By It is a query we get loads from customers of our QSEHRA service. The official reply: “Ask your accountant.”
Nevertheless, whereas we will not give tax recommendation, what we are able to do is aid you take a look at the legislation and supply the knowledge needed so that you can have a productive dialog together with your CPA or lawyer.
October 2018 Replace: The IRS has nonetheless not supplied clear steerage on how sharing ministries work with QSEHRA. Nevertheless, we now recommend sharing ministries be reimbursed outdoors of QSEHRA or be mixed with a person MEC plan. For extra data, please see the Premiums Part of our QSEHRA Reimbursement Information. For Take Command Well being shoppers, we have up to date how we deal with sharing ministries on our platform to separate them out from QSEHRA reimbursements. You’ll be able to be taught extra about these modifications on this assist article.
Please Be aware: Take Command Well being is NOT a licensed licensed public accountant (CPA) or certified to present tax recommendation. We share this data for academic functions solely.
QSEHRA Legislation (twenty first Century Cures Act)
Let’s begin with the legislation. The twenty first Century Cures Act created the Certified Small Entity Well being Reimbursement Association (QSEHRA) by modifying the Inside Income Code (IRC) and the Reasonably priced Care Act (ACA) so as to add provisions for small employers.
Here is a replica of the twenty first Century Cures Act with the language that pertains to QSEHRAs (there have been quite a lot of different issues within the invoice too). Full invoice.
Beneath the definition of the Association (Subsection D.2.B), the legislation requires “proof of protection,” as bolded beneath:
(B)Association described
An association is described on this subparagraph if—
(i)such association is funded solely by an eligible employer and no wage discount contributions could also be made underneath such association,
(ii)such association offers, after the worker offers proof of protection, for the cost of, or reimbursement of, an eligible worker for bills for medical care (as outlined in part 213(d)) incurred by the eligible worker or the eligible worker’s members of the family (as decided underneath the phrases of the association), and
(iii)the quantity of funds and reimbursements described in clause (ii) for any yr don’t exceed $4,950 ($10,000 within the case of an association that additionally offers for funds or reimbursements for members of the family of the worker).
So, “proof of protection” of what? Later within the legislation, when describing how a QSEHRA have to be communicated to staff as a way to preserve compliance, the legislation specifies data in part D.4.B that have to be included in that discover and says “minimal important protection” (MEC).
(B)Contents of discover
The discover required underneath subparagraph (A) shall embody every of the next:
(i) An announcement of the quantity which might be such eligible worker’s permitted profit underneath the association for the yr.
(ii) An announcement that the eligible worker ought to present the knowledge described in clause (i) to any medical health insurance trade to which the worker applies for advance cost of the premium help tax credit score.
(iii) An announcement that if the worker shouldn’t be coated underneath minimal important protection for any month the worker could also be topic to tax underneath part 5000A for such month and reimbursements underneath the association could also be includible in gross earnings.
Alright, so it appears to be like such as you want Minimal Important Protection or MEC, however what’s that?
What’s Minimal Important Protection for QSEHRA?
Fortunately, the legislation does make it clear that they are speaking about MEC because it utilized underneath part 5000A. That is the a part of ACA that changed the tax code to require everybody to keep up medical health insurance protection or face a penalty (AKA, the “particular person mandate”). Part 5000A begins like this:
(a)Requirement to keep up minimal important protection
An relevant particular person shall for every month starting after 2013 make sure that the person, and any dependent of the person who’s an relevant particular person, is roofed underneath minimal important protection for such month.
I am highlighting two phrases, “relevant particular person” and “minimal important protection” for a cause you may see shortly. Part 5000A goes on to explain how the tax penalties work after which offers a definition of minimal important protection in part F:
(f)Minimal important protection
For functions of this part—
(1)On the whole
The time period “minimal important protection” means any of the next:
(A)Authorities sponsored applications
Protection underneath—
(i)the Medicare program underneath half A of title XVIII of the Social Safety Act,
(ii)the Medicaid program underneath title XIX of the Social Safety Act,
(iii)the CHIP program underneath title XXI of the Social Safety Act,
(iv)medical protection underneath chapter 55 of title 10, United States Code, together with protection underneath the TRICARE program; [2]
(v)a well being care program underneath chapter 17 or 18 of title 38, United States Code, as decided by the Secretary of Veterans Affairs, in coordination with the Secretary of Well being and Human Companies and the Secretary,
(vi)a well being plan underneath part 2504(e) of title 22, United States Code (regarding Peace Corps volunteers); 2 or
(vii)the Nonappropriated Fund Well being Advantages Program of the Division of Protection, established underneath part 349 of the Nationwide Protection Authorization Act for Fiscal Yr 1995 (Public Legislation 103–337; 10 U.S.C. 1587 observe).(B)Employer-sponsored plan
Protection underneath an eligible employer-sponsored plan.(C)Plans within the particular person market
Protection underneath a well being plan provided within the particular person market inside a State.(D)Grandfathered well being plan
Protection underneath a grandfathered well being plan.(E)Different protection
Such different well being advantages protection, corresponding to a State well being advantages danger pool, because the Secretary of Well being and Human Companies, in coordination with the Secretary, acknowledges for functions of this subsection.
