By With the QSEHRA benefit, small employers are able to reimburse their employees tax-free for their health insurance premiums and medical expenses. Under the benefit, the employer sets a maximum monthly allowance (in accordance with IRS contribution limits) each employee is eligible to receive. One question we hear repeatedly from employees is “what happens to my monthly allowance if I do not claim the full amount each month?”
Here’s what to know about what happens to your QSEHRA monthly allowance when the QSEHRA maximum reimbursement isn’t met for the month.
Is my unclaimed money lost?
The good news with the QSEHRA benefit is that any unclaimed reimbursement allowance rolls over to the next month and accumulates to build up a balance of unclaimed reimbursements until the end of the calendar year. The balance will start back at zero in January. This also means if you have a month of larger expenses, you can receive a reimbursement larger than your monthly allowance if you have a balance of unclaimed funds saved up.
Example:
Jessica is entitled to $300 per month in tax-free health reimbursements. Her company has set up the HRA to reimburse her for both monthly premiums and additional medical expenses. Her monthly premium is only $150 per month, and she has not had any additional medical expenses (prescriptions, doctor visits, etc.) for three months. That means that for three months, she has accumulated $450 in unclaimed reimbursements.
The next month Jessica had to go to the dentist and pay for some fillings out of pocket. She can apply the $450 in accumulated unclaimed reimbursements towards her dental bill.
Remember, the QSEHRA is a reimbursement tool, not a savings account. The rollover amounts are allowances that can only be claimed for reimbursement, there are no options for a cash payout of unused funds. At the end of a calendar year, any unclaimed allowance will be lost so it is best to save your receipts and enter your expenses as soon as you can!
Resources for employees to better understand QSEHRA
Looking for more information on your new benefit? We have several resources written for employees to better understand their new benefit! Our employee guide and our blog on how to submit an expense claim are great places to get started!
Make sure to check out the reimbursement rules chapter in our handy new QSEHRA Guide for more helpful tips!
Still have questions? Our team would be pleased to help.
