[Federal Register Volume 87, Number 240 (Thursday, December 15, 2022)]
[Rules and Regulations]
[Pages 76569-76576]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-27212]



[[Page 76569]]

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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 301

[TD 9970]
RIN 1545-BQ11


Information Reporting of Health Insurance Coverage and Other 
Issues Under Sections 5000A, 6055, and 6056

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document includes final regulations under the Internal 
Revenue Code that provide an automatic extension of time for providers 
of minimum essential coverage (including health insurance issuers, 
self-insured employers, and government agencies) to furnish individual 
statements regarding such coverage and an alternative method for 
furnishing individual statements when the individual shared 
responsibility payment amount is zero. The final regulations also 
provide an automatic extension of time for ``applicable large 
employers'' (generally employers with 50 or more full-time employees, 
including full-time equivalent employees) to furnish statements 
relating to health insurance that the applicable large employers offer 
to their full-time employees. Additionally, the final regulations 
provide that ``minimum essential coverage,'' as that term is used in 
health insurance-related tax laws, does not include Medicaid coverage 
limited to COVID-19 testing and diagnostic services provided under the 
Families First Coronavirus Response Act. The final regulations affect 
some taxpayers who claim the premium tax credit; health insurance 
issuers, self-insured employers, government agencies, and other persons 
that provide minimum essential coverage to individuals; and applicable 
large employers.

DATES: 
    Effective date: These regulations are effective on December 15, 
2022.
    Applicability date: The regulations under Sec.  1.5000A-2 apply for 
months beginning after September 28, 2020. The regulations under 
Sec. Sec.  1.6055-1 and 301.6056-1 apply for calendar years beginning 
after December 31, 2021.

FOR FURTHER INFORMATION CONTACT: Gerald Semasek at (202) 317-7006 or 
Lisa Mojiri-Azad at (202) 317-4649 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

    This document contains amendments to the Income Tax Regulations (26 
CFR part 1) under sections 5000A and 6055 of the Internal Revenue Code 
(Code) and to the Procedure and Administration Regulations (26 CFR part 
301) under section 6056 of the Code.
    On December 6, 2021, a notice of proposed rulemaking (REG-109128-
21) was published in the Federal Register (86 FR 68939) (2021 proposed 
regulations). The 2021 proposed regulations proposed amendments to the 
regulations under:
     Section 5000A that would provide that Medicaid coverage 
limited to COVID-19 testing and diagnostic services under section 
6004(a)(3) of the Families First Coronavirus Response Act, Public Law 
116-127, 134 Stat. 178 (Mar. 18, 2020) is not minimum essential 
coverage.
     Section 6055 that would provide an automatic extension of 
time for furnishing statements to responsible individuals \1\ and 
permit an alternative manner for timely furnishing statements.
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    \1\ As provided in Sec.  1.6055-1(b)(11), a responsible 
individual includes a primary insured, employee, former employee, 
uniformed services sponsor, parent, or other related person named on 
an application who enrolls one or more individuals, including him or 
herself, in minimum essential coverage.
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     Section 6056 that would provide an automatic extension of 
time for furnishing statements to full-time employees.
    The preamble to the 2021 proposed regulations also included a 
renewed request for comments on rules (REG-103058-16) that were 
proposed in the Federal Register (81 FR 50671) on August 2, 2016 (2016 
proposed regulations) relating to information reporting of minimum 
essential coverage under section 6055.
    Ten comments were received in response to the 2021 proposed 
regulations. No public hearing was requested or held. After 
consideration of the comments received, this Treasury decision adopts 
the 2021 proposed regulations with clarifying modifications as final 
regulations, as discussed in the Summary of Comments and Explanation of 
Revisions section of this preamble. The Department of the Treasury 
(Treasury Department) and the IRS continue to consider the 2016 
proposed regulations in light of the public comments received both in 
2016 and in response to the request in the 2021 proposed regulations. 
The Treasury Department and the IRS expect to finalize the 2016 
proposed regulations separately.

Summary of Comments and Explanation of Revisions

I. Minimum Essential Coverage Under Section 5000A

    Under the Patient Protection and Affordable Care Act, Public Law 
111-148, 124 Stat. 119 (2010), and the Health Care and Education 
Reconciliation Act of 2010, Public Law 111-152, 124 Stat. 1029 (2010) 
(collectively the Affordable Care Act or ACA), eligible individuals who 
purchase coverage under a qualified health plan through a Health 
Insurance Exchange (Exchange) established under section 1311 of the ACA 
may claim a premium tax credit pursuant to section 36B. Section 36B and 
Sec.  1.36B-3 of the Income Tax Regulations provide that a taxpayer is 
allowed a premium tax credit only for months that are coverage months 
for individuals in the taxpayer's family, as defined in Sec.  1.36B-
1(d). Under section 36B(c)(2)(B) and Sec.  1.36B-3(c)(1)(iii), a 
``coverage month'' for an individual includes only those months for 
which the individual is not eligible for minimum essential coverage 
other than coverage in the individual market.
    Section 5000A(f)(1) defines ``minimum essential coverage'' to 
include various types of health plans and programs, including specified 
government-sponsored programs such as the Medicaid program under Title 
XIX of the Social Security Act. Section 1.5000A-2(b)(2) lists certain 
government-sponsored programs that do not constitute minimum essential 
coverage.
    Notice 2020-66, 2020-40 I.R.B. 785, provides that Medicaid coverage 
that is limited to COVID-19 testing and diagnostic services under 
section 6004(a)(3) of the Families First Coronavirus Response Act is 
not minimum essential coverage under a government-sponsored program. 
Consequently, an individual's eligibility for such coverage for one or 
more months does not prevent those months from qualifying as coverage 
months for purposes of determining eligibility for the premium tax 
credit under section 36B.
    Consistent with the guidance provided in Notice 2020-66, the 2021 
proposed regulations would amend Sec.  1.5000A-2 by adding Medicaid 
coverage for COVID-19 testing and diagnostic services to the enumerated 
health coverages under Sec.  1.5000A-2(b)(2) that do not qualify as 
minimum essential coverage under a government-sponsored program. This 
amendment to Sec.  1.5000A-2 would apply for months beginning after 
September 28, 2020. Under the 2021 proposed regulations,

[[Page 76570]]

for months beginning on or after January 1, 2020, and before September 
28, 2020, taxpayers could rely upon Notice 2020-66. No comments were 
received on this proposed change. Accordingly, the Treasury Department 
and the IRS are finalizing the proposed amendment to Sec.  1.5000A-2 
without change.

