Rule2022-27212
Information Reporting of Health Insurance Coverage and Other Issues Under Sections 5000A, 6055, and 6056
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 15, 2022
Effective
December 15, 2022
Issuing agencies
Treasury DepartmentInternal Revenue Service
Abstract
This document includes final regulations under the Internal Revenue Code that provide an automatic extension of time for providers of minimum essential coverage (including health insurance issuers, self-insured employers, and government agencies) to furnish individual statements regarding such coverage and an alternative method for furnishing individual statements when the individual shared responsibility payment amount is zero. The final regulations also provide an automatic extension of time for "applicable large employers" (generally employers with 50 or more full-time employees, including full-time equivalent employees) to furnish statements relating to health insurance that the applicable large employers offer to their full-time employees. Additionally, the final regulations provide that "minimum essential coverage," as that term is used in health insurance-related tax laws, does not include Medicaid coverage limited to COVID-19 testing and diagnostic services provided under the Families First Coronavirus Response Act. The final regulations affect some taxpayers who claim the premium tax credit; health insurance issuers, self-insured employers, government agencies, and other persons that provide minimum essential coverage to individuals; and applicable large employers.
Full Text
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<title>Federal Register, Volume 87 Issue 240 (Thursday, December 15, 2022)</title>
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[Federal Register Volume 87, Number 240 (Thursday, December 15, 2022)]
[Rules and Regulations]
[Pages 76569-76576]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-27212]
[[Page 76569]]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1 and 301
[TD 9970]
RIN 1545-BQ11
Information Reporting of Health Insurance Coverage and Other
Issues Under Sections 5000A, 6055, and 6056
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
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SUMMARY: This document includes final regulations under the Internal
Revenue Code that provide an automatic extension of time for providers
of minimum essential coverage (including health insurance issuers,
self-insured employers, and government agencies) to furnish individual
statements regarding such coverage and an alternative method for
furnishing individual statements when the individual shared
responsibility payment amount is zero. The final regulations also
provide an automatic extension of time for ``applicable large
employers'' (generally employers with 50 or more full-time employees,
including full-time equivalent employees) to furnish statements
relating to health insurance that the applicable large employers offer
to their full-time employees. Additionally, the final regulations
provide that ``minimum essential coverage,'' as that term is used in
health insurance-related tax laws, does not include Medicaid coverage
limited to COVID-19 testing and diagnostic services provided under the
Families First Coronavirus Response Act. The final regulations affect
some taxpayers who claim the premium tax credit; health insurance
issuers, self-insured employers, government agencies, and other persons
that provide minimum essential coverage to individuals; and applicable
large employers.
DATES:
Effective date: These regulations are effective on December 15,
2022.
Applicability date: The regulations under Sec. 1.5000A-2 apply for
months beginning after September 28, 2020. The regulations under
Sec. Sec. 1.6055-1 and 301.6056-1 apply for calendar years beginning
after December 31, 2021.
FOR FURTHER INFORMATION CONTACT: Gerald Semasek at (202) 317-7006 or
Lisa Mojiri-Azad at (202) 317-4649 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background
This document contains amendments to the Income Tax Regulations (26
CFR part 1) under sections 5000A and 6055 of the Internal Revenue Code
(Code) and to the Procedure and Administration Regulations (26 CFR part
301) under section 6056 of the Code.
On December 6, 2021, a notice of proposed rulemaking (REG-109128-
21) was published in the Federal Register (86 FR 68939) (2021 proposed
regulations). The 2021 proposed regulations proposed amendments to the
regulations under:
<bullet> Section 5000A that would provide that Medicaid coverage
limited to COVID-19 testing and diagnostic services under section
6004(a)(3) of the Families First Coronavirus Response Act, Public Law
116-127, 134 Stat. 178 (Mar. 18, 2020) is not minimum essential
coverage.
<bullet> Section 6055 that would provide an automatic extension of
time for furnishing statements to responsible individuals \1\ and
permit an alternative manner for timely furnishing statements.
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\1\ As provided in Sec. 1.6055-1(b)(11), a responsible
individual includes a primary insured, employee, former employee,
uniformed services sponsor, parent, or other related person named on
an application who enrolls one or more individuals, including him or
herself, in minimum essential coverage.
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<bullet> Section 6056 that would provide an automatic extension of
time for furnishing statements to full-time employees.
The preamble to the 2021 proposed regulations also included a
renewed request for comments on rules (REG-103058-16) that were
proposed in the Federal Register (81 FR 50671) on August 2, 2016 (2016
proposed regulations) relating to information reporting of minimum
essential coverage under section 6055.
Ten comments were received in response to the 2021 proposed
regulations. No public hearing was requested or held. After
consideration of the comments received, this Treasury decision adopts
the 2021 proposed regulations with clarifying modifications as final
regulations, as discussed in the Summary of Comments and Explanation of
Revisions section of this preamble. The Department of the Treasury
(Treasury Department) and the IRS continue to consider the 2016
proposed regulations in light of the public comments received both in
2016 and in response to the request in the 2021 proposed regulations.
The Treasury Department and the IRS expect to finalize the 2016
proposed regulations separately.
Summary of Comments and Explanation of Revisions
I. Minimum Essential Coverage Under Section 5000A
Under the Patient Protection and Affordable Care Act, Public Law
111-148, 124 Stat. 119 (2010), and the Health Care and Education
Reconciliation Act of 2010, Public Law 111-152, 124 Stat. 1029 (2010)
(collectively the Affordable Care Act or ACA), eligible individuals who
purchase coverage under a qualified health plan through a Health
Insurance Exchange (Exchange) established under section 1311 of the ACA
may claim a premium tax credit pursuant to section 36B. Section 36B and
Sec. 1.36B-3 of the Income Tax Regulations provide that a taxpayer is
allowed a premium tax credit only for months that are coverage months
for individuals in the taxpayer's family, as defined in Sec. 1.36B-
1(d). Under section 36B(c)(2)(B) and Sec. 1.36B-3(c)(1)(iii), a
``coverage month'' for an individual includes only those months for
which the individual is not eligible for minimum essential coverage
other than coverage in the individual market.
