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.
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:
along with
OR
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.”
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.
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.”
– 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
*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.
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