Wagner Law Group is a nationally recognized practice in the areas of
ERISA and employee benefits, estate planning, employment, labor and
human resources and investment management.
in 1996, The Wagner Law Group is dedicated to the highest standards
of integrity, excellence and thought leadership and is considered to
be amongst the nation's premier ERISA and employee benefits law
firms. The firm has seven offices across the country, providing
unparalleled legal advice to its clients, including large, small and
nonprofit corporations as well as individuals and government entities
worldwide. The Wagner Law Group's 29 attorneys, senior benefits
consultant and four paralegals combine many years of experience
in their fields of practice with a variety of backgrounds. Seven
of the attorneys are AV-rated by Martindale-Hubbell
and six are Fellows of the American
College of Employee Benefits Counsel, an invitation-only
organization of nationally recognized employee benefits
lawyers. Seven of the firm's attorneys have been
named to the prestigious Super
Lawyers list for 2017, which highlights outstanding
lawyers based on a rigorous selection process.
Wagner Law Group
Connecticut Avenue, N.W.
Fax: (561) 293-3591
7108 Fairway Drive
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Tampa, FL 33602
Francisco, CA 94104
25 W. Moody Avenue
St. Louis, MO 63119
IRS Releases Guidance
has released guidance on the requirements for eligible small
employers to offer qualified small employer health reimbursement
arrangements ("QSEHRAs") to eligible employees. In
Notice 2017- 67, the IRS presents 79 FAQs that cover various issues
related to QSEHRAs.
Background. Effective January 1, 2017, certain
small employers became eligible to offer QSEHRAs to eligible
employees. (See the 3/8/2017 Alert.) Under a
QSEHRA, businesses with fewer than 50 full-time employees can
reimburse their staff for individual insurance premiums and qualified
out-of-pocket medical expenses.
general, QSEHRAs must:
- be funded
solely with employer contributions.
- be offered
to all eligible employees on the same terms.
- limit annual
employer contributions (for 2017, the limit is $4,950 per year
for employee-only coverage and $10,000 for family coverage).
reimbursement for health care expenses incurred by the employee
(or the employee's family member), which can include premiums
for individual health insurance.
An employer is eligible to establish a QSEHRA if:
- it is not an
Applicable Large Employer ("ALE") under the ACA (i.e.,
an employer that had 50 or more full-time employees or full-time
equivalent employees during the preceding calendar year); and
- it does not
offer group health coverage to any of its employees.
Employees are eligible for the QSEHRA "after
the employee provides proof of coverage for the payment of, or
reimbursement of ... expenses for medical care."
However, employers may exclude the following
employees from QSEHRA participation:
and seasonal employees
who have not completed 90 days of service
younger than 25
employees (if health care coverage was the subject of collective
aliens with no U.S.- source income
Notice 2017-67. Highlights from the Notice include:
Employer Eligibility: Whether an employer is ineligible to
offer a QSEHRA because it offers group health coverage is determined
on a monthly basis, and all entities within an employer's controlled
or affiliated service group are treated as a single employer.
Thus, if one member of a group offers group health coverage, the
entire group is disqualified from offering QSEHRAs. Employers
become ineligible on the date they become ALEs (even if this occurs
during the QSEHRA plan year) but a run-out period is permitted for
expenses incurred during the period of QSEHRA coverage.
Eligible Employee: The Notice confirms that former employees
and non-employee owners are ineligible to participate in a QSEHRA,
and the determination of whether an employee is part-time or seasonal
(and thereby excludable from coverage) is determined using Internal
Revenue Code Section 105(h) nondiscrimination rules.
Notice Requirements. The Notice establishes the deadline for
QSEHRA sponsors to distribute the required, initial written notice to
eligible employees. For QSEHRAs provided in 2017 or 2018, the
applicable deadline is the later of February 19, 2018 or
90 days before the first day of the QSEHRA's plan year.
Minimum Essential Coverage Requirement. Eligible employees must have Minimum
Essential Coverage ("MEC) in order to receive tax-exempt
benefits. A QSEHRA must obtain proof that the eligible
employee and the individual who incurred the expense had MEC for the
month in which the expense was incurred. Employees must submit
proof of MEC annually and attest that they continue to have MEC each
time they submit for reimbursement.
While a QSEHRA sponsor may contribute to an employee's HSA and allow
the employee to make pre-tax HSA contributions, an employee's HSA
eligibility may be lost if the QSEHRA is not HSA-compatible.
Premium Tax Credits: The guidance covers the impact of QSEHRA
enrollment on eligibility for ACA premium tax credits and how
permitted benefits reduce those credits.
"Same Terms" Requirement. QSEHRAs generally must be provided
on the same terms to all employees. However, an employer may
have different maximum reimbursement amounts for individual and
family coverage. Eligible employees are not allowed to opt out
of the QSEHRA, nor may the employer provide different benefit
options. Employees may not carry over unused amounts into the
following year if those amounts exceed the statutory maximum.
Reporting Requirements. Employers must report the amount of
payments and reimbursements that an eligible employee is entitled to
receive from the QSEHRA for the calendar year on the employee's Form
W-2. While no Form 1095-B is required to be provided to
employees in connection with QSEHRA participation, QSEHRAs are
subject to PCORI fees.