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T
tkatke
January 13, 2021
Question

How do I pay a QSEHRA reimbursement through payroll?

  • January 13, 2021
  • 1 reply
  • 0 views

My company has just begun offering QSEHRA health insurance reimbursements. I want to pay those reimbursements once monthly through QuickBooks payroll. However, all of the instructions I have found on how to set up a payroll item for QSHERA have been to set it up as a "Company Contribution."

Desktop Payroll: Qualified Small Employer Health R... (intuit.com)

When a Company Contribution payroll item is added to a paycheck, the amount only shows in the Company Summary section and does not add that reimbursement amount to the employee's paycheck total. (Please see photo example) So essentially this setup is just a way of tracking the dollar amounts for our company/W-2 reporting and not a means of actually giving the money to the employee.

 

I need to know how to set up a payroll item for QSEHRA that both records the amount for the employee's W-2 and also applies reimbursement the amount to the paycheck.

1 reply

A
AileneA
January 13, 2021

Hello, tkatke. 

 

Thank you for reaching out to the Community. Let me share some information about setting up QSEHRA for your employees in QuickBooks Desktop. You can set up QSEHRA in payroll using the new tax-tracing type Qual. Small ER HRA. This allows you to trace and record the number of payments and reimbursements of your employee that make available annually under a QSEHRA plan.  

 

To set up the new Qual. Small ER HRA tax tracking type payroll item, here's how: 

 

  1. Click the Employees menu and select Manage Payroll Items. Then, pick New Payroll Item.
  2. Select Custom Setup and click Next.
  3. Select Company Contribution and click Next. Then, enter a unique name for this new payroll item, which will appear on employee pay vouchers, pay stubs, and on payroll reports (for example, "Reportable Qual. Small ER HRA" ). Click Next.
  4. Leave the agency information blank. This is a tracking and reporting item only, not a true liability item.
  5. Press the arrow next to the Liability account box, and choose <Add New>.
  6. In the Add New Account window, select Other Expense as the Account Type and enter a new Account Name (for example, "Reportable Qual. Small ER HRA"). Click Save & Close.
  7. Click the drop-down next to the Expense account box and select the account you just created. Click Next. Note: If you are creating more than one payroll item for tracking QSEHRA payments, continue to use this account for both the liability and expense accounts. Setting both the liability and expense accounts the same creates a "wash" item that shows a zero amount on your Profit & Loss statements. This allows you to track QSEHRA payments for W-2 reporting purposes without these numbers affecting your financial reports.
  8. Hit Yes to ignore the warning that you have set your liability account and expense account to the same account.
  9. Click the arrow for the tax tracking type, and select the new tax-tracking type Qual. Small ER HRA. Click Next.
  10. Tap Next twice, then Finish to accept the default settings on the Default rate and limit page.

 

For detailed steps and information, you can refer to this article: Desktop Payroll: Qualified Small Employer Health Reimbursement Arrangements (QSEHRA).  

 

Additional, you can read through this article about report that Qualified Small Employer Health Reimbursement Arrangements (QSEHRA): Report healthcare reimbursements (QSEHRA) on W-2 forms. 

 

Please let me know if you have additional questions about setting up QSEHRA in QuickBooks Desktop. I'll be here to lend a hand. Stay safe!

 

 

T
tkatkeAuthor
January 13, 2021

Thank you   for your reply. But the instructions you provided me are the exact instructions that I have already followed. I shared the link in my post. My question is in addition to that.

Kristine Mae
Kristine Mae
January 13, 2021

I've read your original post, Tkatke. I appreciate the clarification.

 

Let me add more information with regards to QSEHRA. The item is used for company contribution. With that being said, it will not add on the paycheck or money that your employee will receive.

 

If you wish to add an employee reimbursement, you'll have to create another payroll item. Here's how:

  1. Click List.
  2. Go to Payroll Item List.
  3. Click the Payroll Item button, then select New.
  4. Select Custom Setup, then click Next.
  5. Select Addition, then click Next.
  6. Choose an expense account to track the money for reimbursements.
  7. Select the Tax Tracking type, then click Next.
  8. Choose how to calculate the item, then click Next.
  9. Enter a default rate, then click Finish or OK.

Then, add the item to the employee's record. Once done, when you create the paycheck, the item will be added automatically. 

 

As always, we suggest conferring with your accountant on the best way to handle this situation.

 

While we can't provide any accounting advice, we're right here to help you with QuickBooks technical concerns. Feel free to visit us anytime.

 

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