Section 5000A(f)(1) defines ``minimum essential coverage'' to
include various types of health plans and programs, including specified
government-sponsored programs such as the Medicaid program under Title
XIX of the Social Security Act. Section 1.5000A-2(b)(2) lists certain
government-sponsored programs that do not constitute minimum essential
coverage.
Notice 2020-66, 2020-40 I.R.B. 785, provides that Medicaid coverage
that is limited to COVID-19 testing and diagnostic services under
section 6004(a)(3) of the Families First Coronavirus Response Act is
not minimum essential coverage under a government-sponsored program.
Consequently, an individual's eligibility for such coverage for one or
more months does not prevent those months from qualifying as coverage
months for purposes of determining eligibility for the premium tax
credit under section 36B.
Consistent with the guidance provided in Notice 2020-66, the 2021
proposed regulations would amend Sec. 1.5000A-2 by adding Medicaid
coverage for COVID-19 testing and diagnostic services to the enumerated
health coverages under Sec. 1.5000A-2(b)(2) that do not qualify as
minimum essential coverage under a government-sponsored program. This
amendment to Sec. 1.5000A-2 would apply for months beginning after
September 28, 2020. Under the 2021 proposed regulations,
[[Page 76570]]
for months beginning on or after January 1, 2020, and before September
28, 2020, taxpayers could rely upon Notice 2020-66. No comments were
received on this proposed change. Accordingly, the Treasury Department
and the IRS are finalizing the proposed amendment to Sec. 1.5000A-2
without change.
II. Information Reporting Under Sections 6055 and 6056 and Penalties
Under Sections 6721 and 6722
Section 6055 requires all persons who provide minimum essential
coverage to an individual to report certain information to the IRS that
identifies covered individuals and the period of coverage. See section
6055(a) and (b). Those persons are also required to furnish a statement
to the covered individuals with the same information. See section
6055(c). These information returns and written statements were needed
to administer the individual shared responsibility provisions under
section 5000A until the individual shared responsibility payment amount
was reduced to zero for months beginning after December 31, 2018 by
Public Law 115-97, 131 Stat. 2054, 2092 (2017), commonly referred to as
the Tax Cuts and Jobs Act (TCJA). As a result, covered individuals no
longer needed the information on the written statements (Form 1095-B)
to prepare and file their individual returns. However, the TCJA did not
amend any of the reporting or furnishing requirements under section
6055.
Under section 6055 and Sec. 1.6055-1(f) and (g), every person that
provides minimum essential coverage to an individual during the
calendar year is required to file with the IRS an information return
and a transmittal on or before February 28 (March 31 if filed
electronically) of the year following the calendar year to which it
relates and to furnish to the responsible individual identified on the
return a written statement on or before January 31 of the year
following the calendar year to which the statement relates. The IRS
generally has designated Form 1094-B, Transmittal of Health Coverage
Information Returns, and Form 1095-B, Health Coverage, to meet the
section 6055 requirements.
Section 6056 requires an applicable large employer (ALE), as
defined in section 4980H(c)(2) of the Code, that is subject to the
requirements of section 4980H to file information returns annually and
furnish written statements with respect to the health insurance, if
any, that the employer offers to its full-time employees. The
information returns are used by the IRS to administer the employer
shared responsibility provisions of section 4980H, and by certain full-
time employees to help determine if they are eligible for the premium
tax credit under section 36B.
Under section 6056 and Sec. 301.6056-1(e) and (g), every ALE and
member of an aggregated group that is determined to be an ALE
(collectively, ALE member) is required to file with the IRS an
information return and a transmittal on or before February 28 (March 31
if filed electronically) of the year following the calendar year to
which it relates and to furnish to full-time employees a written
statement on or before January 31 of the year following the calendar
year to which the statement relates. The IRS generally has designated
Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer
and Coverage Information Returns, and Form 1095-C, Employer-Provided
Health Insurance Offer and Coverage, to meet the section 6056
requirements.
In addition, an ALE member that offers coverage through a self-
insured health plan must complete the reporting required under section
6055, specifically, the information regarding each individual enrolled
in the self-insured health plan, using Form 1095-C, Part III, rather
than Form 1095-B.
The current regulations under sections 6055 and 6056 allow the IRS
to grant an extension of time of up to 30 days to furnish statements to
individuals for good cause shown. See Sec. Sec. 1.6055-
1(g)(4)(i)(B)(1) and 301.6056-1(g)(1)(ii)(A). Additionally, under the
current regulations the Commissioner may prescribe guidance or
procedures for automatic extensions of time for furnishing statements
to individuals. See Sec. Sec. 1.6055-1(g)(4)(i)(B)(2) and 301.6056-
1(g)(1)(ii)(B). Through a series of notices, the Treasury Department
and the IRS extended the due date for furnishing statements to
individuals under sections 6055 and 6056 for calendar years 2015
through 2020.\2\
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\2\ Notice 2016-04, 2016-3 I.R.B. 279 (Jan. 19, 2016); Notice
2016-70, 2016-49 I.R.B. 784 (Dec. 5, 2016); Notice 2018-06, 2018-3
I.R.B. 300 (Jan. 16, 2018); Notice 2018-94, 2018-51 I.R.B. 1042
(Dec. 17, 2018); Notice 2019-63, 2019-51 I.R.B. 1390 (Dec. 16,
2019); and Notice 2020-76, 2020-47 I.R.B. 1058 (Nov. 16, 2020).
