IRS Guidance on Information Reporting of Health Insurance Coverage

On November 22, 2021, the Department of the Treasury released a Notice of Proposed Rulemaking (NPR) entitled, “Information Reporting of Health Insurance Coverage and Other Issues Under Internal Revenue Code Sections (IRC Secs.) 5000A, 6055, and 6056,” that extend the applicable deadlines to furnish statements, clarify that certain Medicaid coverage is not minimum essential coverage, and provide a deadline to submit comments relating to 2016 proposed rules affecting reporting. Comments related to the NPR are due 60 days following the publication of the NPR in the federal register. The NPR provides as follows.

Automatic Extensions

The NPR automatically extends the applicable deadlines pursuant to Sections 6055 and 6056 by 30 days. The automatic extension replaces the 30-day extension for good cause and the authorization by the Commissioner to provide an automatic extension. If an extended date falls on a weekend or a legal holiday, the statement is considered timely if provided on the following business day.

Alternative Notice

For any year that the penalty applicable to individuals is $0, the employer is permitted to furnish an alternative notice to comply with IRC Sec. 6055. The alternative notice is available for part-time employees and non-employees enrolled in self-insured health coverage. The employer may post a clear and conspicuous notice on the employer’s website that is easily accessible by individuals searching for tax information. The notice must include the employer’s contact information for the individual to request the alternative notice upon request and must be retained on the website until October 15 of the following calendar year. The NPR also provides, as an example, that the alternative notice may contain the heading “Important health Coverage Tax Documents” to reflect the importance of the alternative notice. If the applicable penalty is increased in future years, the Department of Treasury and the IRS will provide updated guidance.

Medicaid Coverage

Pursuant to Notice 2020-66, Medicaid coverage that was limited to COVID-19 testing and diagnostic services is not considered minimum essential coverage. As a result, individuals that retain this type of coverage are not prevented from qualifying for the premium tax credit.

Transitional Good Faith Relief

For calendar years 2015–2019, the Department of Treasury and the IRS have extended good faith relief to employers that make an effort to comply with IRC Secs. 6055 and 6056. In 2020, the relief was extended to calendar year 2020 pursuant to Notice 2020-76. However, the Department of Treasury and the IRS clarified that good faith relief will not be renewed beginning calendar year 2021. Consistent with Notice 2020-76, the Department of Treasury and the IRS do not extend the good faith relief beginning calendar year 2021.

Proposed Regulation

In 2016, the Department of Treasury and the IRS introduced proposed rules that addressed catastrophic health coverage, truncated tax identification numbers, and duplicative or supplemental coverage. In response to the proposed regulation, the IRS received approximately 10 comment letters. The Department of Treasury and the IRS will reopen the comment period to permit stakeholders to comment on the proposed rules. The comments are due 60 days after publication of the document in the Federal Register. Following the comment period, the Department of Treasury and the IRS intend to finalize the 2016 proposed regulation.