II. Information Reporting Under Sections 6055 and 6056 and Penalties 
Under Sections 6721 and 6722

    Section 6055 requires all persons who provide minimum essential 
coverage to an individual to report certain information to the IRS that 
identifies covered individuals and the period of coverage. See section 
6055(a) and (b). Those persons are also required to furnish a statement 
to the covered individuals with the same information. See section 
6055(c). These information returns and written statements were needed 
to administer the individual shared responsibility provisions under 
section 5000A until the individual shared responsibility payment amount 
was reduced to zero for months beginning after December 31, 2018 by 
Public Law 115-97, 131 Stat. 2054, 2092 (2017), commonly referred to as 
the Tax Cuts and Jobs Act (TCJA). As a result, covered individuals no 
longer needed the information on the written statements (Form 1095-B) 
to prepare and file their individual returns. However, the TCJA did not 
amend any of the reporting or furnishing requirements under section 
6055.
    Under section 6055 and Sec.  1.6055-1(f) and (g), every person that 
provides minimum essential coverage to an individual during the 
calendar year is required to file with the IRS an information return 
and a transmittal on or before February 28 (March 31 if filed 
electronically) of the year following the calendar year to which it 
relates and to furnish to the responsible individual identified on the 
return a written statement on or before January 31 of the year 
following the calendar year to which the statement relates. The IRS 
generally has designated Form 1094-B, Transmittal of Health Coverage 
Information Returns, and Form 1095-B, Health Coverage, to meet the 
section 6055 requirements.
    Section 6056 requires an applicable large employer (ALE), as 
defined in section 4980H(c)(2) of the Code, that is subject to the 
requirements of section 4980H to file information returns annually and 
furnish written statements with respect to the health insurance, if 
any, that the employer offers to its full-time employees. The 
information returns are used by the IRS to administer the employer 
shared responsibility provisions of section 4980H, and by certain full-
time employees to help determine if they are eligible for the premium 
tax credit under section 36B.
    Under section 6056 and Sec.  301.6056-1(e) and (g), every ALE and 
member of an aggregated group that is determined to be an ALE 
(collectively, ALE member) is required to file with the IRS an 
information return and a transmittal on or before February 28 (March 31 
if filed electronically) of the year following the calendar year to 
which it relates and to furnish to full-time employees a written 
statement on or before January 31 of the year following the calendar 
year to which the statement relates. The IRS generally has designated 
Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer 
and Coverage Information Returns, and Form 1095-C, Employer-Provided 
Health Insurance Offer and Coverage, to meet the section 6056 
requirements.
    In addition, an ALE member that offers coverage through a self-
insured health plan must complete the reporting required under section 
6055, specifically, the information regarding each individual enrolled 
in the self-insured health plan, using Form 1095-C, Part III, rather 
than Form 1095-B.
    The current regulations under sections 6055 and 6056 allow the IRS 
to grant an extension of time of up to 30 days to furnish statements to 
individuals for good cause shown. See Sec. Sec.  1.6055-
1(g)(4)(i)(B)(1) and 301.6056-1(g)(1)(ii)(A). Additionally, under the 
current regulations the Commissioner may prescribe guidance or 
procedures for automatic extensions of time for furnishing statements 
to individuals. See Sec. Sec.  1.6055-1(g)(4)(i)(B)(2) and 301.6056-
1(g)(1)(ii)(B). Through a series of notices, the Treasury Department 
and the IRS extended the due date for furnishing statements to 
individuals under sections 6055 and 6056 for calendar years 2015 
through 2020.\2\
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    \2\ Notice 2016-04, 2016-3 I.R.B. 279 (Jan. 19, 2016); Notice 
2016-70, 2016-49 I.R.B. 784 (Dec. 5, 2016); Notice 2018-06, 2018-3 
I.R.B. 300 (Jan. 16, 2018); Notice 2018-94, 2018-51 I.R.B. 1042 
(Dec. 17, 2018); Notice 2019-63, 2019-51 I.R.B. 1390 (Dec. 16, 
2019); and Notice 2020-76, 2020-47 I.R.B. 1058 (Nov. 16, 2020).
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    Section 6721 imposes a penalty for failing to timely file an 
information return or for filing an incorrect or incomplete information 
return. Section 6722 imposes a penalty for failing to timely furnish an 
information statement or furnishing an incorrect or incomplete 
information statement. The section 6721 and 6722 penalties are imposed 
regarding information returns and statements listed in section 6724(d), 
which include those required by sections 6055 and 6056. Section 6724 
provides that no penalty will be imposed under section 6721 or 6722 
with respect to any failure if it is shown that the failure is due to 
reasonable cause and not to willful neglect.
a. Automatic Extension of Time To Furnish Statements Under Section 6055
    To reduce administrative burdens for reporting entities and the 
IRS, the 2021 proposed regulations provided that reporting entities 
would be granted an automatic extension of time, not to exceed 30 days 
after January 31, in which to furnish the written statements required 
by Sec.  1.6055-1(g)(1). The 2021 proposed regulations also provided 
that if the extended furnishing date falls on a weekend or legal 
holiday, statements would be timely if furnished on the next business 
day.
    Because this extension would be automatic, the 2021 proposed 
regulations would eliminate Sec.  1.6055-1(g)(4)(i)(B)(1), which allows 
a reporting entity to make a written application to the IRS to request 
an extension of time to furnish the statement. The 2021 proposed 
regulations also would eliminate Sec.  1.6055-1(g)(4)(i)(B)(2), under 
which the Commissioner may prescribe guidance or procedures for 
automatic extensions of time for furnishing written statements pursuant 
to section 6055.
    Commenters expressed strong support for the proposal to amend Sec.  
1.6055-1(g)(4) to provide a permanent, automatic extension of time 
during which a provider of minimum essential coverage must furnish 
written statements to individuals. One commenter acknowledged that the 
addition of the permanent, automatic extension of time for reporting 
entities to furnish statements obviates the need for the IRS to provide 
other extensions of time to furnish statements in most circumstances. 
The commenter nonetheless requested that the final regulations retain 
the provisions in Sec.  1.6055-1(g)(4)(i)(B)(2) allowing the 
Commissioner, in appropriate cases, to prescribe additional guidance or 
procedures for automatic extensions of time for furnishing written 
statements.
    After consideration of the comments received, the Treasury 
Department and the IRS are adopting with one clarifying change the 
proposal for a permanent, automatic extension of time for furnishing 
written statements to individuals pursuant to Sec.  1.6055-1(g). The 
2021 proposed regulations provided that reporting entities would be 
granted an automatic extension of time not

