As explained in our December 19, 2016, article, the 21st Century Cures Act (the “Act”) allows small employers (those that are not subject to the Affordable Care Act’s “play-or-pay” requirements because they have fewer than 50 full-time and full-time-equivalent employees) to offer their employees a premium reimbursement arrangement that would otherwise violate the ACA. By establishing a “qualified small employer health reimbursement arrangement” (or “QSEHRA”), such employers may subsidize their employees’ purchase of individual health insurance coverage. In its recent Notice 2017-20, the IRS has granted these employers additional time to comply with the QSEHRA notification requirement.

Under the Act, an employer seeking to establish a QSEHRA must notify its employees concerning (1) the effect that QSEHRA coverage will have on their compliance with the ACA’s individual mandate, (2) the conditions under which any employer contributions to the QSEHRA might be taxable to the employees, and (3) the effect that QSEHRA coverage might have on the employees’ entitlement to a federal tax credit to purchase coverage through an Exchange. Ordinarily, this notice must be provided at least 90 days before the beginning of the year for which the QSEHRA will be in effect.

The Act included a transition rule, however, under which this notice could be provided as late as 90 days after the enactment date. This would have allowed employers that implemented a QSEHRA for 2017 to provide the notice as late as March 13, 2017. However, conceding that many employers could find it hard to comply with this notification requirement in the absence of further guidance, Notice 2017-20 further extends this transition relief. The new notification deadline is 90 days after the IRS issues guidance on the notice’s content. There is therefore still ample time for a small employer to adopt a QSEHRA for 2017.