Qualified Small Employer Health Reimbursement Arrangements – IRS Issues Guidance in Notice 2017-67

Qualified Small Employer Health Reimbursement Arrangements – IRS Issues Guidance in Notice 2017-67

Qualified Small Employer Health Reimbursements Arrangements (QSEHRAs) were created when the 21st Century Cures Act was passed in December 2016.  While the plans allow eligible small employers to offer the benefit to their employees, there are specific criteria that must be met.  IRS Notice 2017 – 67, issued October 31, 2017, clarifies many of the requirements and specifications of QSEHRAs.  Below are some highlights from the notice:

  • To be an eligible employer, the employer cannot offer another group health plan, including plans that are excepted benefits and only cover dental and vision expenses.
  • Employees may not waive participation in a QSEHRA offered by their employer.
  • A QSEHRA can limit the expenses that will be reimbursed by the plan.
  • A QSEHRA can allow for rollover of unused amounts, however the total of rollover and new contributions in the following plan year cannot exceed the IRS limit for that year.
  • Notice requirements and timing of the notices being provided to employees are clarified.
  • W-2 reporting requirements and clarified and examples are provided for various scenarios.

In addition to providing more information on multiple topics regarding QSEHRAs, the notice also provides sample language that can be used by employees to certify they have the required Minimum Essential Coverage (MEC) to receive the tax benefit of the plan. Employers who are considering implementing a QSEHRA will want to take the time to read the IRS notice to ensure they are aware of the requirements of sponsoring this type of plan.

 

BusinessPlans, Inc. – myCafeteriaPlan does not intend to provide legal or tax advice and information contained in this article should not be interpreted as such. Regulations governing pretax plans are often open to interpretation and should be reviewed with your legal or tax advisor before making any decisions regarding your plan.

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