[[Page 76571]]

exceeding 30 days in which to furnish required statements. To provide a 
clear, definite rule, these final regulations expressly provide a 30-
day, automatic extension of time. The permanent, 30-day automatic 
extension of time to furnish written statements replaces Sec.  1.6055-
1(g)(4)(i) and provides adequate time for furnishing in most 
situations. Additionally, because a reporting entity may qualify for 
penalty relief pursuant to section 6724 by showing that a failure was 
due to reasonable cause and not to willful neglect, the request that 
Sec.  1.6055-1(g)(4)(i)(B)(2) be retained is not adopted.
    While expressing support for the proposed rule, one commenter 
requested that the IRS communicate the automatic extension clearly and 
directly to state governmental bodies that have their own individual 
health insurance mandates and reporting requirements. According to the 
commenter, some states impose requirements similar to the reporting and 
furnishing requirements of section 6055. In these cases, the commenter 
suggested that the deadlines should be coordinated or made the same.
    The Treasury Department and the IRS intend to revise the 
instructions for Form 1094-B and Form 1095-B to communicate the final 
rule's permanent, 30-day automatic extension of time for furnishing the 
required statements. However, the Treasury Department and the IRS have 
no authority over state reporting and furnishing requirements. Whether 
state deadlines for filing returns or other documents relating to 
health coverage will align with the regulations is a question of state 
law. Accordingly, the Treasury Department and the IRS are not revising 
the regulations to coordinate with state reporting and furnishing 
requirements.
b. Automatic Extension of Time To Furnish Statements Under Section 6056
    To reduce administrative burdens for ALE members and the IRS, the 
2021 proposed regulations provided that ALE members would be granted an 
automatic extension of time, not to exceed 30 days after January 31, in 
which to furnish written statements to full-time employees. The 2021 
proposed regulations also provided that if the extended furnishing date 
falls on a weekend or legal holiday, statements would be timely if 
furnished on the next business day.
    Because this extension would be automatic, the 2021 proposed 
regulations would eliminate Sec.  301.6056-1(g)(1)(ii)(A), which allows 
an ALE member to make a written application to the IRS to request an 
extension of time to furnish the statement. The 2021 proposed 
regulations also would eliminate Sec.  1.6056-1(g)(1)(ii)(B), under 
which the Commissioner may prescribe guidance or procedures for 
automatic extensions of time for furnishing written statements pursuant 
to section 6056.
    Commenters expressed strong support for the proposal to amend Sec.  
301.6056-1(g)(1) by providing a permanent automatic extension of time 
during which an ALE must furnish written statements to full-time 
employees. One commenter acknowledged that the addition of a permanent, 
automatic extension of time for reporting entities to furnish 
statements obviates the need for the IRS to provide other extensions of 
time to furnish statements in most circumstances. The commenter 
nonetheless requested that the final regulations retain the provisions 
in Sec.  301.6056-1(g)(1)(ii)(B) allowing the Commissioner, in 
appropriate cases, to prescribe additional guidance or procedures for 
automatic extensions of time for furnishing written statements pursuant 
to section 6056.
    After consideration of the comments received, the Treasury 
Department and the IRS are adopting with one clarifying change the 
proposal for a permanent, automatic extension of time for furnishing 
written statements to individuals pursuant to Sec.  301.6056-1(g)(1). 
The 2021 proposed regulations provided that ALEs would be granted an 
automatic extension of time not exceeding 30 days in which to furnish 
required statements. To provide a clear, definite rule, these final 
regulations expressly provide a 30-day, automatic extension of time. 
The permanent, 30-day automatic extension of time to furnish written 
statements replaces Sec.  301.6056-1(g)(1) and provides adequate time 
for furnishing in most situations. Additionally, because a reporting 
entity may qualify for penalty relief pursuant to section 6724 by 
showing that a failure was due to reasonable cause and not to willful 
neglect, the request that Sec.  1.6056-1(g)(1)(ii)(B) be retained is 
not adopted.
c. Alternative Manner of Furnishing Statements Under Section 6055
    The 2021 proposed regulations provided an alternative manner for a 
reporting entity to timely furnish Forms 1095-B to responsible 
individuals.\3\ Under proposed Sec.  1.6055-1(g)(4)(ii)(B), the 
reporting entity first would be required to post a clear and 
conspicuous notice on the entity's website stating that responsible 
individuals may receive a copy of their statement upon request. The 
notice would have to include an email address, a physical address to 
which a request may be sent, and a telephone number responsible 
individuals may use to contact a reporting entity with any questions. 
Additionally, the 2021 proposed regulations provided that the notice 
would satisfy the requirements for the alternative manner of furnishing 
if it were written in plain, non-technical terms and with letters of a 
font size large enough, including any visual clues or graphical 
figures, to call to a viewer's attention that the information pertains 
to tax statements reporting that individuals had health coverage. Under 
the 2021 proposed regulations, a reporting entity would be required to 
retain the notice in the same location on its website until October 15 
of the year following the calendar year to which the statement relates. 
The reporting entity would have to provide a Form 1095-B to a 
responsible individual within 30 days of the date of receipt of the 
individual's request. The proposed alternative manner of furnishing 
would apply only to taxable years when the individual shared 
responsibility payment amount under section 5000A(b) is zero.
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    \3\ Notice 2020-76 provided a similar alternative manner of 
furnishing statements for coverage year 2020.
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    Commenters generally supported the proposed amendments to Sec.  
1.6055-1(g) allowing reporting entities to satisfy the furnishing 
requirements for Form 1095-B by using the alternative manner of 
furnishing. One commenter requested that the regulations under section 
6056 also be amended to extend the alternative manner of furnishing 
rule to ALEs. The commenter asserted that the information included on 
Form 1095-C has limited utility because it only helps full-time 
employees determine if they are eligible for the premium tax credit. 
The commenter noted the potential environmental benefits, specifically 
the reduced use of paper and resources, that would result by allowing 
for the furnishing of forms only upon request.
    As noted in Notice 2020-76, the preamble to the 2021 proposed 
regulations, and earlier in this Summary of Comments and Explanation of 
Revisions, individuals no longer need Form 1095-B because the TCJA 
reduced the amount of the individual shared responsibility payment to 
zero. This change in Federal law caused the Treasury Department and the 
IRS to consider whether it was possible to amend the section 6055 
regulations to reduce burdens on providers of minimum essential 
coverage, while providing for continued compliance

