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Deadline to Provide QSEHRA Notice Suspended

Hodgson Russ Newsletter
April 28, 2017

Citing the lack of published guidance, the Internal Revenue Service (IRS) suspended the employer advance notice requirement for qualified small employer health reimbursement arrangements (QSEHRAs). By way of background, in December 2016, the 21st Century Cures Act permitted certain employers with fewer than 50 full-time employees to provide QSEHRAs to their eligible employees. Under a QSEHRA, if certain requirements are satisfied an employer may reimburse an employee for the cost of an individual health insurance policy. QSEHRAs represent a limited exception to the general rule (under the Affordable Care Act and related guidance) prohibiting employers from reimbursing individual health insurance policies. One of the requirements for small employers offering a QSEHRA was an advance notice obligation. Specifically, employers were required to furnish written notice to eligible employees at least 90 days before the beginning of a year for which the QSEHRA is provided. Failure to provide the advance written notice would expose the employer to potential penalties. Recognizing the need for additional guidance regarding the contents of the notice, the IRS and Treasury have suspended the 90 day advance notice deadline. An eligible employer that provides a QSEHRA to its eligible employees for a year beginning in 2017 is not required to furnish the initial written notice until after further guidance has been issued by the IRS and the Treasury. IRS Notice 2017-20 https://www.irs.gov/pub/irs-drop/n-17-20.pdf