Using a Salusion ICHRA and QSEHRA with ADP RUN Payroll

For ADP RUN payroll users, Salusion provides a streamlined way to handle ICHRA and QSEHRA reimbursements. While employers have the option to process HRA reimbursements through payroll, most—over 90% of our clients—choose to let Salusion automate the process through ACH transactions.

Why Automate HRA Reimbursements with Salusion?

Automating QSEHRA and ICHRA reimbursements with Salusion offers key benefits:

1. Hands-Free Administration: From plan documents and employee notices to expense capture, substantiation, and ACH reimbursements—every step runs automatically. Once your HRA is set up, there’s nothing left for the administrator to manage.
2. Elimination of Human Error: By removing manual data‑entry and spreadsheet juggling, you eradicate typos, missed submissions, and misplaced paperwork. Automation ensures every claim is processed accurately—every time.
3. Nightly Reconciliation & Audit‑Ready Records: Automated, end‑of‑day matching of expected reimbursements against completed ACH transactions gives you one unified ledger. You’ll have up‑to‑date, error‑proof records for month‑end close and compliance audits.

When Should Employers Use ADP RUN for HRA Reimbursements?

While most employers prefer automated ACH reimbursements, there are situations where using ADP for HRA reimbursements makes sense. Specifically, with a Salusion QSEHRA, employers can choose whether to reimburse taxable premiums (premiums paid through a pre-tax payroll deduction by a spouse or parent through a cafeteria plan) or to exclude them from eligible expenses.

If you choose to process taxable reimbursements through payroll, Salusion will provide a report detailing taxable and non‑taxable amounts, which you can upload into ADP RUN using a template customized to integrate seamlessly with ADP.

Processing Taxable and Non-Taxable Reimbursements Through ADP RUN

If you decide to process taxable reimbursements through ADP, Salusion will provide you with a report detailing taxable and non-taxable reimbursements. You can then manually update these amounts in ADP using a template customized to work with ADP.

Tax Reporting Considerations

ICHRA Tax Reporting

For ICHRAs, tax reporting is completely independent of payroll. Employers are required to generate Form 1094-B and Form 1095-B:

• Form 1094-B: This is a transmittal form submitted to the IRS along with Form 1095-B. It provides summary information about the employer's health coverage.
• Form 1095-B: This form is provided to employees and the IRS to report individuals covered under the ICHRA. It includes details such as employee and dependent coverage, start and end dates, and employer information.

Employers must ensure these forms are accurately completed and submitted to the IRS, as well as distributed to employees as required.

QSEHRA Tax Reporting

With a QSEHRA, payroll updates are necessary. Specifically, the employer must report the total amount made available to employees in Box 12, Code FF of the employee’s W-2. Salusion will provide a report with the necessary figures in December each year.

Updating W-2 Information in ADP

Updating an employee's W-2, Box 12, Code FF in ADP RUN is a two-step process:

Step 1: Set Up Earnings Code

1. Click Settings, then Earnings and Deductions
2. Click Add Earnings
3. Populate the screen with the following values
   1. Category → Standard Earnings
   2. Earning → Small ER Health Reimb Permitted – Family
   3. (optional) Name → "QSEHRA Allowance"
   4. (optional) Worksheet Name → "QSEHRA"

Step 2: Populate the Earnings Code

1. Start your payroll and go to Summary screen
2. Click the employee’s name
3. On the Payroll Entry screen, click the Earnings Codes
4. Enter the dollar amount, repeat for other employees
5. Click Preview Payroll, and Approve to finalize

Conclusion

Salusion’s automation of ICHRA and QSEHRA reimbursements significantly simplifies the administration process for employers using ADP payroll. However, in cases where taxable premiums need to be reimbursed, integrating reimbursements into ADP’s payroll system ensures proper tax withholding and compliance. By following the provided steps, employers can efficiently manage their HRA reimbursements while staying compliant with tax regulations.

For more information on QSEHRAs, visit our Salusion QSEHRA product page. 

For more information on ICHRAs, visit our Salusion ICHRA product page.