As we’ve been discussing at length recently, the 21st Century Cures Act (Cures Act) was a game changer for healthcare, research and development, and a small business’ ability to offer smarter healthcare options with less overhead and more cost effectiveness, among many other provisions in the nearly-1000-page law.
Small Business Healthcare Relief
The last of these—small business healthcare relief—was something that the Healthcare Trends Institute and its parent WEX Health pushed for since early 2016, as evidenced in our article on the Small Business Healthcare Relief Act (HR 5447) in July and its addition to the Cures Act in December.
This provision was important, as it allows small businesses (<50 employees) to offer qualified small employer healthcare reimbursement arrangements (QSEHRAs) as opposed to traditional employer-sponsored group health offerings, which according to the NFIB, only 41% of businesses are able to afford. QSEHRAs allow non-ALE employers to offer certain arrangements without fear of penalties as high as $36,500 per employee, per year.
IRS Publishes Additional Guidance on QSEHRAs in Notice 2017-20
The IRS yesterday issued Notice 2017-20, which extends the period for an employer that provides a qualified small employer health reimbursement arrangement (QSEHRA), which was added to the Internal Revenue Code by the 21st Century Cures Act (Cures Act), to furnish an initial written notice to its eligible employees regarding the QESHRA. The period is extended from March 13, 2017 (90 days after the Cures Act was enacted) to at least 90 days after additional guidance regarding the contents of the QSEHRA notice is issued. The notice also provides transition relief from penalties for failure to furnish the written notice until after further guidance has been issued.
This Notice means that employers who wish to establish a QSEHRA now or in the near future do not need to provide written notice to employees prior to the beginning of the plan period. This gives employers the flexibility to move quickly to establish the QSEHRA without the “gating factor” of the employee notice and enables employers to wait to provide notice until further guidance regarding the contents of the notice is issued.
Notice 2017-20 will be published in Internal Revenue Bulletin 2017-11 on March 13, 2017.
Full Text: IRS Notice 2017-20
The following text, available in PDF form from IRS.gov, explains purpose, background, eligibility, and reporting, as well as changes to the notice period to offer QSEHRAs.
Learn More: Everything You Need to Know about Small Business HRAs
The Healthcare Trends Institute is presenting a webcast on the changes under the Cures Act and the importance for small businesses looking at this cost effective, overhead-averse employee health coverage option on February 28, 2017. Featuring Josh Hilgers of VelaPoint, Eric Johnson of LearnBenefits, and Chris Byrd of WEX Health, these experts will present on the changes being made, including the new defined contribution rules, the possible enhancements that will be made under the ACA replacement plan, and why this matters for the overall consumer-driven healthcare industry.