n-17-20.pdf

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EXTENSION OF PERIOD FOR FURNISHING WRITTEN QSEHRA NOTICE TO ELIGIBLE
EMPLOYEES
Notice 2017-20

PURPOSE
This notice extends the period for an employer to furnish an initial written notice to its
eligible employees regarding a qualified small employer health reimbursement arrangement
(QSEHRA) under section 9831(d) of the Internal Revenue Code (Code).
BACKGROUND
A QSEHRA is an arrangement described in section 9831(d), which was added to the
Code by the 21st Century Cures Act (Cures Act), Pub. L. 114-255, 130 Stat. 1033, enacted
December 13, 2016. Under that section, an eligible employer (generally an employer with fewer
than 50 full-time employees, including full-time equivalent employees, that does not offer a
group health plan to any of its employees) may provide a QSEHRA to its eligible employees.
Under a QSEHRA, after an eligible employee provides proof of coverage, payments or
reimbursements may be made to that eligible employee for expenses for medical care (as defined
in section 213(d) and including expenses for premiums for individual health insurance policies)
incurred by the eligible employee or the eligible employee’s family members, provided certain
requirements are satisfied. Section 9831(d)(1) provides that a QSEHRA will not be treated as a
group health plan.
Section 9831(d)(4) generally requires an eligible employer to furnish a written notice to
its 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). Section

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9831(d)(4)(B) provides that the written notice must include: (i) a statement of the amount that
would be the eligible employee’s permitted benefit under the arrangement for the year; (ii) a
statement that the eligible employee should provide the information described in clause (i) to any
health insurance exchange to which the employee applies for advance payment of the premium
tax credit; and (iii) a statement that if the eligible employee is not covered under minimum
essential coverage for any month, the employee may be liable for an individual shared
responsibility payment under section 5000A for that month and reimbursements under the
arrangement may be includible in gross income.
Section 6652(o), which was also added to the Code by the Cures Act, imposes a penalty
for failing to timely furnish eligible employees with the required written QSEHRA notice.
Section 18001(a)(7) of the Cures Act provides that this penalty applies for years beginning after
December 31, 2016, and further provides that an eligible employer that provides a QSEHRA to
its eligible employees for a year beginning in 2017 will not be treated as failing to timely furnish
the initial written notice if the notice is furnished to its eligible employees no later than 90 days
after the enactment of the Cures Act. The 90
th
day after the enactment of the Cures Act is March
13, 2017.
For more information about QSEHRAs, see FAQs About Affordable Care Act
Implementation Part 35, Q 3, issued by the Department of Labor, the Department of the Treasury
(Treasury), and the Department of Health and Human Services
(https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-
35.pdf).

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TRANSITION RELIEF
Treasury and the Internal Revenue Service (IRS) understand that some eligible employers
may find it difficult to comply with the written notice requirement absent additional guidance
concerning the contents of the notice. Treasury and IRS intend to issue that guidance in the near
future. In order to provide eligible employers additional time to furnish the initial required
written notice to eligible employees following the issuance of such guidance, an eligible
employer that provides a QSEHRA to its eligible employees for a year beginning in 2017 is not
required to furnish the initial written notice to those employees until after further guidance has
been issued by Treasury and the IRS. That further guidance will specify a deadline for providing
the initial written notice that is no earlier than 90 days following the issuance of that guidance.
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No section 6652(o) penalties will be imposed for failure to provide the initial written notice
before the extended deadline specified in that guidance. Employers that furnish the QSEHRA
notice to their eligible employees before further guidance is issued may rely upon a reasonable
good faith interpretation of the statute to determine the contents of the notice.
DRAFTING INFORMATION
The principal author of this notice is Ronald Rutherford-Triche of the Office of Associate
Chief Counsel (Tax Exempt and Government Entities), although other Treasury and IRS officials
participated in its development. For further information regarding this notice, contact Mr.
Rutherford-Triche at (202) 317-5500 (not a toll-free call).

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Consistent with section 18001(a)(7)(F)(iii) of the Cures Act, an application for enrollment under section 1411(b) of
the Patient Protection and Affordable Care Act made before April 1, 2017, shall be treated as having met the
requirement of section 1411(b)(3)(B) of such Act, if the information described therein is provided not later than 30
days after the date on which the applicant receives the notice described in section 9831(d)(4) of the Code.