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Section 6721 imposes a penalty for failing to timely file an
information return or for filing an incorrect or incomplete information
return. Section 6722 imposes a penalty for failing to timely furnish an
information statement or furnishing an incorrect or incomplete
information statement. The section 6721 and 6722 penalties are imposed
regarding information returns and statements listed in section 6724(d),
which include those required by sections 6055 and 6056. Section 6724
provides that no penalty will be imposed under section 6721 or 6722
with respect to any failure if it is shown that the failure is due to
reasonable cause and not to willful neglect.
a. Automatic Extension of Time To Furnish Statements Under Section 6055
To reduce administrative burdens for reporting entities and the
IRS, the 2021 proposed regulations provided that reporting entities
would be granted an automatic extension of time, not to exceed 30 days
after January 31, in which to furnish the written statements required
by Sec. 1.6055-1(g)(1). The 2021 proposed regulations also provided
that if the extended furnishing date falls on a weekend or legal
holiday, statements would be timely if furnished on the next business
day.
Because this extension would be automatic, the 2021 proposed
regulations would eliminate Sec. 1.6055-1(g)(4)(i)(B)(1), which allows
a reporting entity to make a written application to the IRS to request
an extension of time to furnish the statement. The 2021 proposed
regulations also would eliminate Sec. 1.6055-1(g)(4)(i)(B)(2), under
which the Commissioner may prescribe guidance or procedures for
automatic extensions of time for furnishing written statements pursuant
to section 6055.
Commenters expressed strong support for the proposal to amend Sec.
1.6055-1(g)(4) to provide a permanent, automatic extension of time
during which a provider of minimum essential coverage must furnish
written statements to individuals. One commenter acknowledged that the
addition of the permanent, automatic extension of time for reporting
entities to furnish statements obviates the need for the IRS to provide
other extensions of time to furnish statements in most circumstances.
The commenter nonetheless requested that the final regulations retain
the provisions in Sec. 1.6055-1(g)(4)(i)(B)(2) allowing the
Commissioner, in appropriate cases, to prescribe additional guidance or
procedures for automatic extensions of time for furnishing written
statements.
After consideration of the comments received, the Treasury
Department and the IRS are adopting with one clarifying change the
proposal for a permanent, automatic extension of time for furnishing
written statements to individuals pursuant to Sec. 1.6055-1(g). The
2021 proposed regulations provided that reporting entities would be
granted an automatic extension of time not
[[Page 76571]]
exceeding 30 days in which to furnish required statements. To provide a
clear, definite rule, these final regulations expressly provide a 30-
day, automatic extension of time. The permanent, 30-day automatic
extension of time to furnish written statements replaces Sec. 1.6055-
1(g)(4)(i) and provides adequate time for furnishing in most
situations. Additionally, because a reporting entity may qualify for
penalty relief pursuant to section 6724 by showing that a failure was
due to reasonable cause and not to willful neglect, the request that
Sec. 1.6055-1(g)(4)(i)(B)(2) be retained is not adopted.
While expressing support for the proposed rule, one commenter
requested that the IRS communicate the automatic extension clearly and
directly to state governmental bodies that have their own individual
health insurance mandates and reporting requirements. According to the
commenter, some states impose requirements similar to the reporting and
furnishing requirements of section 6055. In these cases, the commenter
suggested that the deadlines should be coordinated or made the same.
The Treasury Department and the IRS intend to revise the
instructions for Form 1094-B and Form 1095-B to communicate the final
rule's permanent, 30-day automatic extension of time for furnishing the
required statements. However, the Treasury Department and the IRS have
no authority over state reporting and furnishing requirements. Whether
state deadlines for filing returns or other documents relating to
health coverage will align with the regulations is a question of state
law. Accordingly, the Treasury Department and the IRS are not revising
the regulations to coordinate with state reporting and furnishing
requirements.
b. Automatic Extension of Time To Furnish Statements Under Section 6056
To reduce administrative burdens for ALE members and the IRS, the
2021 proposed regulations provided that ALE members would be granted an
automatic extension of time, not to exceed 30 days after January 31, in
which to furnish written statements to full-time employees. The 2021
proposed regulations also provided that if the extended furnishing date
falls on a weekend or legal holiday, statements would be timely if
furnished on the next business day.
Because this extension would be automatic, the 2021 proposed
regulations would eliminate Sec. 301.6056-1(g)(1)(ii)(A), which allows
an ALE member to make a written application to the IRS to request an
extension of time to furnish the statement. The 2021 proposed
regulations also would eliminate Sec. 1.6056-1(g)(1)(ii)(B), under
which the Commissioner may prescribe guidance or procedures for
automatic extensions of time for furnishing written statements pursuant
to section 6056.
Commenters expressed strong support for the proposal to amend Sec.
301.6056-1(g)(1) by providing a permanent automatic extension of time
during which an ALE must furnish written statements to full-time
employees. One commenter acknowledged that the addition of a permanent,
automatic extension of time for reporting entities to furnish
statements obviates the need for the IRS to provide other extensions of
time to furnish statements in most circumstances. The commenter
nonetheless requested that the final regulations retain the provisions
in Sec. 301.6056-1(g)(1)(ii)(B) allowing the Commissioner, in
appropriate cases, to prescribe additional guidance or procedures for
automatic extensions of time for furnishing written statements pursuant
to section 6056.
After consideration of the comments received, the Treasury
Department and the IRS are adopting with one clarifying change the
proposal for a permanent, automatic extension of time for furnishing
written statements to individuals pursuant to Sec. 301.6056-1(g)(1).
