Tax Facts

8815 / What are the requirements regarding minimum essential coverage that apply to QSEHRAs?

Pursuant to IRS guidance, amounts reimbursed under a QSEHRA are not treated as being paid for medical expenses under an accident or health plan unless the individual has minimum essential coverage (MEC) for the month to which the amounts relate. If the QSEHRA mistakenly reimburses an employee for medical expenses incurred during a month when he or she did not have MEC, the reimbursed amounts are included in the employee’s gross income.

A QSEHRA is only permitted to reimburse employees for medical expenses after they have received proof that the employee has MEC. This proof should consist of:

a document from a third party, such as the insurance company, showing that the individual has MEC (an insurance card, for example) and an attestation from the employee that the coverage is MEC; or

an attestation by the employee that the employee (and any individual for whom the medical expenses were incurred) has MEC, the date the coverage began and the name of the insurance company providing the coverage. The IRS has provided model attestation language in Appendix B to Notice 2017-67.

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