On September 17, 2015, the IRS issued Notice 2015-68 advising its intent to propose new regulations under Section 6055. Section 6055 requires providers of minimum essential coverage (“MEC”) to report health coverage information to the IRS and covered individuals. Health insurance issues, plan sponsors of self-insured group health plans, government sponsored programs, and other entities that provide MEC are subject to Section 6055 reporting. The impact of the anticipated regulations described below will be focused on employers offering self-insured health coverage. The anticipated regulations generally follow the guidance provided in the 2015 final Instructions for Forms 1094 and 1095 relating to reporting of supplemental coverage, penalty relief, and statements to individuals covered under an expatriate plan.Clarification on the Reporting of Supplemental CoverageThe IRS intends to propose new regulations to clarify how supplemental coverage (primarily health reimbursement arrangements (“HRAs”)) should be reported. When an individual is covered by more than one type of MEC, an employer is required to report only one type of MEC if:(1) The individual is covered by more than one type of MEC provided by the employer; or(2) The individual is eligible for coverage only because the individual is covered by other MEC forwhich reporting is required (but both types of coverage must be through the same employer).These rules would apply month by month and individual by individual. Under the first condition, if an individual is covered by an employer’s self-insured primary medical plan and self-insured HRA, then the employer is required to report the coverage of the individual under only one of the arrangements. If an individual is covered under both arrangements for some months of the year but retires or otherwise drops coverage under the non-HRA group health plan (and is covered only under the HRA), the employer must report coverage under the HRA for the months after the employee retires or drops the non-HRA coverage. The employer must report the coverage in an arrangement of any individual who is covered by only one arrangement.Under the second condition, an employer with an insured primary medical plan and HRA is not required to report an individual’s HRA coverage if the individual is only eligible for the HRA because the individual enrolled in the insured primary medical plan. However, for any individual who is enrolled in one employer’s primary medical plan and another employer’s HRA (e.g., spousal coverage), each employer is required to report on the coverage it provides to that individual.Penalty Relief for Reasonable Cause (including TIN solicitation)Employers that fail to file correct returns or provide correct statements to individuals will be subject to a penalty of $250 per return with a maximum of $3,000,000 for a calendar year under Section 6721 and 6722. For 2015 only, the IRS is providing penalty relief for employers that can show that they made good faith efforts to comply even if incorrect or incomplete information is reported on a return or statement, including TINS or dates of birth. Additionally, for 2015 and beyond, a penalty can be waived if the failure

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is due to reasonable cause, that is, the reporting entity demonstrates that it acted in a responsible manner and the failure is due to significant mitigating factors or events beyond the reporting entity’s control.The IRS seeks comments on the application of the reasonable good cause rules under Section 6724, particularly in how the rules relate to TIN solicitation and reporting. However, until future guidance is issued, employer will not be subject to penalties for failing to report a TIN if:

1. (1)  The initial solicitation is made at the individual’s first enrollment (on or before December 31 of the year in which the account is opened or January 31 of the following year for accounts opened in the preceding December), or if already enrolled on September 17, 2015, the next open season;
2. (2)  The second solicitation is made at a reasonable time thereafter; and
3. (3)  The third solicitation is made by December 31 of the year following the initial solicitation.

An employer is not required to solicit a TIN from an individual whose coverage is terminated.Providing Statements to Individuals Covered under an Expatriate PlanEmployers providing self-insured coverage under an expatriate health plans renewed on or after July 1, 2015 may furnish statements to responsible individuals in electronic format unless the individual affirmatively refuses consent or requests a paper statement.Next StepsEmployers should familiarize themselves with the anticipated regulations because it generally follows the guidance provided in the 2015 final Instructions for Forms 1094 and 1095. Comments regarding the anticipated Section 6055 regulations may be submitted in writing on or before November 16, 2015. It is likely the anticipated Section 6055 regulations will go through proposed regulations and another round of comments prior to the final rules. Gallagher will continue to monitor this area for developments.Gallagher Benefit Services, through its compliance experts and consultants, will continue to monitor developments on healthcare reform legislation and regulation and will provide you with relevant updated information as it becomes available. In the interim, please contact your Gallagher Benefit Services Representative with any questions that you may have.The intent of this analysis is to provide general information regarding the provisions of current healthcare reform legislation and regulation. It does not necessarily fully address all your organization’s specific issues. It should not be construed as, nor is it intended to provide, legal advice. Your organization’s general counsel or an attorney who specializes in this practice area should address questions regarding specific issues.Reprint and thanks to our friends at Gallagher Benefit Services – click here