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IRS to expand temporary PPACA coverage reporting relief

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The Internal Revenue Service (IRS) is trying to ease insurers’, employers’ and plan administrators’ fears that problems with getting enrollees’ Social Security numbers will lead to enormous fines.

The IRS says in a new batch of informal guidance, given in IRS Notice 2015-68, that it will expand a temporary relief program for health coverage providers that leave some individuals’ Social Security numbers out of minimum essential coverage (MEC) reporting forms for 2015.

The Patient Protection and Affordable Care Act of 2010 (PPACA) requires many people to have MEC or else pay a penalty. 

Starting early next year, health insurers will have to send MEC reports to their coverage holders and the IRS for 2015.

See also: IRS officially postpones employer mandate

Employers that provide MEC through self-insured plans will have to send MEC reports for 2015 to enrollees and the IRS.

In theory, PPACA could require insurers and employers that violate the MEC reporting rules, given in Internal Revenue Code (IRC) 6055, to pay fines of up to $250 per inaccurate return, and up to $3 million per year.

See also: IRS struggles to combine PPACA reports

In the real world, the IRS has already said it will waive the penalties for 2015 if coverage providers show they have done what they could, in good faith, to comply with the reporting rules, including meeting requirements that the coverage providers include the Social Security numbers or other taxpayer identification numbers, of the people described in the reporting forms.

Some commenters have told the IRS the process for showing they made a responsible effort to find people’s Social Security numbers is too complicated.

The IRS says it will issue more guidance on what reporting entities have to do to try to get people’s Social Security numbers later.

Meanwhile, the IRS says, it will waive penalties for missing Social Securitynumbers if:

  • An entity asks for the number at an individual’s first enrollment, or, if the individual is already enrolled on Sept. 17, 2015, during the next open enrollment season;

  • A second request for the Social Security number is made “at a reasonable time thereafter”; and,

  • A third request is made by Dec. 31 of the year following the initial request.

A reporting entity does not have to get an individual’s Social Security number if the individual’s coverage was terminated, officials say.

The IRS says it’s also drafting regulations that will seek to define PPACA Basic Health Plan coverage as MEC; let issuers of expatriate health coverage send reports electronically, unless enrollees ask for paper reports; and revise the reporting rules for people who have two or more forms of MEC.

The draft regulations for overlapping MEC could apply to people who have MEC from both an employer-sponsored group health plan and an employer-sponsored health reimbursement arrangement (HRA), or from an employer plan and a public health program, such as Medicaid or Medicare, officials say.

See also: PPACA: IRS Wrestles with Coverage Reporting Rules

The IRS has already issued a rule that’s meant to eliminate duplicate reporting of MEC, but “this rule has proven to be confusing,” IRS officials say.

The IRS intends to replace the current, confusing rule with draft regulations stating that, if one provider provides two or more types of MEC for the same individual, the provider only has to report on one of the MEC arrangements.

The draft regulations will also provide that reporting is generally not required for one type of coverage, such as an HRA that qualifies as MEC, if an individual has to have some other type of MEC, such as major medical coverage, from the same provider to get the first type of MEC, officials say.