March 13 Deadline for QSEHRA Notices Has Been Extended

calendar iconFebruary 15, 2021

The March 13 deadline for employers to furnish initial written notice regarding qualified small employer health reimbursement arrangements (“QSEHRA”) has been extended indefinitely until the government can provide additional guidance to employers. The Internal Revenue Service (“IRS”) announced this extension in IRS Notice 2017-20.

QSEHRAs were made available in the 21st Century Cures Act (“Cures Act”), enacted on December 13, 2016. For the first time, the government allowed small employers (typically 50 or fewer full-time or full-time equivalent employees) without a group health plan to reimburse eligible employees for health insurance coverage they purchase individually, as long as the coverage meets minimum essential coverage (“MEC”) requirements per the Affordable Care Act (“ACA”). The offer also has to be made on the same terms to all eligible employees. Such an arrangement gives small employers a way to help their employees purchase individual health insurance coverage without having to commit to a large group health insurance plan. It also enables their employees to purchase health coverage on a tax-preferred basis.

One takeaway is that employers now have more time to consider if they want to assist their employees with purchasing health insurance on a tax-preferred basis – and how it would affect their bottom line after these additional costs and tax breaks.

For more details about what the Cures Act says about QSEHRAs and the effect on small business owners, check out, “21st Century Cures Act Makes It Easier for Small Businesses to Offer HRAs – with No Excise Tax.

If you have specific questions about the deadline extension or want advice on the best way to proceed, reach out to Deborah Walker, CPA, National Director of Compensation and Benefits at Cherry Bekaert to start the conversation. Even one new idea you get from Deborah could make it worth your time.