Expatriate Health Plans Get IRS Guidance on ACA Fee

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By Alison Bennett

Jan. 29 — The Internal Revenue Service provided interim guidance on how the definition of an “expatriate health plan” applies for purposes of the Affordable Care Act's health insurance providers fee.

The guidance, Notice 2016-14, issued Jan. 29, addressed questions on how the fee applies to expatriate plans under the Expatriate Health Coverage Clarification Act of 2014, which exempted these plans from the fee beginning in 2016. The fee generally is imposed on covered entities that provide health insurance for U.S. health risks.

The IRS said the definition would be similar to that of a medical loss ratio in previous heath insurance provider fee regulations. According to that definition, expatriate policies are defined as predominately group health insurance policies that provide coverage to employees “substantially all” of whom are (1) working outside their country of citizenship, (2) working outside their country of citizenship and outside the employer's country of domicile, or (3) non-U.S. citizens working in their home country.

The IRS emphasized that the definition in the notice applies “solely and for this limited purpose” in 2016 to assist in complying with the new expatriate health coverage legislation. The government is developing proposed regulations on the legislation that will address the definition of an expatriate health plan, the agency said.

Guidance on Direct Premiums

The notice offered guidance for a covered entity—including controlled group members, if any—that has already reported direct premiums written for expatriate health plans for 2016.

If so, the entity must exclude those direct premiums written for expatriate health plans from the direct premiums written (column f) on its 2016 Form 8963, Report of Health Insurance Provider Information, the IRS said.

Notice 2016-14 is scheduled to be published in Internal Revenue Bulletin 2016-7, dated Feb. 16.

For More Information

For more information, see Compensation and Benefits Library’s Tax Aspects of Health Plans Under the Affordable Care Act chapter.

To contact the reporter on this story: Alison Bennett in Washington at abennett@bna.com

To contact the editor responsible for this story: Brett Ferguson at bferguson@bna.com