IRS Proposes Changes to Coverage Reporting

On November 22nd, 2021, the Internal Revenue Service (IRS) released a Notice of Proposed Rulemaking involving health insurance coverage reporting. The Notice of Proposed Rulemaking (NPR) would generally define the term “minimum essential coverage” (MEC) differently than previously used. The proposed regulations would also allow automatic filing extensions, alternative notices, and make changes to Medicaid coverage. Earlier, in August, the IRS released updated guidance for employers on correcting benefit plan mistakes.

Extension of Sections 6055 and 6056 Deadlines

Firstly, the NPR included an automatic extension of any applicable deadlines under the Internal Revenue Code Sections 6055 and 6056. In brief, in 2015, the Affordable Care Act (ACA) created Sections 6055 and 6056 to include the ACA’s reporting requirements. Generally, Section 6055 health insurance coverage reporting requirements apply to providers and small employers that sponsor self-funded health plans. Section 6055 also applies to other entities that provide MEC. Presently, to comply, businesses must complete the 1095-B reporting form (and 1094-B transmittal). Section 6056, however, applies to large employers. Basically, Section 6056 ensures compliance with the ACA through mandatory information reporting on Form 1095-C (and 1094-C transmittal). Markedly, the NPR seeks to create a permanent 30-day automatic extension for furnishing Forms 1095-B and 1095-C to individuals. Subsequently, the forms would be due each year on March 2 (or the next business day if appropriate).

Alternative Health Insurance Coverage Notice Under Section 6055

Secondly, the NPR allows an alternative notice for employers in certain situations. For example, in any year that the penalty applicable to individuals is $0, the employer may furnish an alternative notice. The notice, however, is only available for part-time employees and non-employees enrolled in self-insured health coverage. The employer may also post an evident, conspicuous, and easily accessible notice on its website.

Medicaid and the Definition of Minimal Essential Coverage

Finally, the NPR does clarify that specific Medicaid coverage is not considered MEC. For instance, any Medicaid coverage that was limited to COVID-19 testing is not MEC. This definition also applies to COVID-19-related diagnostic services. As a result, individuals who retained that type of Medicaid coverage still qualify for the premium tax credit.

Employer Takeaways

In conclusion, the IRS is requesting comments from the public for this latest NPR. The agency must receive written comments within 60 days of the NPR’s publication in the Federal Register. However, as of the date of this blog post, the Federal Register has not published the NPR.  At this time, interested parties can submit electronic submissions via the Federal eRulemaking Portal at http://www.regulations.gov (indicate IRS and REG-109128-21).