.

Foreign voluntary workers’ compensation covers expatriate U.S. employees, local hires and employees from outside the U.S. hired to work in a country not their own. Policies differ among insurers, but many provide broader coverage than the typical workers’ compensation policy. For example:

  • War and terrorism-related injuries. U.S. workers’ compensation policies exclude coverage for injuries due to war or terrorism, even if they occur at the workplace.
  • Repatriation. This covers the cost of returning an injured or ill worker to the U.S. for medical treatment.
  • 24/7 coverage. Some policies will cover your workers who are traveling for injuries and illnesses, including endemic illnesses, that occur outside work hours.

Travel accident insurance provides accidental death and dismemberment and life insurance coverage for traveling workers.

Special Considerations for Women

Traveling alone poses risks for women, particularly overseas. If your employees travel, wearing or bringing the following items can enhance a female traveler’s safety:

  • A wedding ring, regardless of marital status. In certain countries, a married woman is viewed as another man’s property and off limits. At the very least, it can deter unwanted suitors.
  • Pepper spray. Check the country’s regulations: some outlaw pepper spray. Many air carriers allow passengers to bring three ounces or less of pepper spray in checked baggage; none allow this and other potentially disabling substances in carry-ons.
  • A rubber doorstop or door brace. Many hotel door locks are easy to pick; a rubber doorstop or door brace can prevent an intruder from pushing the door open.
  • Boxer shorts. David Mair, a managing partner at Champlin, Minn.-based Soter Healthcare Inc., recommends that a woman traveling solo carries a pair of men’s boxers in her luggage and leave them lying on her bed. “That suggests she is not alone,” Mr. Mair told Business Insurance magazine.

We can review your policies to ensure they provide coverage for your employees who travel or work abroad.