The IRS has released Notice 2015-68 advising taxpayers that they intend to propose regulations relating specifically to Section 6055 information reporting on minimum essential coverage. The proposed guidance will:
- Provide that health insurance issuers must report coverage in catastrophic health insurance plans enrolled in through an Exchange/Marketplace;
- Allow electronic delivery of statements reporting coverage under expatriate health plans unless the recipient explicitly refused consent or requests a paper statement;
- Allow filers reporting on insured group health plans to use a truncated taxpayer identification number to identify the employer on the statement furnished to a taxpayer; and
- Specify when a provider of minimum essential coverage is not required to report supplemental coverage (such as that of an HRA) of an individual who has other minimum essential coverage (the “supplemental coverage” rule).
The supplemental coverage rule is intended to eliminate duplicate reporting of an individual’s minimum essential coverage under circumstances when there is reasonable certainty that the provider of the “primary” coverage will report. The rule provides that:
(1) if an individual is covered by multiple minimum essential coverage plans or programs provided by the same provider, reporting is required for only one of them; and
(2) reporting generally is not required for an individual’s minimum essential coverage for which an individual is eligible only if the individual is covered by other minimum essential coverage for which § 6055 reporting (the “B” Forms) is required.
These rules would apply month by month and individual by individual.
To illustrate the first rule:
- If for a month an individual is enrolled in a self-insured group health plan and also has a self-insured health reimbursement arrangement (HRA) from the same employer, the employer is required to report only one type of coverage for that individual.
- However, if an employee is covered under both arrangements for some months of the year but drops coverage under the non-HRA group health plan for part of the year and is covered only under the HRA, the employer must report coverage under the HRA for the months when the employee is covered under the group plan. The employer must report the coverage in an arrangement of any individual who is covered by only one arrangement.
Under the second rule
- If an employee is enrolled in both his employer’s self-insured HRA and insured group health plan, the employer is not required to report the employee’s coverage under the HRA, provided that the HRA coverage is only available to individuals enrolled in the insured group plan.
- However, if an employee is enrolled in an employer’s HRA and in a spouse’s non-HRA group health plan, the employee’s employer would be required to report for the HRA, and the employee’s spouse’s employer (or the health insurance issuer or carrier, if the plan is insured) would be required to report for the non-HRA group health plan coverage
- Reporting would not be required for Medicare or TRICARE supplements and Medicaid coverage providing benefits only to an individual enrolled in other coverage for which reporting is required, such as employer coverage or a qualified health plan.
Other guidance in Notice 2015-68 of particular note included:
The IRS is requesting comments on the application of the reasonable good cause rules under Section 6055 reporting relating to Taxpayer Identification Number (“TIN”) solicitation and reporting.
Section 6055 provides specific procedures for soliciting TINs which, if followed, establish that a reporting entity has made good faith efforts to comply with the rule and penalties may be waived due to reasonable cause. However, reporting entities have expressed concerns that Section 6055 reporting has significant differences from other information reporting provisions that are not adequately addressed by the regulations for establishing reasonable cause.
Pending the issuance of additional guidance, reporting entities will not be subject to penalties for failure to report a TIN if they comply with the TIN solicitation requirements of Section 6055 with the following modifications:
1. the initial solicitation is made at an individual’s first enrollment or, if already enrolled on September 17, 2015, the next open (enrollment) season,
2. the second solicitation is made at a reasonable time thereafter, and
3. the third solicitation is made by December 31 of the year following the initial solicitation.
Additionally, a reporting entity is not required to solicit a TIN from an individual whose coverage is terminated.
Comments should be submitted in writing on or before November 16, 2105.