The Internal Revenue Service (IRS) has issued one proposed regulation, three notices, and a request for information related to the Patient Protection and Affordable Care Act (the Affordable Care Act or ACA) for the following issues:

• Annual fees for health plans ($2/covered life);
• Defining minimum health plan values including a potential actuarial calculator;
• New reporting to the IRS for all plan sponsors and plans;
• New reporting to the IRS only for large employers; and
• Information request about stop-loss insurance for self-insured plans

The IRS requests comments on all topics. This alert briefly describes the scope of the proposed regulations, notices, and request for information; the comment deadlines; and provides links to the documents for more details.

Action Needed Now: Plan sponsors should carefully review the proposed regulations, notices, and request for information, and decide if they want to submit comments, which are due, in the earliest case, by June 11, 2012.

Proposed Regulations on IRS Fees for Health & Welfare Plans - Comments Due July 16, 2012

On April 17, 2012, the IRS issued proposed regulations concerning the calculation and reporting of fees meant to fund parts of the ACA. Section 4375(a) imposes a fee on an issuer of a health insurance policy for each policy year ending on or after October 1, 2012, and before October 1, 2019. Under section 4375(a), the fee is two dollars (one dollar in the case of policy years ending before October 1, 2013) multiplied by the average number of lives covered under the policy. Under section 4375(d), for policy years ending on or after October 1, 2014, the fee is increased based on increases in the projected per capita amount of National Health Expenditures. The fees affect both issuers of health insurance policies and plan sponsors of self-insured health plans. The regulations define covered plans (which include health FSAs and HRAs, as well as retiree-only plans), provide alternative calculation methods for the average number of lives, and provide the timing and form for reporting the fees. The proposed regulations are found at http://www.gpo.gov/fdsys/pkg/FR-2012-04-17/pdf/2012-9173.pdf.

Notices on Minimum Health Plan Values and Reporting to IRS - Comments Due June 11, 2012

Notice 2012-31 - Describes a methodology and requests comments on whether health coverage under a plan provides minimum value. The methodology outlined includes a minimum value (MV) calculator that the IRS would make available, design based safe harbors in the form of checklists, or an appropriate certification by a certified actuary. Notice 2012-31 can be found at http://www.irs.gov/pub/irs-drop/n-12-31.pdf.

Notice 2012-32 - Invites comments concerning the reporting of health insurance coverage under Internal Revenue Code (Code) section 6055. The reporting applies to issuers and employers (including government agencies) that provide minimum essential coverage. Specific comments are requested with respect to what rules should apply when coverage is provided through a VEBA, or under a multiemployer plan, as well as on other aspects of the reporting. Notice 2012-32 can be found at http://www.irs.gov/pub/irs-drop/n-12-32.pdf.

Notice 2012-33 - Invites comments concerning the reporting by large employers (including governmental employers) of health insurance coverage under Code section 6056. The information to be reported is intended to be used in the administration of the excise tax provisions under Code section 4980H. Specific comments are requested as to ways to coordinate and minimize duplication between sections 6055 and 6056. Notice 2012-33 can be found at http://www.irs.gov/pub/irs-drop/n-12-33.pdf.

Request for Information Regarding Stop-Loss Insurance - Comments Due July 2, 2012

The IRS, along with the Department of Labor (DOL) and the Department of Health and Human Services (HHS) (collectively, the "agencies"), have also requested information regarding the use of stop-loss insurance in connection with self-insured employers' group health plans. The agencies posed a number of questions regarding design and trends of stop-loss arrangements with respect to such plans. The request for information was published in the Federal Register on May 1, 2012 and can be found at http://www.gpo.gov/fdsys/pkg/FR-2012-05-01/pdf/2012-10441.pdf.

Cheiron health consultants can assist plan sponsors with the review and consideration of the impact of the proposed regulations, the notices, and the request for information.

Cheiron Observation: If the Supreme Court decides that the entire Affordable Care Act is not constitutional, then it would appear that the fees would not be imposed and the reporting requirements would not apply.

Cheiron is an actuarial consulting firm that provides actuarial and consulting advice. However, we are neither attorneys nor accountants. Therefore, we do not provide legal services or tax advice.