IRS issues final rules on annual insurer fees, rules for MEWAs

In late November, the Internal Revenue Service (IRS) issued final rules on the annual health insurer fee. Of particular interest, this final rule notes that self-insured multiple employer welfare arrangements (MEWAs) are subject to the annual fee.

Notice 2013-76 “provides guidance on the health insurance providers fee related to (1) the time and manner for submitting Form 8963, “Report of Health Insurance Provider Information,” (2) the time and manner for notifying covered entities of their preliminary fee calculation, (3) the time and manner for submitting a corrected Form 8963 for the error correction process and (4) the time for notifying covered entities of their final fee calculation.”

To back up, under the Patient Protection and Affordable Care Act (also known as PPACA or Obama Care), entities engaged in the business of providing health insurance for United States health risks will be subject to an annual fee. Up until now, information on how the Health Insurance Providers Fee Regulations was not yet available.

In the latest communication, the IRS noted that:

Section 57.3(a)(1) provides that each covered entity, including each controlled group that is treated as a single covered entity, must report its net premiums written for health insurance of United States health risks during the data year (calendar year immediately before the fee year) to the IRS by April 5th of the fee year (the calendar year in which the fee must be paid to the government) on Form 8963 in accordance with the instructions for the form.

Section 57.3(a)(2) authorizes the IRS to provide rules in guidance published in the Internal Revenue Bulletin for the manner of reporting by a covered entity under this section, including rules for reporting by a designated entity on behalf of a controlled group that is treated as a single covered entity. Specifically, the notice defines a controlled group as a group of two or more persons, including at least one person that is a covered entity, that is treated as a single employer and is considered a single covered entity for purposes of the fee. Further, a designated entity is defined as the person within the controlled group that is designated to act on behalf of the controlled group regarding the fee with respect to filing Form 8963, receiving IRS communications about the fee for the group, filing a corrected Form 8963 for the group, if applicable, and paying the fee for the group to the government.

Section 57.5 provides that, for each fee year, the IRS will make a preliminary fee calculation for each covered entity and will notify each covered entity of this calculation by the date prescribed in guidance published in the Internal Revenue Bulletin.

Section 57.7(b) requires the IRS to send each covered entity its final fee calculation no later than August 31st of each fee year, while Section 57.7(d) requires each covered entity to pay its fee by September 30th of each fee year

To read the IRS communication in greater detail, please view the full release at http://www.irs.gov/pub/irs-drop/n-13-76.pdf