Health Care Reimbursement Option Now Available

Small businesses—including churches and related ministries—can once again pay premiums for their employees’ health insurance. Previously known as an Employer Payment Plan (EPP) or Health Reimbursement Account (HRA), these arrangements violated the Affordable Care Act (ACA). However, due to a recently passed law, ministries that are not part of a group health plan now have another option to help employees with health care costs.

21st Century Cures Act

The 21st Century Cures Act went into effect at the end of 2016. It includes a provision known as the Qualified Small Employer Health Reimbursement Arrangement (QSEHRA). QSEHRA allows eligible employers to pay or reimburse eligible employees for medical care expenses (see who qualifies, below). The tax-free benefit includes insurance premiums and eligible out-of-pocket medical expenses.

Evaluate your ministry’s health insurance—deadline to act is March 13, 2017.

Which ministries are eligible?

With the passage of QSEHRA, ministries may once again find reimbursement plans preferable to offering a group insurance plan. However, the new law does have a few new restrictions. To be eligible to offer a QSEHRA plan to employees, your ministry:

  1. Must have less than 50 employees. Any ministry that does not meet the definition of an Applicable Large Employer (ALE) as defined in the Affordable Care Act is eligible to participate. ALEs are employers that have 50 or more full-time and full-time equivalent employees.
  2. Cannot offer both a QSEHRA plan and a group health insurance plan. If your ministry currently offers a health insurance plan to employees, then you will need to drop your current plan to be eligible to offer a QSEHRA plan.

Learn more

Visit the MinistryWorks® by Brotherhood Mutual website to learn more about the Qualified Small Employer Health Reimbursement Arrangement. The website article provides information concerning:

  • Employee eligibility
  • How QSEHRA works
  • Employee responsibilities
  • Additional requirements

MinistryWorks by Brotherhood Mutual is a payroll and tax filing service, focused on the needs of churches and ministries.