Question of the Month: What happens when you outgrow a QSEHRA?

Dear Gina:

My company currently has a QSEHRA in place, but we are growing. We just hit 50 employees and I understand this is the limit for us to be allowed to operate this type of program. Are we suddenly ineligible to sponsor this plan?

A: You are correct that 50 employees is the top limit for a company to be allowed to sponsor a QSEHRA. However, simply triggering that number doesn’t mean you have to immediately abandon the plan. The rules state that you will no longer be able to operate the plan January 1st following the year you reach 50 employees.

I should also note that by “50 employees” that means 50 full-time or full-time equivalent employees. So, if you have a number of part time employees, you may not yet have reached that threshold.

Keep in mind, however, that if you are, in fact at 50 FTEs now, even if your number of employees drops below 50 at the end of the year, because you did reach the threshold in the calendar year, you are not eligible to sponsor a QSEHRA in the following year.

If you need help determining your actual employee count, give us a call and we’ll help you walk through it.

– Gina



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