The Internal Revenue Service (IRS) has issued proposed regulations on information reporting of Minimum Essential Coverage (MEC) by coverage providers. The Affordable Care Act (ACA) requires coverage providers (i.e., insurers and employers that have self-funded plans) to report information to the IRS identifying covered individuals and the timeframe of such coverage. This information is also provided to covered individuals (reported on Forms 1095-B and 1095-C, Part III). This information allows individuals to establish, and the IRS to verify, the months during the year when the individuals were covered by MEC for purposes of administering the individual shared responsibility provisions (a.k.a., the individual mandate). This reporting presents some challenging scenarios which these rules are intended to remedy. These rules apply for taxable years ending after December 31, 2015, and may be relied on for calendar years ending after December 31, 2013. Highlights of these rules are as follows: 

  • Health Reimbursement Arrangements (HRA) need not be reported for individuals covered by more than one type of MEC where the other MEC is a self-funded plan.
  • Supplemental coverage need not be reported for an individual if the individual is eligible for that “supplemental” coverage “only if” enrolled in another reportable MEC offered by the same employer.
  • All employers in a controlled group or affiliated service group are treated as the same employer. 
  • Coverage provider asking for the taxpayer identification number (TIN) of a covered individual upon application for new coverage or adding an individual to existing coverage will avoid penalty. A second request for the TIN within 75 days is required. The third request must be made by December 31 of the year after the initial request.
  • Permitted to report the date of birth of a covered individual if a TIN is not available after reasonable efforts to obtain it. 
  • The first and second annual request for missing TINs may be satisfied with respect to individuals currently enrolled in coverage by using July 29, 2016 as the original enrollment date and the coverage provider must request the TIN at any time up to 75 days after July 29.

A request for the TIN of the primary covered individual will serve as a request of every covered individual on the policy or plan under the primary covered individual. However, to avoid penalties, a coverage provider would have to solicit TINs separately for any individual added to a policy or plan.

Next Steps

Employers that offer self-funded plans should read these regulations to ensure proper reporting. The regulations also include helpful examples. It is advisable to document requests for TINs should an audit occur.

For more information, see: https://www.gpo.gov/fdsys/pkg/FR-2016-08-02/pdf/2016-18100.pdf

 

 

NOTICE OF DISCLAIMER

The information herein is intended to be educational only and is based on information that is generally available. HUB International makes no representation or warranty as to its accuracy and is not obligated to update the information should it change in the future. 

The information is not intended to be legal or tax advice. Consult your attorney and/or professional advisor as to your organization’s specific circumstances and legal, tax or other requirements.