Home / Blog / QSE-HRA Notice to Employees: IRS removes deadline; awaiting guidance

QSE-HRA Notice to Employees: IRS removes deadline; awaiting guidance

The Core QSE-HRA Summary Plan Description (SPD) includes the required Notice to Employees

In December 2016, the Qualified Small Employer Health Reimbursement Arrangement (QSE-HRA) became available to business owners with fewer than 50 full-time employees.  It allows employers to provide health insurance premium assistance to employees in the form of a monthly stipend without purchasing a group health insurance plan.One of the required actions for a QSE-HRA to be compliant is having the required Plan Document package in place. Within the Plan Document package is a QSE-HRA Notice to Employees.

This employee notice must be distributed to every employee eligible to participate in the QSE-HRA at least 90 days before the start of a Plan Year. Due to the short time between December 13, 2016 and January 1, 2017 – the day the QSE-HRA bill was signed into law and the first day it could become effective – the deadline for handing out the 2017 QSE-HRA Notice to Employees was moved to March 13, 2017, for all plans beginning January 1, 2017. That gave a full 90 days from the date of the law’s signing to the deadline for providing the notice.

IRS Guidance on the QSE-HRA Notice to Employees

Through all of January and February, those responsible for developing Plan Document packages for employers (with the required QSE-HRA Notice to Employees therein) waited patiently for the Internal Revenue Service (IRS) to provide guidance on how these employee notices should be written.

A properly prepared QSE-HRA Notice to Employees is considered vital to the plan; improperly composed notices may be answered with an employer penalty. This is because of the government’s concern over various tax implications for the employee if he or she does not fully understand and follow rules of the plan, especially those put in place to accommodate the Affordable Care Act (ACA). For example:

  • Employees are required to provide proof of health insurance coverage before becoming eligible to receive QSE-HRA funds. If the employee provides this evidence to the employer but later fails to retain the insurance coverage, benefits received after that coverage is lost may become taxable to the employee.
  • Any employee using QSE-HRA funds from an employer to help buy health insurance through the ACA exchange must state the amount of those funds available while completing the ACA insurance application process.
  • The employee is then required to submit through the ACA exchange a copy of the QSE-HRA Notice to Employees provided by the employer.
  • The ACA exchange will reduce the amount of any premium tax credit available to employees by the amount provided to them through the QSE-HRA.
  • If the employee does not disclose the amount of the QSE-HRA during this process and accepts the full ACA subsidy to pay their health insurance premium, the employee will be subject to paying income tax on the amount of tax credit that should be offset by the QSE-HRA funds.

The anticipated guidance will cover all of these issues and probably more with the appropriate language for a fully compliant QSE-HRA Notice to Employees.

Transition Relief from IRS and Treasury

On February 28, 2017, the IRS issued Notice 2017-20, which provides “Transition Relief” in regard to the deadline for distributing the 2017 QSE-HRA Notice to Employees. That relief comes in the form of removing the March 13, 2017 deadline. The requirement is now extended to an indefinite date at least 90 days after the agency’s formal guidance on this matter is issued, as the notice says, “in the near future.”

Update: IRS Notice 2017-67 issues further guidance on QSE-HRA Notice to Employees

QSE HRA Plan Document PackageIf you’ve yet to get your QSE-HRA Plan Documents package in place, Core Documents can help you with that. Since 1997, we have become the country’s premier provider of affordable Plan Documents as required by the IRS and Department of Labor (DOL).

Here’s why you should order your Plan Documents package from Core Documents today:

  • For a limited time, our QSE-HRA Plan Document package is available at a special price of $199. That’s a $100 savings off the regular price.
  • This package will be delivered to you via email in .pdf format with a Deluxe Binder upgrade available for just $25 more. Rush service* is available for an additional $25.
  • Your package will include a QSE-HRA Notice to Employees that we will revise, if necessary, once the official IRS guidance on the language for the notice is available.

It’s simple to get your QSE-HRA up and running once your personalized Plan Documents package arrives:

  • You only need to sign the documents in two places as indicated and then keep it on site in case of an IRS audit, DOL inquiry, employee request for a copy, and your own reference.
  • There is no requirement to file the documents with any agency.
  • For your convenience, we provide you with a one-page summary of all Plan Sponsor responsibilities.

Get started right now. Just click the button below:

Order Online

If you have any questions during the ordering process, call our knowledgeable and helpful staff at 1-888-755-3373.

You may also find these recent QSE-HRA blog posts helpful:

QSE-HRA: The Stand-Alone HRA Returns

QSE-HRA Video Released — Plan Documents @ Introductory $199

Small Employer HRA Update & FAQs (QSE-HRA)

Read the full text of IRS Notices on QSE-HRA plans and Presidential EO 13813:

Qualified Small Employer Health Reimbursement Arrangements (Notice 2017-67)

Presidential Executive Order Promoting Healthcare Choice and Competition Across the United States (EO 13813, referenced in Notice 2017-67)


*Most documents go out via email within hours. Keep in mind that December, January, and February are our busiest months of the year and documents are processed in the order they are received. The Rush Order fee ($25) simply brings your document to the top of the stack to be processed immediately.

Refund Policy: Purchaser understands that goods and services provided by Core Documents, Inc. are non-refundable. Orders cancelled prior to shipping are subject to cancellation fees that are applied to the cost of goods and services provided during the review, draft, and preparation of your order.

Copyright 2004-2024 Core Documents, Inc., All rights reserved