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Regulation and Compliance > Federal Regulation > IRS

IRS fills ACA health coverage information holes

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The Internal Revenue Service is getting ready to flesh out the rules that govern who tells it what kind of health coverage people have.

The IRS expects to publish new draft health coverage reporting regulations in the Federal Register Tuesday.

Related: IRS offers employers PPACA penalty estimator

The new draft regulations call for the health insurers that sell catastrophic medical insurance to report any catastrophic coverage they have provided to the enrollees and the IRS on Form 1095-B. The rule would first apply to the coverage in effect in 2017. Issuers would send out the first catastrophic plan 1095-B forms in early 2018.

Normally, under Affordable Care Act rules, federal regulators let an insurer sell individual major medical coverage only if the coverage pays for at least about 60 percent of the value of a standard “essential health benefits” package. Catastrophic plans are higher-deductible, lower-value plans that insurers can sell to people under 30, and to people of any age who earn too much to qualify for ACA exchange plan premium subsidies.

Under current rules, insurers and ACA public exchange program managers have not been sure whether the issuers should report the existence of catastrophic coverage or the public exchanges should handle the job. 

The new draft regulations also call for the government agencies that offer Basic Health Plans, which are like managed Medicaid programs for people who earn too much to qualify for Medicaid, to report Basic Health Plan coverage to the IRS. The IRS does not say what form program managers should use to report that coverage. 

A third section in the draft regulations talks about what an employer or other entity should do if it provides two different types of health coverage for one person, such as self-insured major medical insurance coverage and a health reimbursement arrangement that could also be classified as a form of comprehensive health coverage, or what the federal government classifies as “minimum essential coverage.” While the employer is providing two or more types of coverage that come under the minimum essential coverage rules, it would just have to report the richest form of coverage.

Comments will be due 60 days after the official publication date.

The IRS lists John Lovelace as the contact person for the coverage reporting provisions.

The draft regulations help the IRS oversee a system that’s supposed to push healthy people to pay for solid health coverage, or minimum essential coverage, even when those people feel fine.

The ACA drafters put the coverage reporting requirements supporting that system in Section 6055 of the Internal Revenue Code.

The ACA drafters banned most of the defenses health insurers once used to protect themselves against big medical bills. To compensate for that, the ACA drafters created health insurance premium subsidies, the ACA public health insurance system, and other mechanisms to push young, healthy people to pay for minimum essential coverage.

The ACA drafters also tried to punish people who wait until they get sick to pay for coverage, by imposing an “individual shared responsibility penalty” on many people who fail to have minimum essential coverage, or fail to have minimum essential for long enough during a year.

Taxpayers and the IRS are supposed to use new 1095-A, 1095-B and 1095-C coverage reporting forms to determine which people are irresponsible enough, by ACA standards, to owe penalty payments.


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