Keep your employees safe and financially secure when disaster strikes
Under IRS Code Section 139, a Qualified Disaster Relief (QDR) account gives employers the ability to reimburse their employees for disaster-related expenses resulting from COVID-19 on a pre-tax basis. Employers may make payments to cover the increased per-employee costs such as:
- Personal, family, living or funeral expenses incurred as a result of COVID-19
- Expenses incurred for repair or rehab to a personal residence or repair and replacement of its contents if that expense is attributable to COVID-19
Examples of these expenses include: medical expenses incurred as a result of COVID-19, Child care expenses due to school or daycare closures, increased home utilities and expenses as individuals are at home all day working, internet or phone to connect to WiFi/intranet in order to work from home due to COVID-19, and payments to the care taker of a dependent.
Key Features of the QDR
- QDRs are 100% employer funded
- There is no maximum or minimum contribution and the entire amount is pre-tax to the employer and employee
- The employer funds the debit card that employees simply swipe to make purchases, or they can submit claims for reimbursement
- No substantiation is required for employees
- QDRs are easy and fast to implement, providing immediate relief for people who need it most
- QDRs serve as a great strategy for employers wanting to mitigate the number of employees taking extended FMLA under the Families First Coronavirus Response Act
QDR Account Frequently Asked Questions
Q: Can a group set the start and end date for the QDR?
A: Yes, a group can absolutely set those parameters.
Q: Who can be a care taker?
A: A grandparent, neighbor, aunt, cousin, the employee’s child who is 19 or older and is not a tax dependent.
Q: Are owners exempt from participating?
A: Except for owners of C-corporations, owners of all other entities are barred from participation in tax-favored plans. This is because they would benefit twice – once as the owner of the business and again as an individual participant. This is not permitted.