Small employers who don’t offer group health coverage to their employees can help employees pay for medical expenses through a QSEHRA. If your employer offers you a QSEHRA, you can use it to help pay your household’s health care costs (like monthly premium) for qualifying health coverage. If you are offered a QSEHRA, you'll get a notice from your employer with the amount the employer has decided to provide.
You should use your QSEHRA to help pay for your health coverage during the year. If MHC finds you or your family eligible for APTC, you should use less of your APTC when you’re asked by MHC how much you want to use. Reduce your APTC by the amount of QSEHRA your employer offers. For example: if your APTC is $450 and your employer offers a QSEHRA of $250, you should use no more than $200 in APTC ($450-$250=$200). If your APTC is $250 and your employer offers QSEHRA of $250, you should not use any of your APTC ($250-$250 = 0.)
Your MHC application will ask how much APTC you want to use each month. So if your employer’s notice tells you a monthly amount, you can subtract that amount from the monthly tax credit MHC offers you. If your employer’s notice gives a QSEHRA amount for the year, remember to divide the QSEHRA amount by the number of months you’ll be covered (most people will use 12 months). If you use less APTC than you're eligible for, you can still claim the APTC amount you didn’t use when you file your federal tax return.
The QSEHRA amount will affect your final eligibility for APTC, which is determined when you file a federal income tax return for the year. At tax time, the Internal Revenue Service (IRS) will determine your final eligibility for APTC based on how much QSEHRA your employer offered you (your eligibility for APTC is affected by the offer of QSEHRA even if you don’t use it). Your tax credit amount could also be affected by any changes in your income or other life changes during the year. If you use more tax credit than you’re eligible for, you’ll have to pay it back with your taxes.
If you apply for coverage and MHC determines you’re not eligible for APTC, you can still use your QSEHRA to help pay for a QHP plan. And depending on your final household income for the year, the IRS may determine you’re eligible for APTC when you file your federal income tax return.
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