At the end of 2016, the 21st Century Cures Act established the ability of small employers to establish a qualified small employer health reimbursement arrangement (QSEHRA); see a summary of these plan designs from our prior CBIZ Benefit Beat article and CBIZ Health Reform Bulletin.
A QSEHRA is a stand-alone health reimbursement arrangement that can be used to reimburse individual market health premium. To be eligible to establish a QSEHRA, the employer must employ fewer than 50 full-time employees on business days during the preceding calendar year (i.e., not subject to the Affordable Care Act’s employer shared responsibility provisions) and the employer must maintain no other group health plan coverage.
Employers establishing a QSEHRA are required to provide a written notice to eligible employees about the availability of the program. The law required this notice to be provided annually, no later than 90 days prior to the beginning of the program year. On February 27, 2017, the IRS issued guidance (IRS Notice 2017-20) that extends the time period in which an employer must provide the initial written notice to its eligible employees. The period for providing the notice to employees is now extended from March 13, 2017 to 90 days following issuance of additional guidance. The concern is that employers do not have enough information to know what information needs to be included in the notice; therefore, there will be no requirement to provide a notice until 90 days following additional guidance issued by the Internal Revenue Service.