IRS issues guidance on expatriate health plans for 2016 fee year

The IRS has provided guidance that excludes expatriate health plans from the annual fee imposed on insurers of U.S. health risks for the 2016 fee year. The fee is imposed by section 9010 of the Patient Protection and Affordable Care Act (ACA). Expatriate policies are defined by the Department of Health and Human Services (HHS) as group health insurance policies that provide coverage to employees, substantially all of whom are: (1) working outside their country of citizenship; (2) working outside their country of citizenship and outside the employer’s country of domicile; or (3) non-U.S. citizens working in their home country.

The departments are developing proposed regulations under section 3(d)(2) of the Expatriate Health Coverage Clarification Act of 2014 (EHCCA) that will address the definition of an expatriate health plan. Because guidance is needed for the 2016 fee year on the definition of expatriate health plan for purposes of the EHCCA, which excludes expatriate health plans from the section 9010 fee beginning in 2016, this notice provides that solely for this limited purpose the definition of expatriate health plan will be the same as provided in the MLR (medical loss ratio) final rule definition. No inference is intended regarding the definition of expatriate health plan in for purposes of the section 9010 fee for later years.

The notice provides one procedure for covered entities that filed the Supplemental Health Care Exhibits (SHCEs) for 2016 with the National Association of Insurance Commissioners (NAIC) in which it reported direct premiums written for expatriate health plans and included some or all of those direct premiums on its Form 8963, Report of Health Insurance Provider Information. Such an entity must attach a statement to its 2016 Form 8963 certifying that the covered entity (or designated entity, in the case of a controlled group) filed the SHCE for 2016; the covered entity is filing the statement pursuant to Notice 2016-14; and the aggregate dollar amount of direct premiums written for expatriate health plans reported on the SHCE(s) for 2016 for the covered entity (including the amounts for all members of the controlled group, if applicable) are excluded from direct premiums written reported in the Direct Premiums Written column (f) on the covered entity’s 2016 Form 8963.

A non-SHCE filer must attach a statement to its 2016 Form 8963 certifying that the covered entity is filing the statement pursuant to Notice 2016-14; the aggregate dollar amount of direct premiums written for expatriate health plans that met the MLR final rule definition that it excluded from the Direct Premiums Written column (f) on its 2016 Form 8963 (including the amounts for all members of the controlled group, if applicable); and the source of information that the covered entity has available on request for determining direct premiums written for expatriate health plans for 2016, such as the Accident and Health Policy Experience filed with the NAIC, the MLR Annual Reporting Form filed with the Center for Consumer Information and Insurance Oversight of the Department of Health and Human Services, or any similar statements filed with the NAIC, with any state government, or with the federal government pursuant to applicable state or federal requirements.

SOURCE: IRS Notice 2016-14, I.R.B. 2016-7, February 16, 2016.

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