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What is proof of MEC for QSE-HRA eligibility?

The 21st Century Cures Act of 2016 (Cures Act) allows an eligible employer with fewer than 50 employees to provide a Qualified Small Employer Health Reimbursement Arrangement (QSE-HRA) to eligible employees.  While a QSE-HRA does not permit the employer to offer a qualifying employer-sponsored group health plan, it does require the employee to have a health plan with minimum essential coverage (MEC) and provide proof of MEC before the employer can reimburse him or her for qualifying medical expenses. Employers must know what qualifies as proof of MEC for QSE-HRA reimbursements.


The IRS requires proof of MEC for QSE-HRA eligibility before any reimbursement is made to an employee. Proof of MEC is also needed for any dependent for whom a claim is made.

Initial Proof of MEC for QSE-HRA

Click here to use our Employee Attestation for Initial Proof of MEC form.

To establish participation eligibility or for the first request for reimbursement in a plan year, the employee must submit what the IRS calls “initial” proof of MEC. The following meet the initial proof requirement:

  • An insurance card, explanation of benefits, or other proof of coverage for the employee and any dependents eligible under the QSE-HRA

along with

  • The employee’s signed attestation that the coverage is MEC


  • An attestation by the employee stating the employee and dependent(s) are covered by MEC with the name of the company providing the coverage and the date coverage began (see form link, above).

IRS Notice 2017-67 says, “An eligible employer may rely on the employee’s attestation unless the employer has actual knowledge that the individual whose expense is submitted does not have MEC.”

Attestation for Reimbursements

Click here to use our Attestation for Reimbursement of an Incurred Expense form.

Separate attestation is required at every reimbursement. This attestation affirms that the employee (and dependent, if applicable) continue to be insured with a MEC health plan. The per-reimbursement attestation may be on a separate form or included in the claim form itself (see example, above).

From IRS Notice 2017-67, pp. 28-29:

Question 43: May a QSEHRA reimburse an eligible employee on a taxable basis if the employee fails to provide proof of MEC for the individual for whom the employee seeks payments or reimbursements?

Answer 43: No.

Types of MEC

Click here to download the Types of Minimum Essential Coverage (QSE-HRA) document.

From IRS Notice 2017-67, Qualified Small Employer Health Reimbursement Arrangements, Part III — Administrative, Procedural, and Miscellaneous, p. 57, Appendix A:

“Minimum essential coverage means health care coverage under any of the following programs. It does not, however, include coverage consisting solely of excepted benefits. Excepted benefits include stand-alone vision and dental plans, workers’ compensation coverage, and coverage limited to a specified disease or illness.”

Types of Minimum Essential Coverage (QSE-HRA)

Employer-sponsored coverage:

  •  Group health insurance coverage for employees under:

– A plan or coverage offered in the small or large group market within a state,

– A plan provided by a governmental employer, such as the Federal Employees Health Benefit program, or

– A grandfathered health plan offered in a group

  • A self-insured health plan for employees,
  • COBRA coverage,
  • Retiree coverage, or
  • Coverage under an expatriate health plan for employees and related

Individual health coverage:

  • Health insurance purchased directly from an insurance company,
  • Health insurance purchased through the Marketplace,
  • Health insurance provided through a student health plan,
  • Catastrophic coverage, or
  • Coverage under an expatriate health plan for non-employees such as students and

Coverage under government-sponsored programs:

  • Medicare Part A coverage,
  • Medicare Advantage plans,
  • Most Medicaid coverage,*
  • Children’s Health Insurance Program (CHIP) coverage,
  • Most types of TRICARE coverage,
  • Comprehensive health care programs offered by the Department of Veterans Affairs,
  • Health coverage provided to Peace Corps volunteers,
  • Department of Defense Nonappropriated Fund Health Benefits Program,
  • Refugee Medical Assistance, or
  • Coverage through a Basic Health Program (BHP) standard health plan.

Other coverage:

  • Certain foreign coverage,
  • Certain coverage for business owners, or
  • Coverage recognized by HHS as minimum essential **

*Medicaid programs that provide limited benefits generally don’t qualify as minimum essential coverage.

**Plans recognized as minimum essential coverage are listed at: www.cms.gov/CCIIO/Programs-and- Initiatives/Health-Insurance-Market-Reforms/minimum-essential-coverage.html, scroll down and click on the link for the list of approved plans.

Related articles:

QSE-HRA reimbursement to employees without health insurance

How to Report QSE-HRA Employee Benefits on 2017 Form W-2

When is an employer eligible for a QSE-HRA?

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