[[Page 76572]]

with the unchanged statutory requirements of section 6055. Thus, the 
Treasury Department and the IRS proposed the alternative manner of 
furnishing Form 1095-B in recognition that the TCJA mooted the primary 
purpose for which individuals would need Form 1095-B.
    However, as noted earlier, Form 1095-C serves a different purpose 
than Form 1095-B. Form 1095-C is used to administer the employer shared 
responsibility provisions of section 4980H and by certain full-time 
employees to help determine eligibility for the premium tax credit 
under section 36B. Neither the TCJA nor any other change in Federal law 
affects the employer shared responsibility provisions of section 4980H 
or the need for certain full-time employees to have information about 
their coverage offer to help determine eligibility for the premium tax 
credit under section 36B. Because the primary purpose for furnishing 
Form 1095-C is distinct from the primary purpose for furnishing Form 
1095-B and was not affected by the changes made by the TCJA, the 
Treasury Department and the IRS conclude that it is not appropriate to 
amend the regulations under section 6056 to extend the alternative 
manner of furnishing rule to ALEs with regard to their full-time 
employees. However, the 2021 proposed regulations permitted, and these 
final regulations permit, ALEs to use the alternative manner of 
furnishing for non-employees and non-full-time employees for whom 
furnishing is required under Sec.  1.6055-1.
    The commenter that requested the alternative manner of furnishing 
for Form 1095-C also expressed concern about the environmental impact 
of providing Forms 1095-C on paper, but that concern does not take into 
account the potential mitigation of providing the information 
electronically.
    One commenter requested that the Treasury Department and the IRS 
eliminate the section 6055 reporting requirement for years when the 
individual shared responsibility payment amount is zero. According to 
the commenter, under the proposed alternative manner of furnishing 
statements, health insurance issuers and plan sponsors must continue to 
maintain record-keeping systems to complete Forms 1095-B that must be 
provided upon request. The continued requirement to maintain records, 
according to the commenter, imposes burdens and costs. Thus, the 
commenter requested that the regulations be revised to eliminate the 
requirement to furnish Form 1095-B even upon request.
    As noted, the TCJA reduced the individual shared responsibility 
payment amount to zero for months beginning after December 31, 2018; 
however, the TCJA did not amend any of the reporting or furnishing 
requirements under section 6055. Because Congress did not repeal or 
otherwise modify the reporting and furnishing requirements in section 
6055, the Treasury Department and the IRS have determined that there is 
insufficient statutory authority to eliminate the Form 1095-B 
requirement. Accordingly, the commenter's suggestion is not adopted.
    The final regulations include clarifying, non-substantive changes 
to the language in proposed Sec.  1.6055-1(g)(4)(ii)(B) describing the 
alternative manner of furnishing. The final regulations also modify 
proposed Sec.  1.6055-1(g)(4)(ii)(B)(2) to provide that a reporting 
entity using the alternative manner of furnishing must post a notice on 
its website by the date specified in Sec.  1.6055-1(g)(4)(i) of these 
final regulations.
    After consideration of the comments received, the Treasury 
Department and the IRS are adopting the proposed alternative manner of 
furnishing written statements to individuals under section 6055 with 
these clarifying changes.

