PART 57—HEALTH INSURANCE PROVIDERS FEE Authority: 26 U.S.C. 7805; sec. 9010, Pub. L. 111-148 (124 Stat. 119 (2010)). Section 57.3 also issued under 26 U.S.C. 6071(a); Section 57.7 also issued under 26 U.S.C. 6302(a); Section 57.6302-1 also issued under 26 U.S.C. 6302(a). Source: T.D. 9643, 78 FR 71487, Nov. 29, 2013, unless otherwise noted. § 57.1 Overview. (a) The regulations in this part are designated “Health Insurance Providers Fee Regulations.” (b) The regulations in this part provide guidance on the annual fee imposed on covered entities engaged in the business of providing health insurance by 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). All references to section 9010 in this part 57 are references to section 9010 of the ACA. Unless otherwise indicated, all other references to subtitles, chapters, subchapters, and sections are references to subtitles, chapters, subchapters and sections in the Internal Revenue Code and the related regulations. (c) Section 9010(e)(1) sets an applicable fee amount for each year, beginning with 2014, that will be apportioned among covered entities with aggregate net premiums written over $25 million for health insurance for United States health risks. Generally, each covered entity is liable for a fee in each fee year that is based on its net premiums written during the data year in an amount determined by the Internal Revenue Service (IRS) under the rules of this part. § 57.2 Explanation of terms. (a) In general. (b) Covered entity In general. covered entity (i) A health insurance issuer within the meaning of section 9832(b)(2), defined in section 9832(b)(2) as an insurance company, insurance service, or insurance organization that is licensed to engage in the business of insurance in a State and that is subject to State law that regulates insurance (within the meaning of section 514(b)(2) of the Employee Retirement Income Security Act of 1974 (ERISA)); (ii) A health maintenance organization within the meaning of section 9832(b)(3), defined in section 9832(b)(3) as— (A) A Federally qualified health maintenance organization (as defined in section 1301(a) of the Public Health Service Act); (B) An organization recognized under State law as a health maintenance organization; or (C) A similar organization regulated under State law for solvency in the same manner and to the same extent as such a health maintenance organization; (iii) An insurance company subject to tax under part I or II of subchapter L, or that would be subject to tax under part I or II of subchapter L but for the entity being exempt from tax under section 501(a); (iv) An entity that provides health insurance under Medicare Advantage, Medicare Part D, or Medicaid; or (v) A multiple employer welfare arrangement (MEWA), within the meaning of section 3(40) of ERISA, to the extent not fully insured, provided that for this purpose a covered entity does not include a MEWA that with respect to the plan year ending with or within the section 9010 data year satisfies the requirements to be exempt from reporting under 29 CFR 2520.101-2(c)(2)(ii)(A), (B), or (C). (2) Exclusions Self-insured employer. covered entity self-insured employer self-insured employer (ii) Governmental entity. covered entity governmental entity (A) The government of the United States; (B) Any State or a political subdivision thereof (as defined for purposes of section 103) including, for example, a State health department or a State insurance commission; (C) Any Indian tribal government (as defined in section 7701(a)(40)) or a subdivision thereof (determined in accordance with section 7871(d)); or (D) Any agency or instrumentality of any of the foregoing. (iii) Certain nonprofit corporations. covered entity (A) That is incorporated as a nonprofit corporation under a State law; (B) No part of the net earnings of which inures to the benefit of any private shareholder or individual (within the meaning of §§ 1.501(a)-1(c) and 1.501(c)(3)-1(c)(2) of this chapter); (C) No substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (within the meaning of § 1.501(c)(3)-1(c)(3)(ii) of this chapter) (or which is described in section 501(h)(3) and is not denied exemption under section 501(a) by reason of section 501(h)); (D) That does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office (within the meaning of § 1.501(c)(3)-1(c)(3)(iii) of this chapter); and (E) More than 80 percent of the gross revenues of which is received from government programs that target low-income, elderly, or disabled populations under titles XVIII, XIX, and XXI of the Social Security Act. (iv) Certain voluntary employees' beneficiary associations (VEBAs). covered entity (3) Application of exclusions Test year. test year (ii) Consistency rule. (iii) Special rule for fee year as test year. (4) State. State (c) Controlled groups In general. controlled group (2) Treatment of controlled group. (3) Special rules. (i) A foreign entity subject to tax under section 881 is included within a controlled group under section 52(a) or (b); and (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. (d) Data year. data year (e) Designated entity In general. designated entity (i) Filing Form 8963, “Report of Health Insurance Provider Information”; (ii) Receiving IRS communications about the fee for the group; (iii) Filing a corrected Form 8963 for the