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IRS Suspends Deadline for QSEHRA Initial Notices

Under the 21st Century Cures Act, eligible employers who offer a QSEHRA must furnish a written notice to their eligible employees at least 90 days before the beginning of a year for which the QSEHRA is provided (or in the case of an employee who is not eligible to participate in the arrangement as of the beginning of such year, the date on which such employee is first so eligible).

On February, 27, 2017, the IRS suspended the deadline by which eligible employers who provide a QSEHRA to eligible employees must provide written notice to those employees. In Notice 2017-20, the IRS said that eligible employers may find complying with the initial written notice requirement difficult without additional guidance concerning the contents of that initial written notice. The IRS announced that it intends to issue guidance on this point in the near future.

Additionally, the IRS announced in Notice 2017-20 that eligible employers who offer a QSEHRA to their eligible employees for a plan year beginning in 2017 are not required to furnish the initial written notice to those employees until the IRS issues the guidance on the notice contents. The future guidance will specify a deadline by which to provide the initial written notice that is no earlier than 90 days following the issuance of the guidance. Notice 2017-20 also states that Code Section 6652(o) penalties will not be imposed for an employer’s failure to provide the initial written notice before the extended deadline. Employers who furnish the initial written QSEHRA notice to their eligible employees before the further guidance is issued may rely upon a “reasonable good faith interpretation” of the 21st Century Cures Act to determine the contents of the initial written notice.

This notice means that employers who wish to establish a QSEHRA now or in the near future can move quickly to establish a QSEHRA without waiting for the further guidance regarding the initial notice.

Read our article about employer and employee eligibility for QSEHRAs.