It’s the season of healthcare limbo, but sometimes limbo can be good. For example, small employers who use health reimbursement arrangements in lieu of employer-sponsored plans may have just caught a small break. In guidance issued February 27, 2017, the IRS indefinitely suspended notice (and associated penalty) requirements for small employers who use Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs).

QSEHRAs were officially sanctioned by last year’s 21^st Century Cures Act. They allow small employers (generally those with 50 or less full-time or full-time equivalent employees) who don’t offer employer-sponsored health insurance to offer reimbursement to employees receiving coverage from another plan, such as that of a spouse or family member. This was welcome news to many small employers who had used such arrangements prior to the Affordable Care Act (ACA) but abandoned them in the face of stiff potential penalties under post-ACA IRS guidance.

Under the 21^st Century Cures Act, employers offering a QSEHRA are required to notify employees that the QSEHRA will be offered at least 90 days before the beginning of the plan year, but the law included 2017 transition relief exempting employers from late notice penalties as long as they furnished the required notice at any point prior to March 13, 2017. Some small employers who have resumed using QSEHRA arrangements have been awaiting details on the required form and content of the notice in order to comply.

IRS Notice 2017-20 extends the transition relief from notice requirements indefinitely, providing that it will continue until 90 days after the IRS and Treasury issue guidance on the required content of the notice. So while the use of QSEHRAs remains permissible, the notice requirement (and associated penalties) will remain in limbo, for now.

Surgent will offer training on QSEHRAs in its courses addressing healthcare and fringe benefits this season, and when notice requirements are clarified and put back on a timetable toward implementation, we’ll make sure to update you with those details. For more breaking news on healthcare and fringe benefits, subscribe to the Surgent blog: Tangible Gains.