Final Information Reporting Rules Issued For Insurance Purchased On Health Insurance Exchanges

The Internal Revenue Service has released final information reporting rules for insurance purchased on affordable insurance exchanges. The final regulations apply to health insurance exchanges that make qualified health plans available to individuals. The regulations are effective on May 7, 2014, and apply to tax years ending after Dec. 31, 2013. The final regulations adopt the proposed regulations with some modifications. The final rules were published in the May 7 Federal Register.

Exchanges must report specified information for each family enrolled in a qualified health plan, whether they are receiving advance credit payments or not, including multiple families submitting a single application or enrolled in a single qualified health plan.

In addition to the data identified in the proposed regulations, the final regulations generally require exchanges to report the policy identification number assigned by the exchange, instead of a policy number created by an issuer, and clarify that the “specific account number” is the unique identifying number the exchange uses to report data that enables the IRS to associate the data with the proper account.

The final regulations also provide that exchanges will report the issuer’s EIN on a monthly basis only, as this information is not needed on the annual report. Exchanges are no longer required to report an address for a taxpayer’s spouse. However, the exchange must report the dates of each individual’s coverage under the qualified health plan and the start and end dates for the qualified health plan itself.

The exchanges must report the monthly premium for the applicable benchmark plan that applies to the coverage family (the members of the family enrolling and eligible for a premium tax credit subsidy) that is used to compute advance credit payments. However, in lieu of reporting this benchmark premium, exchanges may provide a reasonable method for taxpayers to use to determine the premium for the applicable benchmark plan that applies to a coverage family.

Under the final rules, exchanges are required to report employment information only to the extent the information is provided; exchanges are not obligated to verify the information’s accuracy, except to the extent required by Department of Health and Human Services regulations. However, if an enrollee provides updated or corrected employment information the exchange must report that information to the IRS in its next monthly report. Exchanges must submit corrected monthly reports for the coverage year by April 15 following the year of coverage.

The proposed regulations required exchanges to report certain information to the IRS on or before the 15th day following each month of coverage (monthly reporting), commencing in February 2014. The final regulations provide that the IRS may establish an initial monthly reporting date no earlier than June 15, 2014. The first report must include cumulative information for enrollments for the period Jan. 1, 2014, through the end of the month preceding the initial monthly reporting date or May 31, 2014.

An exchange must provide enrollees with an information statement on or before January 31 of the year following the calendar year of coverage. Form 1095-A may be used for this purpose.

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