Excited to start your small business HRA, but not sure what you need to do to legally inform your employees of the new benefit? The IRS has issued special guidance on which pieces of information need to be included in the Employee Notice and have included a QSEHRA sample notice as a guide.
Employee Notice Requirements
According to the IRS, the QSEHRA Employee Notice must contain the following information:
- A statement of the permitted benefit amount for which the employee might be eligible and the date QSEHRA is first provided to eligible employee.
- A statement that the eligible employee must inform any Marketplace to which the employee applies for advance payment of the premium tax credit (APTC) of the amount of the provided benefit.
- A statement that the amount of the provided benefit may affect the eligibility for and the amount of the premium tax credit and that the employee should retain the written notice because it may be necessary to calculate the premium tax credit on the employee’s individual income tax return.
- A statement that if the eligible employee does not have minimum essential coverage for any month, then the employee may be liable for an individual shared responsibility payment under Section 5000A of the Affordable Care Act for that month and that reimbursements under the QSEHRA for expenses incurred in that month will be included in the employee’s gross income.
The Employee Notice can be delivered electronically according to the guidelines the IRS has set forth.
A Sample Notice from the IRS
The IRS gives the following example of the employee notice on page 25 of the guidance.
“ In 2017, Employer provides a QSEHRA with a self-only permitted benefit of $3,960 and a family permitted benefit of $8,040. These dollar amounts are the maximum amounts for which an eligible employee in each category may be reimbursed; the amount each employee is actually reimbursed depends on the expenses submitted by the employee for reimbursement. The first month of eligibility begins on January 1. Employer timely provides the following written notice to its eligible employees:
“Your permitted benefit for 2017 is $3,960 if you have self-only coverage or $8,040 if any members of your family also have coverage. (These amounts are prorated by month if you are not eligible on the first day of the year.) Your permitted benefit applies to medical expenses incurred on or after January 1 (your eligibility date).” “You are required to inform any Marketplace to which you apply for advance payments of the premium tax credit about the amount of your permitted benefit. The amount of your permitted benefit may affect your eligibility for a premium tax credit and will reduce the amount of the premium tax credit for 26 which you are eligible. You should retain this written notice because it may be needed to calculate the premium tax credit on your individual income tax return.” “If you do not have minimum essential coverage for any month, you may be liable for an individual shared responsibility payment under section 5000A of the Internal Revenue Code, and all of the reimbursements you receive under this arrangement for expenses incurred in that month will be includible in your gross income. For a list of examples of plans and arrangements that are minimum essential coverage, you may refer to the Instructions for IRS Form 8965, which are available on the IRS website.”
An employee hired after the beginning of the year receives the same written notice except the first paragraph includes the newly eligible employee’s initial eligibility date.”
Looking for help?
Take Command Health has QSEHRA figured out. We take care of all the legal documents for you and our system electronically delivers the Employee Notice to employees.
Take Command Health also takes care of onboarding each of your employees, monthly and annual reporting. You'll never have to hassle with receipts or worry about setting up a health plan again.