Our previous post on the 21st Century Cures Act, outlined an important change to the ACA and the Internal Revenue Code. Small businesses may again offer stand-alone HRAs so long as they meet the requirements of a Qualified Small Employer Health Reimbursement Arrangement (“QSEHRA”), which will not be treated as group health plans and not subject eligible employers to prohibitive penalties under the ACA. Under the 21st Century Cures Act, employers providing a QSEHRA must provide an initial written notice to eligible employees at least 90 days prior to the beginning of a year that the QSEHRA is made available by the employer. Employers that fail to timely distribute the initial written notice are subject to a penalty of up to $2,500 per calendar year. Under previous guidance from the IRS, written notice provided by employers on or before March 13, 2017 would be considered timely for 2017.

Recently, the IRS announced that due to the lack of guidance on the content of the required written notice, eligible employers that provide a QSEHRA during 2017 are not required to provide the initial written notice to their employees until further guidance is issued on the content of the notice. After such guidance is published, an employer offering a QSEHRA will have 90 days to provide written notice to its eligible employees. Therefore, employers that have already established a QSEHRA, or are considering doing so in 2017, will want to be on the lookout for further guidance from the IRS on the “initial” written notice requirements.