The 2021 proposed regulations provided that ALEs would be granted an
automatic extension of time not exceeding 30 days in which to furnish
required statements. To provide a clear, definite rule, these final
regulations expressly provide a 30-day, automatic extension of time.
The permanent, 30-day automatic extension of time to furnish written
statements replaces Sec. 301.6056-1(g)(1) and provides adequate time
for furnishing in most situations. Additionally, because a reporting
entity may qualify for penalty relief pursuant to section 6724 by
showing that a failure was due to reasonable cause and not to willful
neglect, the request that Sec. 1.6056-1(g)(1)(ii)(B) be retained is
not adopted.
c. Alternative Manner of Furnishing Statements Under Section 6055
The 2021 proposed regulations provided an alternative manner for a
reporting entity to timely furnish Forms 1095-B to responsible
individuals.\3\ Under proposed Sec. 1.6055-1(g)(4)(ii)(B), the
reporting entity first would be required to post a clear and
conspicuous notice on the entity's website stating that responsible
individuals may receive a copy of their statement upon request. The
notice would have to include an email address, a physical address to
which a request may be sent, and a telephone number responsible
individuals may use to contact a reporting entity with any questions.
Additionally, the 2021 proposed regulations provided that the notice
would satisfy the requirements for the alternative manner of furnishing
if it were written in plain, non-technical terms and with letters of a
font size large enough, including any visual clues or graphical
figures, to call to a viewer's attention that the information pertains
to tax statements reporting that individuals had health coverage. Under
the 2021 proposed regulations, a reporting entity would be required to
retain the notice in the same location on its website until October 15
of the year following the calendar year to which the statement relates.
The reporting entity would have to provide a Form 1095-B to a
responsible individual within 30 days of the date of receipt of the
individual's request. The proposed alternative manner of furnishing
would apply only to taxable years when the individual shared
responsibility payment amount under section 5000A(b) is zero.
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\3\ Notice 2020-76 provided a similar alternative manner of
furnishing statements for coverage year 2020.
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Commenters generally supported the proposed amendments to Sec.
1.6055-1(g) allowing reporting entities to satisfy the furnishing
requirements for Form 1095-B by using the alternative manner of
furnishing. One commenter requested that the regulations under section
6056 also be amended to extend the alternative manner of furnishing
rule to ALEs. The commenter asserted that the information included on
Form 1095-C has limited utility because it only helps full-time
employees determine if they are eligible for the premium tax credit.
The commenter noted the potential environmental benefits, specifically
the reduced use of paper and resources, that would result by allowing
for the furnishing of forms only upon request.
As noted in Notice 2020-76, the preamble to the 2021 proposed
regulations, and earlier in this Summary of Comments and Explanation of
Revisions, individuals no longer need Form 1095-B because the TCJA
reduced the amount of the individual shared responsibility payment to
zero. This change in Federal law caused the Treasury Department and the
IRS to consider whether it was possible to amend the section 6055
regulations to reduce burdens on providers of minimum essential
coverage, while providing for continued compliance
[[Page 76572]]
with the unchanged statutory requirements of section 6055. Thus, the
Treasury Department and the IRS proposed the alternative manner of
furnishing Form 1095-B in recognition that the TCJA mooted the primary
purpose for which individuals would need Form 1095-B.
However, as noted earlier, Form 1095-C serves a different purpose
than Form 1095-B. Form 1095-C is used to administer the employer shared
responsibility provisions of section 4980H and by certain full-time
employees to help determine eligibility for the premium tax credit
under section 36B. Neither the TCJA nor any other change in Federal law
affects the employer shared responsibility provisions of section 4980H
or the need for certain full-time employees to have information about
their coverage offer to help determine eligibility for the premium tax
credit under section 36B. Because the primary purpose for furnishing
Form 1095-C is distinct from the primary purpose for furnishing Form
1095-B and was not affected by the changes made by the TCJA, the
Treasury Department and the IRS conclude that it is not appropriate to
amend the regulations under section 6056 to extend the alternative
manner of furnishing rule to ALEs with regard to their full-time
employees. However, the 2021 proposed regulations permitted, and these
final regulations permit, ALEs to use the alternative manner of
furnishing for non-employees and non-full-time employees for whom
furnishing is required under Sec. 1.6055-1.
The commenter that requested the alternative manner of furnishing
for Form 1095-C also expressed concern about the environmental impact
of providing Forms 1095-C on paper, but that concern does not take into
account the potential mitigation of providing the information
electronically.
One commenter requested that the Treasury Department and the IRS
eliminate the section 6055 reporting requirement for years when the
individual shared responsibility payment amount is zero. According to
the commenter, under the proposed alternative manner of furnishing
statements, health insurance issuers and plan sponsors must continue to
maintain record-keeping systems to complete Forms 1095-B that must be
provided upon request. The continued requirement to maintain records,
according to the commenter, imposes burdens and costs. Thus, the
commenter requested that the regulations be revised to eliminate the
requirement to furnish Form 1095-B even upon request.
As noted, the TCJA reduced the individual shared responsibility
payment amount to zero for months beginning after December 31, 2018;
however, the TCJA did not amend any of the reporting or furnishing
requirements under section 6055. Because Congress did not repeal or
otherwise modify the reporting and furnishing requirements in section
6055, the Treasury Department and the IRS have determined that there is
insufficient statutory authority to eliminate the Form 1095-B
requirement. Accordingly, the commenter's suggestion is not adopted.
The final regulations include clarifying, non-substantive changes
to the language in proposed Sec. 1.6055-1(g)(4)(ii)(B) describing the
alternative manner of furnishing. The final regulations also modify
proposed Sec. 1.6055-1(g)(4)(ii)(B)(2) to provide that a reporting
entity using the alternative manner of furnishing must post a notice on
its website by the date specified in Sec. 1.6055-1(g)(4)(i) of these
final regulations.
