Exactly how Would the IRS Verify OFF EXCHANGE Insurance?

[wehotex]

From what I've read, poor IRS folk are going to be pulling their hairs with verifying subsidies for the ON EXCHANGE critters. How are they going to verify if the OFFs have creditable coverage or not? Will the insurance companies willingly supply Uncle Sugar with this information or will it be an affidavit on the tax form? Is there a conflict of privacy if the insurance companies were to supply this info to the government?

 

[timsip]

My guess is that they will have to provide you with a document that verifies how many months you had credible coverage and a line on your 1040 that you transfer info to. I also believe there will be a new section that calculates your actual subsidy if you applied for one and it will determine your clawback or additional refund. Also if you don't provide information about your credible coverage, there will be a section that calculates the penalty and adds that to what you owe or subtracts it from your refund. Uncle Sugar isn't going to get screwed out of any of this.

 

[Yagents]

There is a new numbered form that will be sent to both the client and the IRS. Similar to a 5498 tax form for IRA contributions. I forgot the name of it, but I posted it before. think of it like a CCC (cert of creditable coverage)

 

[wehotex]

There is a new numbered form that will be sent to both the client and the IRS. Similar to a 5498 tax form for IRA contributions. I forgot the name of it, but I posted it before. think of it like a CCC (cert of creditable coverage)

So then the insurance company will be cooperating in submitting such information to the IRS? If paying for insurance is a "tax" , are there other examples where a business sends information to the IRS? All information that the IRS (as far as I know) receives has ALWAYS been income, interest, passive income, capital gains, etc. I've never heard of "tax" information being submitted to the IRS before (until now).

 

[Yagents]

I gave you the answer. Having proof of coverage avoids the "tax". Otherwise, we have an "honor" system, and the gov't would never allow that........ooops spoke to soon. (referencing OEP extension) (to not confuse anyone with my cryptic joke)

 

[AllenChicago]

Will the insurance companies willingly supply Uncle Sugar with this information or will it be an affidavit on the tax form? Is there a conflict of privacy if the insurance companies were to supply this info to the government?

On March 5, 2014, the IRS finalized regulations that describe how health insurers are to report which individuals in a household have "Minimum Essential Coverage". One form for the IRS and one for the Insured. MEC insurer reporting is not required for On-Exchange purchases.

Excerpt:
"The 6055 return, for the IRS, must report the name, address, and employer identification number of the reporting entity; the name, address, Social Security number of the responsible individual (the primary insured, employee, former employee, uniformed service member, parent or other related person who enrolls one or more persons in coverage); the name and Social Security number of each individual covered by the policy or program; the months for which each individual was enrolled in coverage or entitled to receive benefits for at least one day; and any other information required by the IRS. The report must specify the actual months in which coverage was provided rather than the dates on which coverage began and ended."

"The statement for the insured must be provided by January 31st of the year following the coverage year so that individuals have it in time to file their taxes, but reporting entities that can show good cause can request an extension of up to 30 days from the IRS. The statement must be sent to the responsible individual’s last known permanent address or, if no permanent address is known, a temporary address. Reporting entities do not need to make any further efforts to locate the individual if the statement is returned."

Source: Implementing Health Reform: Allowing Noncompliant Policies; Benefits And Payment Parameters Rule (Part 3, IRS Reporting Rules) – Health Affairs Blog
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