8817 / What types of reimbursements may be made from QSEHRAs?

Permissible reimbursements do include reimbursement for an eligible employee’s family member’s health coverage even if the family member’s coverage is separate from the health insurance policy that covers the employee. Further, the QSEHRA may reimburse for group health coverage sponsored by the employee’s spouse, but the reimbursement is taxable to the extent that the spouse’s share of the premiums was paid on a pre-tax basis.

With respect to newly eligible employees, QSEHRA reimbursements may be made as soon as the employee becomes eligible, assuming the employee has satisfied all additional requirements (for example, substantiation) for receiving the reimbursement.

Unlike certain other types of accounts, QSEHRAs are permitted to reimburse employees for over-the-counter drugs purchased without a prescription without jeopardizing qualification, but these reimbursements are taxable because IRC Section 106(f) only permits them to be excluded if a prescription is obtained.