III. Elimination of Transitional Good Faith Relief

    The preamble to the 2021 proposed regulations described the genesis 
of the transitional good faith relief from penalties under sections 
6721 and 6722, which the Treasury Department and the IRS provided to 
reporting entities in the preambles to the regulations under sections 
6055 and 6056 \4\ for calendar year 2015 and in IRS notices for 
calendar years 2016-2020.\5\ Under the transitional good faith relief, 
the IRS did not impose penalties under sections 6721 and 6722 on 
reporting entities if the entities could show that they made good faith 
efforts to comply with the information reporting requirements. In 
Notice 2020-76, the Treasury Department and the IRS stated that 2020 
was the last year that transitional good faith relief would be 
provided. Consistent with Notice 2020-76, the Treasury Department and 
the IRS reiterated in the preamble to the 2021 proposed regulations 
that the transitional good faith relief would be discontinued after 
2020.
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    \4\ See T.D. 9660, 79 FR 13220 (Mar. 10, 2014); T.D. 9661, 79 FR 
13231 (Mar. 10, 2014).
    \5\ See Notice 2016-70; Notice 2018-06; Notice 2018-94; Notice 
2019-63; and Notice 2020-76.
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    Two commenters requested that the Treasury Department and the IRS 
reconsider terminating the transitional good faith relief, with one of 
the commenters suggesting that the relief be retained at least for 
calendar years 2022, 2023, and 2024. Specifically, one commenter 
advocated for continuation of the relief because health coverage 
information reporting, especially for ALEs, is complicated, and many 
employers continue to make unintentional mistakes. The commenter 
asserted that the reasonable cause standard would be insufficient to 
relieve employers from significant penalties. The commenter requested, 
at a minimum, good faith penalty relief for small employers (as defined 
under applicable state law) that are ALEs.
    The other commenter asked that the transitional good faith relief 
be retained because, although the individual shared responsibility 
payment amount is zero, several states have imposed individual mandates 
regarding health insurance that require reporting; instructions for IRS 
forms respecting reporting are modified annually; and plans have faced 
compliance problems caused by the COVID-19 pandemic.
    As discussed in the preamble to the 2021 proposed regulations, the 
good faith relief offered beginning in calendar year 2015 was intended 
to be transitional to accommodate public concerns with implementing the 
new reporting requirements under the ACA. These reporting requirements 
have now been in place for seven years, and transitional relief is no 
longer appropriate. Also, the Treasury Department and the IRS are of 
the view that additional good faith relief is not necessary to address 
the commenters' concerns. The reasonable cause exception under section 
6724 already provides adequate relief from penalties under sections 
6721 and 6722 for filers who have reasonable cause for failing to 
timely or accurately complete their reporting requirements.

Applicability Date

    The regulations under Sec.  1.5000A-2 apply for months beginning 
after September 28, 2020. For months beginning on or after January 1, 
2020, and before September 28, 2020, taxpayers may continue to rely on 
Notice 2020-66.
    The regulations under Sec. Sec.  1.6055-1 and 301.6056-1 apply for 
calendar years beginning after December 31, 2021. As discussed in the 
Proposed Applicability Date section of the 2021 proposed regulations, 
taxpayers may rely on Sec. Sec.  1.6055-1 and 301.6056-1 of the 2021 
proposed regulations for calendar years

[[Page 76573]]

beginning after December 31, 2020, and before December 15, 2022.

Statement of Availability of IRS Documents

    IRS revenue procedures, revenue rulings, notices, and other 
guidance cited in this preamble are published in the Internal Revenue 
Bulletin and are available from the Superintendent of Documents, U.S. 
Government Publishing Office, Washington, DC 20402, or by visiting the 
IRS website at https://www.irs.gov.

Special Analyses

I. Regulatory Planning and Review--Economic Analysis

    These final regulations are not subject to review under section 
6(b) of Executive Order 12866 pursuant to the Memorandum of Agreement 
(April 11, 2018) between the Treasury Department and the Office of 
Management and Budget (OMB) regarding review of tax regulations. It has 
been determined that a final regulatory flexibility analysis under 5 
U.S.C. 604 is required for this final rule. The analysis is set forth 
under the heading ``Final Regulatory Flexibility Analysis.''

II. Paperwork Reduction Act

    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a valid 
control number assigned by OMB.
    There is no collection of information contained in these final 
regulations. The collections of information contained in Sec. Sec.  
1.6055-1 and 301.6056-1 were previously reviewed and approved by OMB in 
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) 
and are associated with control numbers 1545-2251 (associated with Form 
1095-C) and 1545-2252 (associated with Form 1095-B).
    The Paperwork Reduction Act (44 U.S.C. 3501-3520) relates to 
information collection requests by any Government agency. A collection 
of information generally means the obtaining, causing to be obtained, 
soliciting, or requiring the disclosure to third parties or the public, 
of facts or opinions by or for an agency, regardless of form or format, 
calling for either (1) answers to identical questions posted to, or 
identical reporting or recordkeeping requirements imposed on ten or 
more persons, other than agencies, instrumentalities, or employees of 
the United States, or (2) answers to questions posed to agencies, 
instrumentalities, or employees of the United States which are to be 
used for general statistical purposes. 44 U.S.C. 3502(3). A collection 
of information is commonly referred to as a reporting, recordkeeping, 
or disclosure requirement.
    These final regulations do not require a reporting entity to 
provide any information to the Federal Government, to maintain specific 
records, or to disclose any additional information that the reporting 
entity did not already have a requirement to disclose.

