Written notice to employees: Transition and penalty relief.
The IRS has finally issued guidance to employers on the requirements for providing a qualified small employer health reimbursement arrangement (QSEHRA), the tax consequences of the arrangement, and the requirements for providing written notice of the arrangement to eligible employees. The guidance covers eligible employers and employees, the same term requirement, the statutory dollar limits, written notice requirement, the minimum essential coverage requirement, reimbursements, reporting, and coordination with the premium tax credit and health saving account requirements. The guidance applies for plan years beginning on and after November 20, 2017. The new guidance is in question and answer format, with lots of examples making it relatively easy to follow and to get specific answers to the most frequently asked questions.
President Trump’s Executive Order 13813 directed the Secretaries of the Treasury, Labor, and Health and Human Services to consider revising guidance, to the extent permitted by law and supported by sound policy, to increase the usability of health reimbursement arrangements (HRAs), expand employers’ ability to offer HRAs to their employees, and to allow HRAs to be used in conjunction with non-group coverage.
The IRS considers this guidance (stated in its entirety in this article) to address these objectives. Employers, plan writers and administrators all should take note of the guidance that has been supplied because with a document standard in place the IRS now has the tool it has been lacking for the past decade to actually audit employer plans for compliance.