Learn more about Medicaid and COVID-19 testing and diagnostics coverage.
Find out why applicable large employers (ALEs) should take note of this news.
Learn the background of the FFCRA and COVID-19 testing and diagnostics for uninsured people covered by Medicaid.
Discover the interim and future guidance (and applicable dates) for COVID-19 testing and diagnostics coverage.
In Notice 2020-66, the IRS recently made some decisions regarding COVID-19 testing and diagnostics. They decided that Medicaid coverage limited to these COVID-19 services does not qualify as minimum essential coverage under a government-sponsored program. So, an individual’s eligibility for this coverage for one or more months doesn’t prevent those months from qualifying as coverage months for purposes of determining eligibility for the premium tax credit under Internal Revenue Code Section 36B.
Applicable large employers (ALEs) should take note. Under the Affordable Care Act (ACA), if an ALE doesn’t offer affordable minimum essential coverage and provide minimum value to its full-time employees and their dependents, the employer may be subject to a penalty. This penalty occurs if at least one of its full-time employees receives a premium tax credit for buying individual coverage through a Health Insurance Marketplace (or “exchange”). But how will this affect your organization? Fiducial has the information you need to know.
Background
The Families First Coronavirus Response Act (FFCRA) allows states to provide COVID-19 testing and diagnostic services to uninsured people covered by Medicaid.
Under the ACA, eligible individuals who buy coverage under a qualified health plan through an exchange may claim a premium tax credit under Sec. 36B. 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. Furthermore, a coverage month for an individual includes only those months that he or she is ineligible for minimum essential coverage other than coverage in the individual market.
Minimum essential coverage generally includes coverage under government-sponsored programs, including Medicaid. However, the IRS can — and has — determined that certain health care coverage providing limited benefits isn’t minimum essential coverage under a government-sponsored program. For example, tuberculosis-related services aren’t minimum essential coverage.
Interim and future guidance on COVID-19 testing and diagnostics
In Notice 2020-66, the IRS announced its determination that, under the FFCRA, Medicaid coverage limited to COVID-19 testing and diagnostic services isn’t minimum essential coverage under a government-sponsored program. Thus, an individual’s eligibility for this coverage for one or more months doesn’t prevent those months from qualifying as coverage months for purposes of determining eligibility for the premium tax credit under Sec. 36B.
The IRS also announced that the agency intends to add Medicaid coverage of COVID-19 testing and diagnostic services to the list of health care coverage that isn’t minimum essential coverage under a government-sponsored program.
Applicable dates
Notice 2020-66 applies to tax years beginning in or after 2020. Until the IRS issues further guidance, taxpayers may rely on the interim guidance described in the Notice.
Further, if the IRS does not release any proposed regs or other guidance re: COVID-19 testing and diagnostics within 18 months after today (the scheduled date of publication for the Notice in the Internal Revenue Bulletin), taxpayers may continue to rely on the interim guidance. Until the IRS issues additional guidance, they won’t assert a position adverse to any taxpayer — including an ALE — based in whole or in part on the Notice. Need help understanding whether and how the guidance may apply to your organization? Call Fiducial at 1-866-FIDUCIAL or make an appointment at one of our office locations. Ready to book an appointment now? Click here. Know someone who might need our services? We love referrals!
For more small business COVID-19 resources, visit Fiducial’s Coronavirus Update Center to find information on SBA loans, tax updates, the Paycheck Protection Program, paid sick and family leave, and more.