IRS Extends Period for Furnishing Written QSEHRA Notice to Employees

The IRS recently published Notice 2017-20, which extends the period for employers to provide written notice to employees regarding a qualified small employer health reimbursement arrangement (QSEHRA). As background, late in 2016 Congress enacted the Cures Act, which allows smaller employers (generally speaking, those with fewer than 50 full-time employees/equivalents—those not subject to PPACA’s employer mandate) that do not offer a group health plan to any of its employees to instead offer a QSEHRA.

A QSEHRA is an arrangement whereby the employer pays or reimburses eligible employees for individual health insurance policy premiums incurred by the employee or his or her family members, so long as certain requirements are met. (More information on QSEHRAs can be found in a DOL FAQ, here.) One of those requirements is that the employer must provide a written notice to its eligible employees at least 90 days before the beginning of a year for which the QSEHRA is provided (or, for those that become eligible after the beginning of the plan year, such as a new hire, the date on which the employee is first eligible). So, for a plan year beginning in early 2017 (such as a calendar year plan), the notice requirement may have been difficult to meet. However, according to Notice 2017-20, employers will not be treated as failing to timely furnish this initial written notice if the notice is furnished to employees no later than March 13, 2017 (which is 90 days after the enactment of the Cures Act).

Importantly, the notice must include a description of the maximum amount available for reimbursement under the QSEHRA, a statement that the employee should provide the QSEHRA information to any exchange in which the employee applies for advance payment of the premium tax credit and a statement that the employee may still be subject to the individual mandate penalty (if the employee does not have other MEC). Employers should work with their advisor and/or outside counsel if they are considering offering a QSEHRA as an option.

Notice 2017-20 »