July 25th, 2014
Although the focus of activity the week of July 21 was in the courts, the agencies were not totally silent. On July 24, 2014 the Internal Revenue Service released final and temporary and proposed regulations addressing issues that are presented by the premium tax credit program. The IRS also released drafts of the forms that individuals, insurers, and employers will use for reporting information to the IRS necessary for reconciliation of premium tax credits and for the enforcement of the individual and employer mandate programs. Finally, the IRS set the maximum individual mandate penalty for individuals whose income is high enough that they pay the penalty as a percentage of income rather than a flat dollar amount. This amount is established by the statute as the average cost of a bronze level plan for the applicable family size for 2014 and was set by the IRS at $2,448 per individual annually, up to $12,240 for families of five or more.
The draft forms operationalize the reporting requirements established by rules published earlier. Insurers and self-insured health plans will provide a Form 1095-B to each of their enrollees and members, and file these forms, together with a transmittal form 1094-B with the IRS. Large employers must provide a form 1095-C to each employee, and transmit these, together with a transmittal form 1095-B to the IRS. Exchanges will provide their enrollees a form 1095-A. Individuals who receive premium tax credits will file a form 8962 with the IRS, while individuals claiming an exemption from the individual mandate will file a form 8965. Though the forms are not accompanied by instructions, they are quite straightforward and track closely the earlier released rules.
The final and temporary rules address several situations that will arise under the premium tax credit program that have not yet been addressed by the premium tax credit rules. The temporary rules are identical to the proposed rules and will cease to apply once the proposed rules are finalized.Read the rest of this entry »