Over the past several months, Patient Protection and Affordable Care Act ("ACA") guidance has been released on a frequent basis. On March 5, 2014, the Department of Health and Human Services ("HHS") released a new bulletin extending its transitional policy allowing the renewal of ACA non-compliant, individual and small group health insurance policies for another two years. On the same day, the Treasury Department and the Internal Revenue Service ("IRS") issued final regulations streamlining reporting requirements for employers. Reporting requirements under both Internal Revenue Code Sections 6055 ("Section 6055") and 6056 ("Section 6056") were combined into a single form.
Use of Non-Compliant Policies Extended
As background, on November 14, 2013, the Centers for Medicare and Medicaid Services (CMS) issued a letter to State Insurance Commissioners notifying them that they may permit insurers to renew non-grandfathered health insurance policies in the individual and small group market even if the policies did not comply with the ACA for policy years beginning October 1, 2014. The newly released bulletin extends this relief for two additional years, until the 2017 plan year. Specifically, renewed 2013 plans do not need to comply with several major ACA requirements such as:
- guaranteed issue and guaranteed renewability requirements;
- limitations on health status underwriting and preexisting condition exclusions (adults only);
- single risk-pool requirement;
- prohibition against discrimination;
- essential health benefit and clinical trial coverage requirements; and
- limitations on cost-sharing.
The bulletin only addresses individual and small group market plans. The transitional policy also contemplates an additional one year extension if appropriate. One important note is that, although the policy allows for the renewal of noncompliant policies, it is up to the State Insurance Commissioners to allow such renewals. At the time of this publication, it is unclear which states will follow HHS's transitional policy.
Section 6055 and 6056 Reporting Combined
Section 6055 requires insurers, sponsors of insured plans, and governmental entities to report information to the IRS detailing each individual to whom they provided minimum essential coverage. Section 6056 requires large employers subject to the "shared responsibility" provisions of the ACA to report to the IRS health care coverage provided to full-time employees. The final reporting regulations just issued by the IRS provide that employers may use a single, consolidated form to help avoid duplicative reporting requirements under Section 6055 and Section 6056.
Since the information required to be reported is largely the same under Section 6055 and 6056, the final regulations provide a simplified reporting alternative. Employers with self-insured plans may report both Section 6055 and Section 6056 information to the IRS and to employees on the same form. Employers with insured plans may also use the same combined form but only need to complete the information relating to Section 6056; the insurer would independently report Section 6055 information. The IRS is preparing draft forms and intends to release them in the near future for comment. The combining of the Section 6055 and Section 6056 reporting requirements should reduce the administrative burden the ACA places on employers.