In an effort to provide small employers with additional time to furnish the required QSEHRA initial written notice, Treasury and IRS have suspended the deadline until further guidance has been issued that will include a revised notice deadline. For 2017, the first required written notice would have been due on March 13.

Our January 23 blog post apprised you of the 21st Century Cures Act, enacted this past December, that created a Health Reimbursement Arrangement (HRA) for small employers that do not offer a group health plan. The small employer HRA has been given the acronym “QSEHRA.”

We advised that employers with fewer than 50 employees may offer these arrangements if they provide an initial written notice to eligible employees of at least 90 days before the beginning of a year for which the QSEHRA is provided. The written notice must include:

  • a statement of the amount of the eligible employee’s permitted benefit under the arrangement;
  • a statement that the eligible employee must provide the permitted benefit amount to any health insurance exchange to which the employee applies for advance payment of the premium tax credit; and
  • a statement that an eligible employee may be liable for an individual shared responsibility payment, and reimbursement under such arrangement may be included in the employee’s gross income.

In Notice 2017-20, the Treasury Department and IRS suspended the notice deadline, and waived any penalties that could have been imposed on employers for failure to provide the initial written notice. We will continue to keep you updated on any further developments.