After consideration of the comments received, the Treasury
Department and the IRS are adopting the proposed alternative manner of
furnishing written statements to individuals under section 6055 with
these clarifying changes.
III. Elimination of Transitional Good Faith Relief
The preamble to the 2021 proposed regulations described the genesis
of the transitional good faith relief from penalties under sections
6721 and 6722, which the Treasury Department and the IRS provided to
reporting entities in the preambles to the regulations under sections
6055 and 6056 \4\ for calendar year 2015 and in IRS notices for
calendar years 2016-2020.\5\ Under the transitional good faith relief,
the IRS did not impose penalties under sections 6721 and 6722 on
reporting entities if the entities could show that they made good faith
efforts to comply with the information reporting requirements. In
Notice 2020-76, the Treasury Department and the IRS stated that 2020
was the last year that transitional good faith relief would be
provided. Consistent with Notice 2020-76, the Treasury Department and
the IRS reiterated in the preamble to the 2021 proposed regulations
that the transitional good faith relief would be discontinued after
2020.
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\4\ See T.D. 9660, 79 FR 13220 (Mar. 10, 2014); T.D. 9661, 79 FR
13231 (Mar. 10, 2014).
\5\ See Notice 2016-70; Notice 2018-06; Notice 2018-94; Notice
2019-63; and Notice 2020-76.
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Two commenters requested that the Treasury Department and the IRS
reconsider terminating the transitional good faith relief, with one of
the commenters suggesting that the relief be retained at least for
calendar years 2022, 2023, and 2024. Specifically, one commenter
advocated for continuation of the relief because health coverage
information reporting, especially for ALEs, is complicated, and many
employers continue to make unintentional mistakes. The commenter
asserted that the reasonable cause standard would be insufficient to
relieve employers from significant penalties. The commenter requested,
at a minimum, good faith penalty relief for small employers (as defined
under applicable state law) that are ALEs.
The other commenter asked that the transitional good faith relief
be retained because, although the individual shared responsibility
payment amount is zero, several states have imposed individual mandates
regarding health insurance that require reporting; instructions for IRS
forms respecting reporting are modified annually; and plans have faced
compliance problems caused by the COVID-19 pandemic.
As discussed in the preamble to the 2021 proposed regulations, the
good faith relief offered beginning in calendar year 2015 was intended
to be transitional to accommodate public concerns with implementing the
new reporting requirements under the ACA. These reporting requirements
have now been in place for seven years, and transitional relief is no
longer appropriate. Also, the Treasury Department and the IRS are of
the view that additional good faith relief is not necessary to address
the commenters' concerns. The reasonable cause exception under section
6724 already provides adequate relief from penalties under sections
6721 and 6722 for filers who have reasonable cause for failing to
timely or accurately complete their reporting requirements.
Applicability Date
The regulations under Sec. 1.5000A-2 apply for months beginning
after September 28, 2020. For months beginning on or after January 1,
2020, and before September 28, 2020, taxpayers may continue to rely on
Notice 2020-66.
The regulations under Sec. Sec. 1.6055-1 and 301.6056-1 apply for
calendar years beginning after December 31, 2021. As discussed in the
Proposed Applicability Date section of the 2021 proposed regulations,
taxpayers may rely on Sec. Sec. 1.6055-1 and 301.6056-1 of the 2021
proposed regulations for calendar years
[[Page 76573]]
beginning after December 31, 2020, and before December 15, 2022.
Statement of Availability of IRS Documents
IRS revenue procedures, revenue rulings, notices, and other
guidance cited in this preamble are published in the Internal Revenue
Bulletin and are available from the Superintendent of Documents, U.S.
Government Publishing Office, Washington, DC 20402, or by visiting the
IRS website at <a href="https://www.irs.gov">https://www.irs.gov</a>.
Special Analyses
I. Regulatory Planning and Review--Economic Analysis
These final regulations are not subject to review under section
6(b) of Executive Order 12866 pursuant to the Memorandum of Agreement
(April 11, 2018) between the Treasury Department and the Office of
Management and Budget (OMB) regarding review of tax regulations. It has
been determined that a final regulatory flexibility analysis under 5
U.S.C. 604 is required for this final rule. The analysis is set forth
under the heading ``Final Regulatory Flexibility Analysis.''
II. Paperwork Reduction Act
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a valid
control number assigned by OMB.
There is no collection of information contained in these final
regulations. The collections of information contained in Sec. Sec.
1.6055-1 and 301.6056-1 were previously reviewed and approved by OMB in
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d))
and are associated with control numbers 1545-2251 (associated with Form
1095-C) and 1545-2252 (associated with Form 1095-B).
The Paperwork Reduction Act (44 U.S.C. 3501-3520) relates to
information collection requests by any Government agency. A collection
of information generally means the obtaining, causing to be obtained,
soliciting, or requiring the disclosure to third parties or the public,
of facts or opinions by or for an agency, regardless of form or format,
calling for either (1) answers to identical questions posted to, or
identical reporting or recordkeeping requirements imposed on ten or
more persons, other than agencies, instrumentalities, or employees of
the United States, or (2) answers to questions posed to agencies,
instrumentalities, or employees of the United States which are to be
used for general statistical purposes. 44 U.S.C. 3502(3). A collection
of information is commonly referred to as a reporting, recordkeeping,
or disclosure requirement.
These final regulations do not require a reporting entity to
provide any information to the Federal Government, to maintain specific
records, or to disclose any additional information that the reporting
entity did not already have a requirement to disclose.
