IRS Issues QSEHRA Guidance in FAQ Format

Late in 2016, as part of the 21st Century Cures Act, Congress had created a program under which certain qualifying small employers could pay directly for medical costs of certain employees (generally private health care insurance) without running afoul of the provisions of the Affordable Care Act that could subject the employer to a $100 per employee per day penalty for offering a health plan that did not comply with the standards imposed under that law.

These programs are referred to as “Qualified Small Employer Health Reimbursement Arrangements” (QSEHRAs) authorized by IRC §9831(d).  In Notice 2017-67 the IRS issued a 59-page set of frequently asked questions (FAQs) regarding the operation of such plans to maintain compliance with the requirements of the law.

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IRS Delays Deadline for Required Notices for Employers Offering Reimbursement for Individual Insurance Policies

The IRS has yet again bailed out the Congress after a new law imposed a deadline for taking action that was simply unworkable (in this case, for calendar year plans 90 days after the law was enacted).  In Notice 2017-20 the IRS has granted relief from notices that were required to be given to employees eligible to be covered by a qualified small employer health reimbursement arrangement (QSEHRA), a requirement added by the 21st Century Cures Act that enacted December 13, 2016.

An employer with fewer than 50 employees who does not offer group plan to any employees is eligible to establish a qualified small employer health reimbursement arrangement. [IRC §9831(d)]  However, an employer establishing such an arrangement is required to give written notice to all eligible employees at least 90 days before the beginning of a year for which a QSEHRA is provided.  [IRC §9831(d)(4)]

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Reimbursement of Individual Plan Premiums by an Employer: The Issue and How to Deal with Clients Impacted by It

An important new notice was issued on February 18 that provides relief for many affected taxpayers through June 30, 2015.  See the write-up elsewhere on this site regarding Notice 2015-17.

Much confusion and angst has resulted from the recent discovery by some of the impact of a ruling issued by the IRS (with an identical DOL ruling) in September of 2013 that, for most employers, makes impractical the reimbursement of individual health policies.  

This article tries to outline what the position of the agencies are, the underlying law that resulted in these rulings, plans that do and do not run afoul of these rules and how to deal with a client that has been operating in ignorance of these rules and running an impermissible arrangement.

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