III. Final Regulatory Flexibility Analysis

    When an agency either issues a final rule that follows a required 
notice of proposed rulemaking or issues a final interpretative rule 
involving the internal revenue laws that imposes a collection of 
information requirement on small entities as described in 5 U.S.C. 
603(a), the Regulatory Flexibility Act (5 U.S.C. chapter 6) (Act) 
requires the agency to ``prepare a final regulatory flexibility 
analysis.'' A final regulatory flexibility analysis must, pursuant to 5 
U.S.C. 604(a), include the five elements listed in this final 
regulatory flexibility analysis. For purposes of this final regulatory 
flexibility analysis, a small entity is defined as a small business, 
small nonprofit organization, or small governmental jurisdiction. See 5 
U.S.C. 601(3)-(6). Small business size standards define whether a 
business is ``small'' and have been established for types of economic 
activities, or industry, generally under the North American Industry 
Classification System (NAICS). See title 13, part 121 of the Code of 
Federal Regulations (Small Business Size Regulations). The size 
standards look at various factors, including annual receipts, number of 
employees, and amount of assets, to determine whether the business is 
small. See title 13, Sec.  121.201 of the Code of Federal Regulations 
for the Small Business Size Standards by NAICS Industry.
    The Treasury Department and the IRS conclude that, although the 
overall impact of these final regulations will reduce the burden on 
small entities, these final regulations will impact a substantial 
number of small entities and the economic impact on those small 
entities may be significant. As a result, although the impact of these 
final regulations is positive for small entities, a final regulatory 
flexibility analysis is required.
A Statement of the Need for, and the Objectives of, the Final Rule
    The final regulations under Sec.  1.5000A-2 make permanent the 
guidance in Notice 2020-66 regarding whether certain Medicaid coverage 
of COVID-19 testing and diagnostic services is minimum essential 
coverage. These final regulations will ensure that taxpayers have 
accurate guidance when determining whether they have minimum essential 
coverage, which in turn will assist taxpayers in determining whether 
they qualify for the premium tax credit.
    The principal objective of the final regulations under section 
5000A is to provide certainty that Medicaid coverage limited to certain 
COVID-19 testing and diagnostic services is not minimum essential 
coverage. Minimum essential coverage is defined in section 5000A(f)(1) 
and generally includes coverage under the Medicaid program under title 
XIX of the Social Security Act. However, Sec.  1.5000A-2(b)(2) lists 
certain types of services that are excluded from the definition of 
minimum essential coverage and these final regulations will add 
Medicaid coverage of certain COVID-19 testing and diagnostic services 
to that list. Thus, eligibility for this coverage will not preclude an 
individual from qualifying for the premium tax credit.
    The final regulations under Sec. Sec.  1.6055-1 and 301.6056-1 make 
permanent the extension of time to furnish Forms 1095-B and 1095-C to 
responsible individuals and employees that has been provided every 
calendar year since 2015. These final regulations will reduce the 
burden on reporting entities by extending the time to satisfy their 
furnishing obligations for certain health care coverage without the 
penalty under section 6722 being imposed. This extension should result 
in an increase in the timeliness and accuracy of the reporting.
    The final regulations under Sec.  1.6055-1 also allow reporting 
entities to furnish the statement required by section 6055 by providing 
notice on their website and by providing the statement to the 
responsible individual upon request. These final regulations will 
reduce the burden on reporting entities by providing a less costly 
option to satisfy the furnishing obligation under section 6055 for tax 
years when individuals do not need to report health coverage 
information on their Federal income tax returns.
    The principal objectives of the final regulations under section 
6055 are to (1) provide reporting entities under section 6055 and 
section 6056 with additional time to complete and furnish accurate 
statements to responsible individuals and full-time employees; and (2) 
to offer reporting entities a minimally burdensome option by which to 
furnish the statement required by section 6055. The legal basis for the 
extended due date for statements required under

[[Page 76574]]

section 6055 and section 6056 was originally set forth in the series of 
notices referenced in the Summary of Comments and Explanation of 
Revisions section of this preamble. In those notices, the Treasury 
Department and the IRS extended the dates for furnishing statements to 
responsible individuals and full-time employees and provided that 
reporting entities that satisfy the furnishing requirement by the 
extended due date will not be subject to penalties under sections 6721 
and 6722. Section 6724(a) provides that no penalty is imposed under 
section 6721 or 6722 if it is shown that the failure is due to 
reasonable cause and not to willful neglect. The legal basis for the 
alternative manner of furnishing statements under section 6055 is in 
section 6055(b)(1)(A), which authorizes the Secretary to prescribe the 
form of the return that is required to be furnished under section 
6055(c).
Summaries of the Significant Issues Raised in the Public Comments 
Responding to the Initial Regulatory Flexibility Analysis (IRFA) and of 
the Agency's Assessment of the Issues, and a Statement of Any Changes 
Made to the Rule as a Result of the Comments
    No comments were received in response to the IRFA in the proposed 
regulations.
The Response of the Agency to Any Comments Filed by the Chief Counsel 
for Advocacy of the SBA in Response to the Proposed Rule
    Pursuant to section 7805(f) of the Code, the proposed regulations 
were submitted to the Chief Counsel of the Office of Advocacy of the 
Small Business Administration for comment on its impact on small 
business, and no comments were received.
A Description and an Estimate of the Number of Small Entities to Which 
the Rule Will Apply or an Explanation of Why an Estimate Is Not 
Available
    These final regulations apply to health insurance issuers, self-
insured employers, government agencies, and other providers of minimum 
essential coverage required to furnish individual statements regarding 
such coverage under section 6055, and to ALE members that are required 
by section 6056 to furnish information relating to health insurance 
that the ALE offers to its full-time employees. An estimate of the 
number of small entities subject to these final regulations is not 
feasible because a correlation between small entities and this type of 
reporting cannot be made. These final regulations affect entities in 
all industries using any NAICS code.
A Description of the Projected Reporting, and Other Compliance 
Requirements of the Rule, Including an Estimate of the Classes of Small 
Entities Subject to the Requirements and the Type of Professional 
Skills Necessary for Preparation of the Report or Record
    As discussed in the Paperwork Reduction Act section earlier in this 
preamble, these final regulations do not impose any reporting, 
recordkeeping, or similar requirements on any small entities that did 
not already apply to small entities.
A Description of the Steps the Agency Has Taken To Minimize the 
Significant Economic Impact on Small Entities Consistent With the 
Stated Objectives of Applicable Statutes, Including a Statement of the 
Factual, Policy, and Legal Reasons for Selecting Any Alternative 
Adopted in the Final Rule and Why Other Significant Alternatives 
Affecting the Impact on Small Entities That the Agency Considered Were 
Rejected
    The Treasury Department and the IRS are not aware of any steps that 
could be taken to minimize the economic impact on small entities that 
would also be consistent with the objectives of these final regulations 
and have determined that, without a legislative change, there are no 
viable alternatives to the provisions in the final regulations that 
would enable reporting entities to continue to satisfy their reporting 
obligations with a lesser burden. These final regulations do not impose 
any more requirements on small entities than are necessary to 
effectively administer the internal revenue laws. Further, these final 
regulations do not subject small entities to any requirements that are 
not also applicable to larger entities covered by the regulations.
    Accordingly, the Treasury Department and the IRS conclude that the 
provisions of these final regulations will effectively promote sound 
tax administration. The additional exclusion from the definition of 
minimum essential coverage in Sec.  1.5000A-2 will provide guidance to 
ensure that taxpayers can adequately determine whether they have 
minimum essential coverage that would preclude them from qualifying for 
a premium tax credit. An automatic extension of time to furnish 
statements under Sec. Sec.  1.6055-1(g)(4)(i) and 301.6056-1(g)(1) will 
assist reporting entities to timely and accurately satisfy their 
statutory reporting obligations, while also reducing the cost and 
burden of having to request an extension. Last, the alternative manner 
of furnishing a statement in Sec.  1.6055-1(g)(4)(ii)(B), at a time 
when the individual shared responsibility payment amount is zero, will 
also help reporting entities reduce costs. Accordingly, implementation 
of these final regulations will increase tax compliance by providing 
definitive guidance to individuals, will allow reporting entities the 
time needed to furnish timely and accurate statements under sections 
6055 and 6056, and will allow reporting entities an alternative method 
of furnishing statements under section 6055 to minimize their 
production and distribution costs.

