IRS issues interim guidance for expatriate health plans regarding the ACA: An Article Authored by Paul Oliveira, CPA from KLR - Accounting Firm Boston, Massachusetts, Providence, Rhode Island

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IRS issues interim guidance for expatriate health plans regarding the ACA

posted Nov 6, 2015 by Paul Oliveira, CPA

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The IRS recently issued interim guidance in Notice 2015-43 related to how the Affordable Care Act (ACA) applies to expatriate health plans. Previous guidance exempted certain expatriate health plans from some ACA provisions. Then, a law enacted in December 2014 codified the exemption of qualifying expatriate plans issued or renewed on or after July 1, 2015, from most ACA requirements — provided they met specified standards.

Now that the July 1 effective date has passed without interpretive guidance, the recent IRS notice generally allows application of a “reasonable good faith interpretation” of the standards until further guidance is issued. The U.S. Department of the Treasury, U.S. Department of Labor and U.S. Department of Health and Human Services indicated that they agree with the guidance and plan to jointly issue proposed regulations on the requirements for expatriate plans.

Forms 1094 and 1095

Notice 2015-43 also confirms that coverage under an expatriate health plan does count as minimum essential coverage. Providers of minimum essential coverage (for example, insurers and self-insured employers) and applicable large employers must file IRS Forms 1094 and 1095 regardless of whether the coverage is provided through an expatriate health plan. These filings, which are first due in early 2016, report health coverage for employees.

The clarification recognizes that insurers and plan sponsors may need additional time to modify their expatriate health plan arrangements and thus provides relief by allowing application of a reasonable good-faith interpretation of the standards. Compliance with previous IRS FAQ guidance generally is considered good-faith interpretation.

Look for Future Guidance

Be aware that Notice 2015-43’s good-faith rules don’t apply to Patient-Centered Outcomes Research Institute (PCORI) fees paid by insurers and sponsors of self-insured plans or certain other fees paid by insurers.

More guidance is expected on the application of ACA provisions to expatriate health plans. In the meantime, those who sponsor or advise expatriate health plans should continue to bring their arrangements into compliance with required standards and may wish to submit comments while waiting for additional guidance. IRS Notice 2015-43 explains how to submit comments, which are due by October 19, 2015.