Proposed regulations issued on minimum essential coverage information reporting

The IRS has issued proposed regulations relating to information reporting of minimum essential coverage under Code Sec. 6055 . Health insurance issuers, certain employers, and others that provide minimum essential coverage to individuals must report to the IRS information about the type and period of coverage and furnish related statements to covered individuals. The proposed regulations clarify issues relating to reporting of certain plans and TIN solicitation and truncation. The proposed regulations are generally proposed to apply for tax years ending after December 31, 2015, and may be relied on for calendar years ending after December 31, 2013, with the exception of rules on reporting of coverage under catastrophic plans.

Reporting of catastrophic plans. Exchanges must report to the IRS information relating to qualified health plans individuals enroll in through the Exchange. However, the term “qualified health plan” does not include catastrophic coverage so neither Exchanges nor coverage issuers have reported on these plans. The proposed regulations require health insurance issuers to report catastrophic plan coverage on Form 1095-B, effective for coverage in 2017 and returns and statements filed and furnished in 2018.

Reporting of coverage under Basic Health Programs. States are able to establish a Basic Health Program to provide an additional healthcare coverage option to certain individuals not eligible for Medicaid. The proposed regulations require the state agency administering the coverage under the Basic Health Program to report that coverage.

Truncating TINs. Code Sec. 6055 requires that health insurance issuers and carriers reporting coverage under insured group health plans report information about the employer sponsoring the plan, including the employer’s EIN, to the IRS and on a statement to the covered individuals. The proposed regulations clarify that the EIN of the employer sponsoring the plan may be truncated on statements health insurance issuers and carriers furnish to taxpayers.

Plans for which reporting is not required. Information reporting under Code Sec. 6055 is generally required of every person who provides minimum essential coverage to an individual during the year. In certain instances where the reporting would be duplicative, the existing regulations allow the person who provides supplemental coverage to forgo information reporting. The proposed regulations provide that (1) if an individual is covered by more than one minimum essential coverage plan or program provided by the same reporting entity, reporting is required for only one of the plans or programs; and (2) reporting is not required for an individual’s minimum essential coverage to the extent that the individual is eligible for that coverage only if the individual is also covered by other minimum essential coverage for which Code Sec. 6055 reporting is required.

TIN solicitation. Under existing regulations, in cases of a missing TIN, the reporting entity is treated as acting in a responsible manner in soliciting a TIN if the reporting entity makes (1) an initial solicitation when an account is opened or a relationship is established, (2) a first annual solicitation by December 31 of the year the account is opened (or January 31 of the following year if the account is opened in December), and (3) a second annual solicitation by December 31 of the year following the year in which the account is opened. The proposed regulations require that the first annual solicitation be made no later than 75 days after the date on which the account was “opened” (i.e., the day the filer received the substantially complete application for coverage), or, if the coverage is retroactive, no later than the seventy-fifth day after the determination of retroactive coverage is made. The deadline for the second annual solicitation (third solicitation overall) remains December 31 of the year following the year the account is opened.

To provide additional relief and ensure that the requirements for the first annual and second annual solicitations may be satisfied with respect to individuals already enrolled in coverage, an additional rule is provided. Under this rule, if an individual was enrolled in coverage on any day before July 29, 2016, the account is considered opened on July 29, 2016. Accordingly, reporting entities have satisfied the requirement for the initial solicitation with respect to already enrolled individuals so long as they requested enrollee TINs either as part of the application for coverage or at any other point before July 29, 2016.

SOURCE: NPRM REG-103058-16, published in the Federal Register on August 2, 2016.

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