Interim transition relief continues for expatriate health plans, IRS says

The IRS has issued interim guidance on the application of certain provisions of the Patient Protection and Affordable Care Act (ACA) to expatriate health insurance issuers, expatriate health plans, and employers in their capacity as plan sponsors of expatriate health plans, as defined in the Expatriate Health Coverage Clarification Act of 2014 (EHCCA) (P.L. 113-235 ). Under the guidance, pending the issuance of proposed regulations, employers and plan sponsors may apply the requirements of the EHCCA using a reasonable good faith interpretation.

Market reforms. Taxpayers may continue to follow the expatriate plan transition relief first identified in ACA Implementation FAQs Part XIII, Q&A 1, and extended in FAQs XVIII, Q&A 6 and Q&A 7. Under this relief, for plan years ending on or before December 31, 2016, expatriate health plans do not have to comply with the Market Reforms under Code Sec. 9815 as long as they continue to comply with the pre-ACA group plan rules. For purposes of the relief, an “expatriate health plan” is an insured group health plan with respect to which enrollment is limited to primary insureds who reside outside of their home country for at least six months of the plan year and any covered dependents, and its associated group health insurance coverage.

Minimum essential coverage. Coverage provided under an expatriate group health plan is a form of minimum essential coverage that would satisfy the individual shared responsibility requirements under Code Sec. 5000A.

Reporting. EHCCA’s exemption from the ACA generally does not apply to the reporting requirements for applicable large employers under Code Sec. 6056, or coverage providers under Code Sec. 6055. However, for expatriate health plans, statements to individuals reporting minimum essential coverage or offers of employer coverage may be furnished in electronic format unless the recipient refuses consent.

PCORI fees. Until the issuance of further guidance, issuers and plan sponsors may determine the PCORI fee under Code Sec. 4375 by excluding the lives covered under a specified health insurance policy that is issued or renewed on or after July 1, 2015, or under an applicable self-insured health plan for plan years starting on or after July 1, 2015, if the facts and circumstances demonstrate that the policy or plan: (1) was designed and issued specifically to cover primarily employees (a) who are working and residing outside the United States, or (b) who are not citizens or residents of the United States but who are assigned to work in the United States for a specific and temporary purpose or who work in the United States for no more than six months of the policy year or plan year; or (2) was designed to cover individuals who are members of a group of similarly situated individuals. For purposes of determining whether an insured is residing outside the United States, issuers and plan sponsors may rely on the most recent address on file for the primary insured.

Special rule for groups of similarly situated individuals. Under EHCCA, enrollment in an expatriate health plan is generally limited to qualified expatriates. The definition of a “qualified expatriate” includes an individual who is a member of a group of similarly situated individuals. Until the issuance of further guidance, an individual is considered to be a member of a group of similarly situated individuals if the following conditions are met:

(1) The group of individuals is formed for the purpose of traveling or relocating internationally in service of one or more of the purposes listed in Code Sec. 501(c)(3) or (4) , or similarly situated organizations or groups (such as students or religious missionaries) and that is not formed primarily for the sale of health insurance coverage;
(2) In the case of a group organized to travel outside the United States, each member of the group is expected to travel or reside outside the United States for at least six months of the policy year (or, in the case of a policy year that is less than 12 months, for at least half of the policy year), and in the case of a group organized to travel within the United States, each member of the group is expected to travel or reside in the United States for not more than 12 months; and
(3) the group of individuals was been formed and maintained in good faith for purposes other than obtaining insurance; does not condition membership in the association on any health status-related factor relating to an individual (including an employee of an employer or a dependent of an employee); makes health insurance coverage offered through the association available to all members regardless of any health status-related factor relating to such members (or individuals eligible for coverage through a member); does not make health insurance coverage offered through the association available other than in connection with a member of the association; and meets such additional requirements as may be imposed under State law.

Comments requested. Comments are requested on clarifications needed for the statutory definitions of the terms expatriate health plan and qualified expatriate, as well as the interaction of the EHCCA with existing relief for expatriate health plans. Comments should include a reference to Notice 2015-43. Send submissions to CC:PA:LPD:PR (Notice 2015-43), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, D.C. 20044. Submissions may be hand delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (Notice 2015-43), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, D.C. 20044, or sent electronically to the following e-mail address: Notice.comments@irscounsel.treas.gov. Please include “Notice 2015-43″ in the subject line of any electronic communication. All material submitted will be available for public inspection and copying.

SOURCE: IRS Notice 15-43, I.R.B. 2015-29, July 20, 2015.

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