IRS Extends Transition Relief For QSE HRA Notice
At the close of February, the IRSreleased a notice regarding qualified small employer health reimbursement arrangement (QSE HRA) notices and an extension until further guidance is provided. These notices are the initial outreach an eligible employer (less than 50 full-time employees and equivalents with no group health plan offered) must make to eligible employees notifying them of the QSE HRA. These reimbursements include various medical expenses, as well as premiums for individual healthcare that are not in conflict with ACAmandates.
As part of this arrangement, employers are required to provide the aforementioned written notices at least 90 days prior to either the start of the QSE HRA year or the start of the period to which an eligible employee begins to take advantage of the QSE HRA.
Generally, these notices are intended to include the amount of the QSE HRA benefit to the employee, that the employee should provide information about the HRA to the applicable Exchange to which the employee applies for premium tax credits, and if an eligible employee does not have minimum essential coverage for any month, that employee may be subjected to a penalty under the ACA’sindividual mandate.
With the passage of the 21st Century Cures Act (The Cures Act) on December 13, 2016 but imposing a penalty for years starting after December 31, 2016, the Cures Act provides employers transition relief so that those who want to implement a QSE HRA for 2017 will have until March 13, 2017 to provide the requisite notice.
However, the IRSrecognized that some employers may encounter difficulty in complying with this notice requirement absent additional guidance, which the IRSanticipates will be released in the “near future.” Accordingly, the IRS Notice explains that until such further guidance is released, an eligible employer that provides a QSE HRA to its eligible employees for a year beginning in 2017 is not required to furnish the initial written notice to those employees until after such further guidance is issued. That further guidance will specify a deadline for providing such initial written notice that is no earlier than 90 days following the issuance of that guidance.
It is unclear to what extent the anticipated further guidance will be impacted by a possible ACA repeal and replace given the uncertainty in what provisions in the ACA will change and when the changes will take effect.
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