IRS Releases QSEHRA Notice Extension

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The IRS released Notice 2017-20, extending the notice period for an employer to furnish an initial written notice to its eligible employees regarding a qualified small employer health reimbursement arrangement (QSEHRA).

As you may recall, the QSEHRA was added to the Code under the 21st Century Cures Act in December of 2016.  A QSEHRA is a reimbursement plan that can be offered to employees of employers with less than 50 full-time employees that does not offer a group health plan to any of its employees.  An eligible employee with proof of coverage will be eligible for payments or reimbursement for medical care under Section 213, including individual health insurance policies for the employee and their eligible family members. Please see an earlier Compliance Buzz for more details.

Notice 2017-20 provides transition relief for employers that provide a QSEHRA to its eligible employees for a year beginning in 2017. The initial written notice requirement to employees will be suspended until after further guidance has been issued by IRS and no Code Sec. 6652(o) penalties will be imposed for failure to provide the initial written notice before the extended deadline specified in that guidance.  . That “further guidance” will specify a deadline for providing the initial written notice that is no earlier than 90 days following the issuance of that guidance.

Employers that attempt to comply with the QSEHRA notice to their eligible employees before further guidance is issued may rely upon a reasonable good faith interpretation of the statute to determine the contents of the notice.

The Employer Council on Flexible Compensation (ECFC) has also written a letter in February to the IRS and Treasury Department asking for guidance on this and other elements of QSEHRA to ease the implementation and administration of these new programs.

We will continue to post updates as they become available.

Categories: Compliance, Health Care in General | Tags: QSEHRA , Cures Act , IRS , ECFC | Return