III. Final Regulatory Flexibility Analysis
When an agency either issues a final rule that follows a required
notice of proposed rulemaking or issues a final interpretative rule
involving the internal revenue laws that imposes a collection of
information requirement on small entities as described in 5 U.S.C.
603(a), the Regulatory Flexibility Act (5 U.S.C. chapter 6) (Act)
requires the agency to ``prepare a final regulatory flexibility
analysis.'' A final regulatory flexibility analysis must, pursuant to 5
U.S.C. 604(a), include the five elements listed in this final
regulatory flexibility analysis. For purposes of this final regulatory
flexibility analysis, a small entity is defined as a small business,
small nonprofit organization, or small governmental jurisdiction. See 5
U.S.C. 601(3)-(6). Small business size standards define whether a
business is ``small'' and have been established for types of economic
activities, or industry, generally under the North American Industry
Classification System (NAICS). See title 13, part 121 of the Code of
Federal Regulations (Small Business Size Regulations). The size
standards look at various factors, including annual receipts, number of
employees, and amount of assets, to determine whether the business is
small. See title 13, Sec. 121.201 of the Code of Federal Regulations
for the Small Business Size Standards by NAICS Industry.
The Treasury Department and the IRS conclude that, although the
overall impact of these final regulations will reduce the burden on
small entities, these final regulations will impact a substantial
number of small entities and the economic impact on those small
entities may be significant. As a result, although the impact of these
final regulations is positive for small entities, a final regulatory
flexibility analysis is required.
A Statement of the Need for, and the Objectives of, the Final Rule
The final regulations under Sec. 1.5000A-2 make permanent the
guidance in Notice 2020-66 regarding whether certain Medicaid coverage
of COVID-19 testing and diagnostic services is minimum essential
coverage. These final regulations will ensure that taxpayers have
accurate guidance when determining whether they have minimum essential
coverage, which in turn will assist taxpayers in determining whether
they qualify for the premium tax credit.
The principal objective of the final regulations under section
5000A is to provide certainty that Medicaid coverage limited to certain
COVID-19 testing and diagnostic services is not minimum essential
coverage. Minimum essential coverage is defined in section 5000A(f)(1)
and generally includes coverage under the Medicaid program under title
XIX of the Social Security Act. However, Sec. 1.5000A-2(b)(2) lists
certain types of services that are excluded from the definition of
minimum essential coverage and these final regulations will add
Medicaid coverage of certain COVID-19 testing and diagnostic services
to that list. Thus, eligibility for this coverage will not preclude an
individual from qualifying for the premium tax credit.
The final regulations under Sec. Sec. 1.6055-1 and 301.6056-1 make
permanent the extension of time to furnish Forms 1095-B and 1095-C to
responsible individuals and employees that has been provided every
calendar year since 2015. These final regulations will reduce the
burden on reporting entities by extending the time to satisfy their
furnishing obligations for certain health care coverage without the
penalty under section 6722 being imposed. This extension should result
in an increase in the timeliness and accuracy of the reporting.
The final regulations under Sec. 1.6055-1 also allow reporting
entities to furnish the statement required by section 6055 by providing
notice on their website and by providing the statement to the
responsible individual upon request. These final regulations will
reduce the burden on reporting entities by providing a less costly
option to satisfy the furnishing obligation under section 6055 for tax
years when individuals do not need to report health coverage
information on their Federal income tax returns.
The principal objectives of the final regulations under section
6055 are to (1) provide reporting entities under section 6055 and
section 6056 with additional time to complete and furnish accurate
statements to responsible individuals and full-time employees; and (2)
to offer reporting entities a minimally burdensome option by which to
furnish the statement required by section 6055. The legal basis for the
extended due date for statements required under
[[Page 76574]]
section 6055 and section 6056 was originally set forth in the series of
notices referenced in the Summary of Comments and Explanation of
Revisions section of this preamble. In those notices, the Treasury
Department and the IRS extended the dates for furnishing statements to
responsible individuals and full-time employees and provided that
reporting entities that satisfy the furnishing requirement by the
extended due date will not be subject to penalties under sections 6721
and 6722. Section 6724(a) provides that no penalty is imposed under
section 6721 or 6722 if it is shown that the failure is due to
reasonable cause and not to willful neglect. The legal basis for the
alternative manner of furnishing statements under section 6055 is in
section 6055(b)(1)(A), which authorizes the Secretary to prescribe the
form of the return that is required to be furnished under section
6055(c).
Summaries of the Significant Issues Raised in the Public Comments
Responding to the Initial Regulatory Flexibility Analysis (IRFA) and of
the Agency's Assessment of the Issues, and a Statement of Any Changes
Made to the Rule as a Result of the Comments
No comments were received in response to the IRFA in the proposed
regulations.
The Response of the Agency to Any Comments Filed by the Chief Counsel
for Advocacy of the SBA in Response to the Proposed Rule
Pursuant to section 7805(f) of the Code, the proposed regulations
were submitted to the Chief Counsel of the Office of Advocacy of the
Small Business Administration for comment on its impact on small
business, and no comments were received.
A Description and an Estimate of the Number of Small Entities to Which
the Rule Will Apply or an Explanation of Why an Estimate Is Not
Available
These final regulations apply to health insurance issuers, self-
insured employers, government agencies, and other providers of minimum
essential coverage required to furnish individual statements regarding
such coverage under section 6055, and to ALE members that are required
by section 6056 to furnish information relating to health insurance
that the ALE offers to its full-time employees. An estimate of the
number of small entities subject to these final regulations is not
feasible because a correlation between small entities and this type of
reporting cannot be made. These final regulations affect entities in
all industries using any NAICS code.