(2)Eligible employer-sponsored plan
The time period “eligible employer-sponsored plan” means, with respect to any worker, a bunch well being plan or group medical health insurance protection provided by an employer to the worker which is—
(A)
a governmental plan (throughout the that means of part 2791(d)(8) of the Public Well being Service Act), or(B)
another plan or protection provided within the small or giant group market inside a State.Such time period shall embody a grandfathered well being plan described in paragraph (1)(D) provided in a bunch market.
(3)Excepted advantages not handled as minimal important protection
The time period “minimal important protection” shall not embody medical health insurance protection which consists of protection of excepted advantages—
(A)
described in paragraph (1) of subsection (c) of part 2791 of the Public Well being Service Act; or(B)
described in paragraph (2), (3), or (4) of such subsection if the advantages are supplied underneath a separate coverage, certificates, or contract of insurance coverage.
(4)People residing outdoors United States or residents of territories. Any relevant particular person shall be handled as having minimal important protection for any month—
(A)
if such month happens throughout any interval described in subparagraph (A) or (B) of part 911(d)(1) which is relevant to the person, or(B)
if such particular person is a bona fide resident of any possession of america (as decided underneath part 937(a)) for such month.
(5)Insurance coverage-related phrases
Any time period used on this part which can be utilized in title I of the Affected person Safety and Reasonably priced Care Act shall have the identical that means as when utilized in such title.
Hmm…wait, the place does it say something about “sharing ministries”? I believed these have been exempt from ACA particular person mandate necessities?
They’re, however they’re exempt underneath the definition of “relevant particular person” (going again to the beginning of Part 5000A). Beneath 5000A.D, an “relevant particular person” is outlined and members of healthcare sharing ministries are clearly excluded from being an “relevant particular person” and subsequently excluded from the person mandate:
(d)Relevant particular person
For functions of this part—
(1)On the whole
The time period “relevant particular person” means, with respect to any month, a person aside from a person described in paragraph (2), (3), or (4).
(2)Spiritual exemptions
(A)Spiritual conscience exemption. Such time period shall not embody any particular person for any month if such particular person has in impact an exemption underneath part 1311(d)(4)(H) of the Affected person Safety and Reasonably priced Care Act which certifies that such particular person is—
(i) a member of a acknowledged non secular sect or division thereof which is described in part 1402(g)(1), and
(ii)an adherent of established tenets or teachings of such sect or division as described in such part.
(B)Well being care sharing ministry
(i)On the whole
Such time period shall not embody any particular person for any month if such particular person is a member of a well being care sharing ministry for the month.
(ii)Well being care sharing ministry
The time period “well being care sharing ministry” means a corporation—
(I) which is described in part 501(c)(3) and is exempt from taxation underneath part 501(a),
(II) members of which share a typical set of moral or non secular beliefs and share medical bills amongst members in accordance with these beliefs and with out regard to the State during which a member resides or is employed,
(III) members of which retain membership even after they develop a medical situation,
(IV) which (or a predecessor of which) has been in existence always since December 31, 1999, and medical bills of its members have been shared repeatedly and with out interruption since a minimum of December 31, 1999, and
(V) which conducts an annual audit which is carried out by an impartial licensed public accounting agency in accordance with typically accepted accounting rules and which is made obtainable to the general public upon request.
Conclusion: What ought to I do?
October 2018 Replace: The IRS has nonetheless not supplied clear steerage on how sharing ministries work with QSEHRA. Nevertheless, we now recommend sharing ministries be reimbursed outdoors of QSEHRA or be mixed with a person MEC plan. For extra data, please see the Premiums Part of our QSEHRA Reimbursement Information. For Take Command Well being shoppers, we have up to date how we deal with sharing ministries on our platform to separate them out from QSEHRA reimbursements. You’ll be able to be taught extra about these modifications on this assist article.
We’re not consultants at tax legislation or understanding IRS language. Nevertheless studying the legislation, it is clear that to obtain tax-free advantages from a QSEHRA, that you need to present “proof of protection.”
That protection is later described as “minimal important protection” or MEC. Though it is unlikely you would make an argument that sharing ministries like Medi-Share and others are MEC, you would make an argument that as a member of a sharing ministry you might be exempt from having to have MEC within the first place.
Does that exemption carry by means of to QSEHRA?
We do not know! Hopefully the IRS will present steerage or clear course quickly. Within the meantime, please be sure to discuss to your tax skilled or accountant when you or your staff are concerned about utilizing a sharing ministry underneath a QSEHRA.
At present, we enable enterprise homeowners and directors of Take Command Well being’s QSEHRA platform to determine how you can deal with Medi-Share and different sharing ministries. If the IRS offers extra steerage, we’ll be sure you replace it right here and with our members.
Hungry for extra? Take a look at the FAQ part in our helpful new QSEHRA Information!
About Take Command Well being
Take Command Well being launched three years in the past with the aim of bringing consciousness, advocacy, and transparency to the complicated world of medical health insurance for small companies and people. Take Command Well being is on the forefront of this problem, a acknowledged chief in QSEHRA administrationand small enterprise tax technique, with prospects in each state. It operates in Arizona, California, Florida, Georgia, Indiana, Michigan, North Carolina, Pennsylvania, Texas, Tennessee, and Wisconsin for particular person insurance coverage and affords small enterprise HRA administration nationwide.
Once more, we’re NOT TAX EXPERTS. Please don’t use this put up as recommendation or data. There could also be different sections of the legislation that apply you need to talk about together with your CPA.