IV. Unfunded Mandates Reform Act

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires that agencies assess anticipated costs and benefits and take 
certain other actions before issuing a final rule that includes any 
Federal mandate that may result in expenditures in any one year by a 
state, local, or tribal government, in the aggregate, or by the private 
sector, of $100 million (updated annually for inflation). This final 
rule does not include any Federal mandate that may result in 
expenditures by state, local, or tribal governments, or by the private 
sector in excess of that threshold.

V. Executive Order 13132: Federalism

    Executive Order 13132 (Federalism) prohibits an agency from 
publishing any rule that has federalism implications if the rule either 
imposes substantial, direct compliance costs on state and local 
governments, and is not required by statute, or preempts state law, 
unless the agency meets the consultation and funding requirements of 
section 6 of the Executive order. This final rule does not have 
federalism implications and does not impose substantial direct 
compliance costs on state and local governments or preempt state law 
within the meaning of the Executive order.

Drafting Information

    The principal author of these final regulations is Gerald Semasek 
of the Office of Associate Chief Counsel (Income Tax and Accounting). 
Other personnel from the Treasury Department and the IRS participated 
in the development of these regulations.

List of Subjects

26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

[[Page 76575]]

26 CFR Part 301

    Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income 
taxes, Penalties, Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

    Accordingly, the Treasury Department and the IRS amend 26 CFR parts 
1 and 301 as follows:

PART 1--INCOME TAXES

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

    Authority:  26 U.S.C. 7805 * * *


0
Par. 2. Section 1.5000A-2 is amended by revising paragraph (b)(2)(vii) 
and (viii); and adding paragraph (b)(2)(ix) to read as follows:


Sec.  1.5000A-2   Minimum essential coverage.

* * * * *
    (b) * * *
    (2) * * *
    (vii) Coverage under 10 U.S.C. 1079(a), 1086(c)(1), or 1086(d)(1) 
that is solely limited to space available care in a facility of the 
uniformed services for individuals excluded from TRICARE coverage for 
care from private sector providers;
    (viii) Coverage under 10 U.S.C. 1074a and 1074b for an injury, 
illness, or disease incurred or aggravated in the line of duty for 
individuals who are not on active duty; and
    (ix) Medicaid coverage limited to COVID-19 testing and diagnostic 
services provided under section 6004(a)(3) of the Families First 
Coronavirus Response Act, Pub. L. 116-127, 134 Stat. 178 (March 18, 
2020).
* * * * *

0
Par. 3. Section 1.5000A-5 is amended by revising paragraph (c) to read 
as follows:


Sec.  1.5000A-5   Administration and procedure.

* * * * *
    (c) Applicability date. Except as otherwise provided in this 
paragraph (c), this section and Sec. Sec.  1.5000A-1 through 1.5000A-4 
apply for months beginning after December 31, 2013. Section 1.5000A-
2(b)(2)(ix) applies for months beginning after September 28, 2020.

0
Par. 4. Section 1.6055-1 is amended by revising the first sentence of 
paragraph (g)(1) introductory text and paragraphs (g)(4) and (j) to 
read as follows:


Sec.  1.6055-1   Information reporting for minimum essential coverage.

