Qualified Disaster Relief Account (QDR)

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.