A Description of the Projected Reporting, and Other Compliance
Requirements of the Rule, Including an Estimate of the Classes of Small
Entities Subject to the Requirements and the Type of Professional
Skills Necessary for Preparation of the Report or Record
As discussed in the Paperwork Reduction Act section earlier in this
preamble, these final regulations do not impose any reporting,
recordkeeping, or similar requirements on any small entities that did
not already apply to small entities.
A Description of the Steps the Agency Has Taken To Minimize the
Significant Economic Impact on Small Entities Consistent With the
Stated Objectives of Applicable Statutes, Including a Statement of the
Factual, Policy, and Legal Reasons for Selecting Any Alternative
Adopted in the Final Rule and Why Other Significant Alternatives
Affecting the Impact on Small Entities That the Agency Considered Were
Rejected
The Treasury Department and the IRS are not aware of any steps that
could be taken to minimize the economic impact on small entities that
would also be consistent with the objectives of these final regulations
and have determined that, without a legislative change, there are no
viable alternatives to the provisions in the final regulations that
would enable reporting entities to continue to satisfy their reporting
obligations with a lesser burden. These final regulations do not impose
any more requirements on small entities than are necessary to
effectively administer the internal revenue laws. Further, these final
regulations do not subject small entities to any requirements that are
not also applicable to larger entities covered by the regulations.
Accordingly, the Treasury Department and the IRS conclude that the
provisions of these final regulations will effectively promote sound
tax administration. The additional exclusion from the definition of
minimum essential coverage in Sec. 1.5000A-2 will provide guidance to
ensure that taxpayers can adequately determine whether they have
minimum essential coverage that would preclude them from qualifying for
a premium tax credit. An automatic extension of time to furnish
statements under Sec. Sec. 1.6055-1(g)(4)(i) and 301.6056-1(g)(1) will
assist reporting entities to timely and accurately satisfy their
statutory reporting obligations, while also reducing the cost and
burden of having to request an extension. Last, the alternative manner
of furnishing a statement in Sec. 1.6055-1(g)(4)(ii)(B), at a time
when the individual shared responsibility payment amount is zero, will
also help reporting entities reduce costs. Accordingly, implementation
of these final regulations will increase tax compliance by providing
definitive guidance to individuals, will allow reporting entities the
time needed to furnish timely and accurate statements under sections
6055 and 6056, and will allow reporting entities an alternative method
of furnishing statements under section 6055 to minimize their
production and distribution costs.
IV. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated costs and benefits and take
certain other actions before issuing a final rule that includes any
Federal mandate that may result in expenditures in any one year by a
state, local, or tribal government, in the aggregate, or by the private
sector, of $100 million (updated annually for inflation). This final
rule does not include any Federal mandate that may result in
expenditures by state, local, or tribal governments, or by the private
sector in excess of that threshold.
V. Executive Order 13132: Federalism
Executive Order 13132 (Federalism) prohibits an agency from
publishing any rule that has federalism implications if the rule either
imposes substantial, direct compliance costs on state and local
governments, and is not required by statute, or preempts state law,
unless the agency meets the consultation and funding requirements of
section 6 of the Executive order. This final rule does not have
federalism implications and does not impose substantial direct
compliance costs on state and local governments or preempt state law
within the meaning of the Executive order.
Drafting Information
The principal author of these final regulations is Gerald Semasek
of the Office of Associate Chief Counsel (Income Tax and Accounting).
Other personnel from the Treasury Department and the IRS participated
in the development of these regulations.
List of Subjects
26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
[[Page 76575]]
26 CFR Part 301
Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income
taxes, Penalties, Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
Accordingly, the Treasury Department and the IRS amend 26 CFR parts
1 and 301 as follows:
PART 1--INCOME TAXES
0
Paragraph 1. The authority citation for part 1 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 2. Section 1.5000A-2 is amended by revising paragraph (b)(2)(vii)
and (viii); and adding paragraph (b)(2)(ix) to read as follows:
Sec. 1.5000A-2 Minimum essential coverage.
* * * * *
(b) * * *
(2) * * *
(vii) Coverage under 10 U.S.C. 1079(a), 1086(c)(1), or 1086(d)(1)
that is solely limited to space available care in a facility of the
uniformed services for individuals excluded from TRICARE coverage for
care from private sector providers;
(viii) Coverage under 10 U.S.C. 1074a and 1074b for an injury,
illness, or disease incurred or aggravated in the line of duty for
individuals who are not on active duty; and
(ix) Medicaid coverage limited to COVID-19 testing and diagnostic
services provided under section 6004(a)(3) of the Families First
Coronavirus Response Act, Pub. L. 116-127, 134 Stat. 178 (March 18,
2020).
* * * * *
0
Par. 3. Section 1.5000A-5 is amended by revising paragraph (c) to read
as follows:
Sec. 1.5000A-5 Administration and procedure.
* * * * *
(c) Applicability date. Except as otherwise provided in this
paragraph (c), this section and Sec. Sec. 1.5000A-1 through 1.5000A-4
apply for months beginning after December 31, 2013. Section 1.5000A-
2(b)(2)(ix) applies for months beginning after September 28, 2020.
0
Par. 4. Section 1.6055-1 is amended by revising the first sentence of
paragraph (g)(1) introductory text and paragraphs (g)(4) and (j) to
read as follows:
Sec. 1.6055-1 Information reporting for minimum essential coverage.
* * * * *
(g) * * *
(1) * * * Except as otherwise provided in paragraph (g)(4)(ii)(B)
of this section, every person required to file a return under this
section must furnish to the responsible individual identified on the
return a written statement. * * *
* * * * *
(4) Time and manner for furnishing statements--(i) Time for
furnishing. Except as otherwise provided in this paragraph (g)(4)(i), a
reporting entity must furnish the statements required under paragraph
(g)(1) of this section on or before January 31 of the year following
the calendar year in which the minimum essential coverage is provided.
