Overview: Buddy Punch now enables employers to track QSEHRA reimbursements directly in payroll. This makes it easier to record reimbursements accurately, keep everything organized in one place, and ensure proper reporting for year-end tax documents like the Form W-2.
Important! Reporting QSEHRA as a standard reimbursement in the current year can lead to payroll corrections, costly amendments, and W-2Cs. Click here for full fee transparency.
Instructions:
What Is QSEHRA and Who Qualifies?
A Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is a health benefit for small employers that allows them to reimburse employees for qualified medical expenses on a tax-advantaged basis.
To be eligible, the business must have fewer than 50 full-time employees and not offer group health insurance. Reimbursements are tax-free as long as employees have ACA-compliant coverage and must be reported annually on the employee’s W-2 in Box 12.
Important! Reporting QSEHRA as a standard reimbursement in the current year can lead to payroll corrections, costly amendments, and W-2Cs. Click here for full fee transparency.
How to Record QSEHRA in Payroll
To record QSEHRA in payroll, click the arrows to the right of the employee's name to expand their earnings. From there, you will select the +New Earning:
Once you have clicked on +New Earning, you will select the Reimbursement code from the drop-down.
After the Reimbursement code has been selected, you will type QSEHRA in the Description, select QSEHRA in the dropdown under the Code column, and finish by entering the total earnings in the Amount field:
From there, select Save Draft to make sure your updates are saved before reviewing and submitting payroll for processing:
FAQs
Q: Can an employer offer both group health insurance and QSEHRA?
A: No. To offer a QSEHRA, an employer cannot offer a traditional group health plan to any of its employees. QSEHRA is specifically designed for small employers with fewer than 50 full-time employees who do not provide group health coverage.
Q: Is there an annual contribution limit for QSEHRA?
A: Yes. The IRS sets annual maximum reimbursement limits for QSEHRA benefits each year. Employers cannot reimburse employees above those limits. The maximum may vary depending on whether the employee has self-only or family coverage. Please review the current IRS limits before setting reimbursement amounts.