* * * * *
    (g) * * *
    (1) * * * Except as otherwise provided in paragraph (g)(4)(ii)(B) 
of this section, every person required to file a return under this 
section must furnish to the responsible individual identified on the 
return a written statement. * * *
* * * * *
    (4) Time and manner for furnishing statements--(i) Time for 
furnishing. Except as otherwise provided in this paragraph (g)(4)(i), a 
reporting entity must furnish the statements required under paragraph 
(g)(1) of this section on or before January 31 of the year following 
the calendar year in which the minimum essential coverage is provided. 
Reporting entities are granted an automatic, 30-day extension of time 
in which to furnish these statements.
    (ii) Manner of furnishing--(A) In general. Except as otherwise 
provided in paragraph (g)(4)(ii)(B) of this section, if mailed, the 
statement must be sent to the responsible individual's last known 
permanent address or, if no permanent address is known, to the 
individual's temporary address. For purposes of this paragraph 
(g)(4)(ii)(A), a reporting entity's first class mailing to the last 
known permanent address, or if no permanent address is known, the 
temporary address, discharges the requirement to furnish the statement. 
A reporting entity may furnish the statement electronically if the 
requirements of Sec.  1.6055-2 are satisfied.
    (B) Alternative manner of furnishing. A reporting entity shall be 
treated as furnishing the statement in a timely manner under this 
paragraph (g)(4) if the individual shared responsibility payment amount 
under section 5000A(c) for the calendar year in which the minimum 
essential coverage is provided is zero and the reporting entity 
satisfies the requirements in this paragraph (g)(4)(ii)(B). If the 
reporting entity is an applicable large employer member that sponsors a 
self-insured group health plan and makes a return in accordance with 
paragraph (f)(2)(i) of this section related to that plan, the 
applicable large employer member may use the alternative manner of 
furnishing described in this paragraph (g)(4)(ii)(B) for statements to 
non-full-time employees and non-employees who are enrolled in the 
applicable large employer's self-insured group health plan. The 
reporting entity satisfies the requirements of this paragraph 
(g)(4)(ii)(B) only if the reporting entity:
    (1) Provides clear and conspicuous notice, in a location on its 
website that is reasonably accessible to all responsible individuals, 
stating that responsible individuals may receive a copy of their 
statement upon request. The notice must include an email address, a 
physical address to which a request for a statement may be sent, and a 
telephone number that responsible individuals may use to contact the 
reporting entity with any questions. A notice posted on a reporting 
entity's website satisfies the requirements of this paragraph 
(g)(4)(ii)(B)(1) if it is written in plain, non-technical terms and 
with letters of a font size large enough, including any visual clues or 
graphical figures, to call to a viewer's attention that the information 
pertains to tax statements reporting that individuals had health 
coverage. For example, a reporting entity's website provides a clear 
and conspicuous notice if it includes a statement on the main page--or 
a link on the main page, reading ``Tax Information'', to a secondary 
page that includes a statement--in capital letters, ``IMPORTANT HEALTH 
COVERAGE TAX DOCUMENTS''; explains how responsible individuals may 
request a copy of Form 1095-B, Health Coverage (or, for an applicable 
large employer member that sponsors a self-insured group health plan 
and makes a return in accordance with paragraph (f)(2)(i) of this 
section, explains how non-full-time employees and non-employees who are 
enrolled in the plan may request a copy of Form 1095-C, Employer-
Provided Health Insurance Offer and Coverage); and includes the 
reporting entity's email address, mailing address, and telephone 
number;
    (2) Posts the notice on its website by the date specified in 
paragraph (g)(4)(i) of this section and retains the notice in the same 
location on its website through October 15 of the year following the 
calendar year to which the statements relate (or the first business day 
after October 15, if October 15 falls on a Saturday, Sunday or legal 
holiday); and
    (3) Furnishes the statement to a requesting responsible individual 
within 30 days of the date the request is received. To satisfy the 
requirement of this paragraph (g)(4)(ii)(B)(3), a reporting entity may 
furnish the statement electronically pursuant to Sec.  1.6055-2(a)(2) 
through (6).
* * * * *
    (j) Applicability date. Except as otherwise provided in this 
paragraph (j), this section applies for calendar years beginning after 
December 31, 2014. Paragraphs (g)(1) and (g)(4)(i) and (ii) of this 
section apply for calendar years beginning after December 31, 2021, but 
reporting entities may choose to apply

[[Page 76576]]

paragraphs (g)(1) and (g)(4)(i) and (ii) of this section for calendar 
years beginning after December 31, 2020. Except as otherwise provided 
in this paragraph (j), paragraph (g)(4), as contained in 26 CFR part 1 
edition revised as of April 1, 2021, applies to calendar years ending 
after December 31, 2014, and beginning before January 1, 2022.

PART 301--PROCEDURE AND ADMINISTRATION

0
Par. 5. The authority citation for part 301 continues to read in part 
as follows:

    Authority:  26 U.S.C. 7805 * * *


0
Par. 6. Section 301.6056-1 is amended by adding introductory text to 
paragraph (g)(1) and revising paragraph (m) to read as follows:


Sec.  301.6056-1  Rules relating to reporting by applicable large 
employers on health insurance coverage offered under employer-sponsored 
plans.

* * * * *
    (g) * * *
    (1) Time for furnishing. Except as otherwise provided in this 
paragraph (g)(1), each statement required by this section for a 
calendar year must be furnished to a full-time employee on or before 
January 31 of the year succeeding the calendar year in accordance with 
applicable Internal Revenue Service procedures and instructions. 
Applicable large employers are granted an automatic, 30-day extension 
of time in which to furnish these statements.
* * * * *
    (m) Applicability date. Except as otherwise provided in this 
paragraph (m), this section applies for calendar years beginning after 
December 31, 2014. Paragraph (g)(1) of this section applies for 
calendar years beginning after December 31, 2021, but applicable large 
employers may choose to apply paragraph (g)(1) of this section for 
calendar years beginning after December 31, 2020. Except as otherwise 
provided in this paragraph (m), paragraph (g)(1), as contained in 26 
CFR part 1 edition revised as of April 1, 2021, applies to calendar 
years ending after December 31, 2014, and beginning before January 1, 
2022.

Melanie R. Krause,
Acting Deputy Commissioner for Services and Enforcement.
    Approved: December 6, 2022.
Lily Batchelder,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2022-27212 Filed 12-12-22; 4:15 pm]
BILLING CODE 4830-01-P