IRS Extends Voluntary Reporting Of Catastrophic Coverage
The IRS released Notice 2017-41 last month, informing health insurance issuers of further guidance surrounding the reporting of catastrophic plan coverage acquired through the ACA’s Health Insurance Marketplace. It’s the latest chapter in the effort to complete rules for reporting on catastrophic health insurance plans.,
Catastrophic insurance plans provide minimum essential coverage under the ACA. Qualified plans may be offered only in the individual market. Individuals can only enroll in these through a government-run health exchange. Traditionally, catastrophic coverage plans are provided to those individuals who have endured a hardship, are under the age of 30, or lack access to affordable minimum essential coverage. Per the U.S. Department of Health and Human Services, the deductible for 2017 catastrophic coverage plans on the Health Insurance Marketplace is $7,150. Individuals who enroll onto these plans may not claim the premium tax credit for this coverage on their tax returns.
The IRS in September 2015 issued Notice 2015-68 informing health insurance providers that they would be required to report coverage in catastrophic health insurance plans under future regulations. Rules for reporting catastrophic health coverage plans were proposed in 2016, but remain uncompleted.
This recent memo provides guidance until regulations are issued. It advises that health insurance issuers are not required to report catastrophic plan offerings enrolled in through government-run health exchanges, and will not be subject to penalties for not reporting enrollment information about these plans. According to the IRS guidance, this also extends to the prior two years and next year:
Consistent with guidance for 2015 and 2016, issuers of catastrophic plan coverage may, but are not required to, report on 2017 catastrophic plan coverage enrolled in through an Exchange (on returns and statements filed and furnished in 2018). In addition, issuers may rely on this notice to voluntarily report catastrophic plan coverage enrolled in through an Exchange for coverage years after 2017 to the extent final regulations requiring issuer reporting of catastrophic plan coverage enrolled in through an Exchange are not applicable. The Treasury Department and the IRS encourage issuers to voluntarily report on catastrophic plan coverage enrolled in through an Exchange.
Health insurance issuers may rely on Notice 2017-41 for guidance until final regulations requiring insurers reporting of coverage under a catastrophic plan enrolled in through a government health exchange are available. While the current reporting is voluntary, proactively preparing the process will be helpful when reporting of catastrophic health insurance plans becomes required.
To learn more about ACA compliance in 2021, click here.
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