Q & A – Can an employer pay for an employee’s individual health plan premiums instead of offering a group health plan?

Q: Can an employer pay for an employee’s individual health plan premiums instead of offering a group health plan?

A: The IRS does not allow employers to reimburse employees for their individual health plans.  A small employer who does not offer a health plan to employees, and is not an Applicable Large Employer (ALE) (meaning they have less than 50 full-time employee plus FTE’s), can provide a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA).  Using the QSEHRA, an employer can reimburse employees for medical expenses allowed by the IRS, including reimbursement for their individual health insurance premiums on a non-taxable basis.

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