83 FR 8173 - Health Insurance Providers Fee

DEPARTMENT OF THE TREASURY
Internal Revenue Service

Federal Register Volume 83, Issue 38 (February 26, 2018)

This document contains final regulations that provide rules for the definition of a covered entity for purposes of the fee imposed by section 9010 of the Patient Protection and Affordable Care Act, as amended. The final regulations supersede and adopt the text of temporary regulations that provide rules for the definition of a covered entity. The final regulations affect persons engaged in the business of providing health insurance for United States health risks.

[Federal Register Volume 83, Number 38 (Monday, February 26, 2018)]
[Rules and Regulations]
[Pages 8173-8175]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-03884]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 57

[TD 9830]
RIN 1545-BM52


Health Insurance Providers Fee

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations and removal of temporary regulations.

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SUMMARY: This document contains final regulations that provide rules 
for the definition of a covered entity for purposes of the fee imposed 
by section 9010 of the Patient Protection and Affordable Care Act, as 
amended. The final regulations supersede and adopt the text of 
temporary regulations that provide rules for the definition of a 
covered entity. The final regulations affect persons engaged in the 
business of providing health insurance for United States health risks.

DATES: Effective Date: The final regulations are effective February 22, 
2018.

FOR FURTHER INFORMATION CONTACT: Rachel S. Smith at (202) 317-6855 (not 
a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    Section 9010 of the Patient Protection and Affordable Care Act 
(PPACA), Public Law 111-148 (124 Stat. 119 (2010)), as amended by 
section 10905 of PPACA, and as further amended by section 1406 of the 
Health Care and Education Reconciliation Act of 2010, Public Law 111-
152 (124 Stat. 1029 (2010)) (collectively, the Affordable Care Act or 
ACA) imposes an annual fee on covered entities that provide health 
insurance for United States health risks. All references in this 
preamble to section 9010 are references to section 9010 of the ACA. 
Section 9010 did not amend the Internal Revenue Code (Code) but 
contains cross-references to specified Code sections. Unless otherwise 
indicated, all other references to subtitles, chapters, subchapters, 
and sections in this preamble are references to subtitles, chapters, 
subchapters, and sections in the Code and related regulations. All 
references to ``fee'' in this preamble are references to the fee 
imposed by section 9010.
    On November 27, 2013, the Department of the Treasury (Treasury 
Department) and the IRS published final regulations (TD 9643) relating 
to the health insurance providers fee in the Federal Register (78 FR 
71476). On February 26, 2015, the Treasury Department and the IRS 
published temporary regulations (TD 9711) relating to the health 
insurance providers fee in the Federal Register (80 FR 10333). A notice 
of proposed rulemaking (REG-143416-14) cross-referencing the temporary 
regulations was published in the Federal Register in the same issue (80 
FR 10435). The temporary regulations provided further guidance on the 
definition of a covered entity for the 2015 fee year and subsequent fee 
years.

[[Page 8174]]

    The Treasury Department and the IRS received two written comments 
with respect to the notice of proposed rulemaking. No public hearing 
was requested or held. After considering the public written comments, 
the final regulations adopt the proposed regulations without change and 
the temporary regulations are removed.

Explanation of Provisions

    The temporary regulations provided that, for the 2015 fee year and 
each subsequent fee year, an entity qualified for an exclusion under 
section 9010(c)(2) if it qualified for an exclusion either for the 
entire data year ending on the prior December 31st or for the entire 
fee year beginning on January 1st. The temporary regulations also 
generally imposed a consistency requirement that bound an entity to its 
original selection of either the data year or the fee year (its test 
year) to determine whether it qualified for an exclusion under section 
9010(c)(2) for the 2015 fee year and each subsequent fee year. Next, 
the temporary regulations imposed a special rule for any entity that 
uses the fee year as its test year. Finally, the temporary regulations 
provided that a controlled group must report net premiums written only 
for each person who is a controlled group member at the end of the day 
on December 31st of the data year and that would qualify as a covered 
entity in the fee year if it were a single-person covered entity (that 
is, not a member of a controlled group).
    The Treasury Department and the IRS received two written comments 
in response to the proposed and temporary regulations. Both commenters 
agreed with the approach described in the proposed and temporary 
regulations. One commenter suggested that the final rules add three 
additional requirements. First, the commenter suggested that entities 
seeking to claim the non-profit exemption described in section 
9010(c)(2)(C) and Sec.  57.2(b)(2)(iii) of the Health Insurance 
Providers Fee Regulations be required to file a Form 8963, ``Report of 
Health Insurance Provider Information,'' or similar report indicating 
its exempt status for either the data year or the fee year. Second, the 
commenter suggested that such entities claiming exempt status for the 
fee year should also file a year-end statement certifying that they 
maintained their exempt status through the end of the fee year. The 
Treasury Department and the IRS received similar comments prior to 
issuing the final regulations. The preamble to TD 9643 (78 FR 71476) 
explains that the Treasury Department and the IRS declined to adopt 
commenters' suggestions to require an entity qualifying for an 
exclusion to report its net premiums written because section 9010(g)(1) 
applies only to covered entities. Furthermore, imposing additional 
filing requirements for only certain entities is contrary to Executive 
Order 13789, which directs the Treasury Department to reduce tax 
regulatory burdens. Imposing additional filing requirements for only 
certain entities is also contrary to Executive Order 13765, which 
directs the executive branch to minimize the regulatory burden of the 
ACA specifically. Therefore, we decline to adopt the commenter's 
suggestions.
    Third, the commenter suggested that any entities that fail to 
remain exempted for the full duration of the fee year should be subject 
to a fee assessment at the end of the year. The final regulations do 
not adopt this suggestion. Section 57.6(c) of the Health Insurance 
Providers Fee Regulations provides that the IRS will not alter fee 
calculations on the basis of information provided after the end of the 
error correction period. Section 9010(g)(2) and Sec.  57.3(b)(1) of the 
Health Insurance Providers Fee Regulations impose a penalty on covered 
entities that fail to timely submit Form 8963 without reasonable cause. 
It is possible that if an entity fails to remain exempted for the full 
duration of the fee year, such entity will be subject to a penalty 
provided for by the existing statutory and regulatory framework. An 
additional fee assessment for such entities is not necessary.