Reporting entities are granted an automatic, 30-day extension of time
in which to furnish these statements.
(ii) Manner of furnishing--(A) In general. Except as otherwise
provided in paragraph (g)(4)(ii)(B) of this section, if mailed, the
statement must be sent to the responsible individual's last known
permanent address or, if no permanent address is known, to the
individual's temporary address. For purposes of this paragraph
(g)(4)(ii)(A), a reporting entity's first class mailing to the last
known permanent address, or if no permanent address is known, the
temporary address, discharges the requirement to furnish the statement.
A reporting entity may furnish the statement electronically if the
requirements of Sec. 1.6055-2 are satisfied.
(B) Alternative manner of furnishing. A reporting entity shall be
treated as furnishing the statement in a timely manner under this
paragraph (g)(4) if the individual shared responsibility payment amount
under section 5000A(c) for the calendar year in which the minimum
essential coverage is provided is zero and the reporting entity
satisfies the requirements in this paragraph (g)(4)(ii)(B). If the
reporting entity is an applicable large employer member that sponsors a
self-insured group health plan and makes a return in accordance with
paragraph (f)(2)(i) of this section related to that plan, the
applicable large employer member may use the alternative manner of
furnishing described in this paragraph (g)(4)(ii)(B) for statements to
non-full-time employees and non-employees who are enrolled in the
applicable large employer's self-insured group health plan. The
reporting entity satisfies the requirements of this paragraph
(g)(4)(ii)(B) only if the reporting entity:
(1) Provides clear and conspicuous notice, in a location on its
website that is reasonably accessible to all responsible individuals,
stating that responsible individuals may receive a copy of their
statement upon request. The notice must include an email address, a
physical address to which a request for a statement may be sent, and a
telephone number that responsible individuals may use to contact the
reporting entity with any questions. A notice posted on a reporting
entity's website satisfies the requirements of this paragraph
(g)(4)(ii)(B)(1) if it is written in plain, non-technical terms and
with letters of a font size large enough, including any visual clues or
graphical figures, to call to a viewer's attention that the information
pertains to tax statements reporting that individuals had health
coverage. For example, a reporting entity's website provides a clear
and conspicuous notice if it includes a statement on the main page--or
a link on the main page, reading ``Tax Information'', to a secondary
page that includes a statement--in capital letters, ``IMPORTANT HEALTH
COVERAGE TAX DOCUMENTS''; explains how responsible individuals may
request a copy of Form 1095-B, Health Coverage (or, for an applicable
large employer member that sponsors a self-insured group health plan
and makes a return in accordance with paragraph (f)(2)(i) of this
section, explains how non-full-time employees and non-employees who are
enrolled in the plan may request a copy of Form 1095-C, Employer-
Provided Health Insurance Offer and Coverage); and includes the
reporting entity's email address, mailing address, and telephone
number;
(2) Posts the notice on its website by the date specified in
paragraph (g)(4)(i) of this section and retains the notice in the same
location on its website through October 15 of the year following the
calendar year to which the statements relate (or the first business day
after October 15, if October 15 falls on a Saturday, Sunday or legal
holiday); and
(3) Furnishes the statement to a requesting responsible individual
within 30 days of the date the request is received. To satisfy the
requirement of this paragraph (g)(4)(ii)(B)(3), a reporting entity may
furnish the statement electronically pursuant to Sec. 1.6055-2(a)(2)
through (6).
* * * * *
(j) Applicability date. Except as otherwise provided in this
paragraph (j), this section applies for calendar years beginning after
December 31, 2014. Paragraphs (g)(1) and (g)(4)(i) and (ii) of this
section apply for calendar years beginning after December 31, 2021, but
reporting entities may choose to apply
[[Page 76576]]
paragraphs (g)(1) and (g)(4)(i) and (ii) of this section for calendar
years beginning after December 31, 2020. Except as otherwise provided
in this paragraph (j), paragraph (g)(4), as contained in 26 CFR part 1
edition revised as of April 1, 2021, applies to calendar years ending
after December 31, 2014, and beginning before January 1, 2022.
PART 301--PROCEDURE AND ADMINISTRATION
0
Par. 5. The authority citation for part 301 continues to read in part
as follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 6. Section 301.6056-1 is amended by adding introductory text to
paragraph (g)(1) and revising paragraph (m) to read as follows:
Sec. 301.6056-1 Rules relating to reporting by applicable large
employers on health insurance coverage offered under employer-sponsored
plans.
* * * * *
(g) * * *
(1) Time for furnishing. Except as otherwise provided in this
paragraph (g)(1), each statement required by this section for a
calendar year must be furnished to a full-time employee on or before
January 31 of the year succeeding the calendar year in accordance with
applicable Internal Revenue Service procedures and instructions.
Applicable large employers are granted an automatic, 30-day extension
of time in which to furnish these statements.
* * * * *
(m) Applicability date. Except as otherwise provided in this
paragraph (m), this section applies for calendar years beginning after
December 31, 2014. Paragraph (g)(1) of this section applies for
calendar years beginning after December 31, 2021, but applicable large
employers may choose to apply paragraph (g)(1) of this section for
calendar years beginning after December 31, 2020. Except as otherwise
provided in this paragraph (m), paragraph (g)(1), as contained in 26
CFR part 1 edition revised as of April 1, 2021, applies to calendar
years ending after December 31, 2014, and beginning before January 1,
2022.
Melanie R. Krause,
Acting Deputy Commissioner for Services and Enforcement.
Approved: December 6, 2022.
Lily Batchelder,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2022-27212 Filed 12-12-22; 4:15 pm]
BILLING CODE 4830-01-P
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</html>Indexed from Federal Register on December 15, 2022.
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