Special Analyses

    Certain IRS regulations, including these, are exempt from the 
requirements of Executive Order 12866, as supplemented and reaffirmed 
by Executive Order 13563. Therefore, a regulatory impact assessment is 
not required. Because the final regulations do not impose a collection 
of information on small entities, the Regulatory Flexibility Act (5 
U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the 
Code, the temporary regulations that preceded the final regulations was 
submitted to the Chief Counsel for Advocacy of the Small Business 
Administration for comment on its impact on small business.

Drafting Information

    The principal author of these final regulations is Rachel S. Smith, 
Office of the Associate Chief Counsel (Passthroughs and Special 
Industries). However, other personnel from the Treasury Department and 
the IRS participated in their development.

List of Subjects in 26 CFR Part 57

    Health insurance, Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR part 57 is amended as follows:

PART 57--HEALTH INSURANCE PROVIDERS FEE

0
Paragraph 1. The authority citation for part 57 continues to read in 
part as follows:

    Authority: 26 U.S.C. 7805; sec. 9010, Pub. L. 111-148 (124 Stat. 
119 (2010)). * * *


0
Par. 2. Section 57.2 is amended by revising paragraphs (b)(3) and 
(c)(3)(ii) as follows:


Sec.  57.2  Explanation of terms.

* * * * *
    (b) * * *
    (3) Application of exclusions--(i) Test year. An entity qualifies 
for an exclusion described in paragraphs (b)(2)(i) through (iv) of this 
section if it so qualifies in its test year. The term test year means 
either the entire data year or the entire fee year.
    (ii) Consistency rule. For purposes of paragraph (b)(3)(i) of this 
section, an entity must use the same test year as it used in its first 
fee year beginning after December 31, 2014, and in each subsequent fee 
year. Thus, for example, if an entity used the 2014 data year as its 
test year for the 2015 fee year, that entity must use the data year as 
its test year for each subsequent fee year.
    (iii) Special rule for fee year as test year. For purposes of 
paragraph (b)(3) of this section, any entity that uses the fee year as 
its test year but ultimately does not qualify for an exclusion 
described in paragraphs (b)(2)(i) through (iv) of this section for that 
entire fee year must use the data year as its test year for each 
subsequent fee year.
     * * *
    (c) * * *
    (3) * * *
    (ii) A person is treated as being a member of the controlled group 
if it is a member of the group at the end of the day on December 31st 
of the data year. However, a person's net premiums written are included 
in net premiums written for the controlled group only if the person 
would qualify as a covered entity in the fee year if the person were 
not a member of the controlled group.
* * * * *


Sec.  57.2T   [Removed]

0
Par. 3. Section 57.2T is removed.

[[Page 8175]]


0
Par. 4. Section 57.10 is amended by revising paragraph (b) to read as 
follows:


Sec.  57.10  Effective/applicability date.

* * * * *
    (b) Paragraphs (b)(3) and (c)(3)(ii) of Sec.  57.2. Paragraphs 
(b)(3) and (c)(3)(ii) of Sec.  57.2 apply on February 22, 2018.


Sec.  57.10T  [Removed]

0
 Par. 5. Section 57.10T is removed.

 Kirsten Wielobob,
Deputy Commissioner for Services and Enforcement.

    Approved: February 15, 2018.
David J. Kautter,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2018-03884 Filed 2-22-18; 11:15 am]
BILLING CODE 4830-01-P