group, if applicable, as described in § 57.6; and (iv) Paying the fee for the group to the government. (2) Selection of designated entity In general. (ii) Requirement for consolidated groups; common parent. (iii) Failure to select a designated entity. (f) Fee. fee (g) Fee year. fee year (h) Health insurance In general. health insurance health insurance coverage health insurance (2) Exclusions. health insurance (i) Coverage only for accident, or disability income insurance, or any combination thereof, within the meaning of section 9832(c)(1)(A); (ii) Coverage issued as a supplement to liability insurance within the meaning of section 9832(c)(1)(B); (iii) Liability insurance, including general liability insurance and automobile liability insurance, within the meaning of section 9832(c)(1)(C); (iv) Workers' compensation or similar insurance within the meaning of section 9832(c)(1)(D); (v) Automobile medical payment insurance within the meaning of section 9832(c)(1)(E); (vi) Credit-only insurance within the meaning of section 9832(c)(1)(F); (vii) Coverage for on-site medical clinics within the meaning of section 9832(c)(1)(G); (viii) Other insurance coverage that is similar to the insurance coverage in paragraph (h)(2)(i) through (vii) of this section under which benefits for medical care are secondary or incidental to other insurance benefits, within the meaning of section 9832(c)(1)(H), to the extent such insurance coverage is specified in regulations under section 9832(c)(1)(H); (ix) Benefits for long-term care, nursing home care, home health care, community-based care, or any combination thereof, within the meaning of section 9832(c)(2)(B), and such other similar, limited benefits to the extent such benefits are specified in regulations under section 9832(c)(2)(C); (x) Coverage only for a specified disease or illness within the meaning of section 9832(c)(3)(A); (xi) Hospital indemnity or other fixed indemnity insurance within the meaning of section 9832(c)(3)(B); (xii) Medicare supplemental health insurance (as defined under section 1882(g)(1) of the Social Security Act), coverage supplemental to the coverage provided under chapter 55 of title 10, United States Code, and similar supplemental coverage provided to coverage under a group health plan, within the meaning of section 9832(c)(4); (xiii) Coverage under an employee assistance plan, a disease management plan, or a wellness plan, if the benefits provided under the plan constitute excepted benefits under section 9832(c)(2) (or do not otherwise provide benefits consisting of health insurance under paragraph (h)(1) of this section); (xiv) Student administrative health fee arrangements, as defined in paragraph (h)(3); (xv) Travel insurance, as defined in paragraph (h)(4) of this section; or (xvi) Indemnity reinsurance, as defined in paragraph (h)(5)(i) of this section. (3) Student administrative health fee arrangement. student administrative health fee arrangement (4) Travel insurance. travel insurance travel insurance (5) Reinsurance Indemnity reinsurance. indemnity reinsurance (A) The reinsuring company agrees to accept, and to indemnify the issuing company for, all or part of the risk of loss under policies specified in the agreement; and (B) The covered entity retains its liability to, and its contractual relationship with, the individuals whose health risks are insured under the policies specified in the agreement. (ii) Assumption reinsurance. assumption reinsurance (i) Located in the United States. located in the United States (j) NAIC. NAIC (k) Net premiums written net premiums written net premiums written net premiums written (l) SHCE. SHCE (m) United States. United States (n) United States health risk. United States health risk (1) A United States citizen; (2) A resident of the United States (within the meaning of section 7701(b)(1)(A)); or (3) Located in the United States (within the meaning of paragraph (i) of this section) during the period such individual is so located. [T.D. 9643, 78 FR 71487, Nov. 29, 2013, as amended by T.D. 9711, 80 FR 10334, Feb. 26, 2015; T.D. 9830, 83 FR 8174, Feb. 26, 2018] § 57.3 Reporting requirements and associated penalties. (a) Reporting requirement In general. (2) Manner of reporting In general. (ii) Electronic Filing Required. (3) Disclosure of reported information. (b) Penalties Failure to report In general. (ii) Amount. (A) $10,000, plus (B) The lesser of— ( 1 ( 2 (iii) Reasonable cause. (iv) Treatment of penalty. (A) Is treated as a penalty under subtitle F; (B) Must be paid on notice and demand by the IRS and in the same manner as a tax under the Internal Revenue Code; and (C) Is a penalty for which only civil actions for refund under procedures of subtitle F apply. (2) Accuracy-related penalty In general. (ii) Amount. (A) The amount of the covered entity's fee for the fee year that the IRS determines should have been paid in the absence of any understatement; over (B) The amount of the covered entity's fee for the fee year that the IRS determined based on the understatement. (iii) Understatement. (iv) Treatment of penalty. (3) Controlled groups. [T.D. 9643, 78 FR 71487, Nov. 29, 2013, as amended by T.D. 9881, 84 FR 61547, Nov. 13, 2019] § 57.4 Fee calculation. (a) Fee components In general. (2) Calculation of net premiums written. (3) Applicable amount. Fee year Applicable amount 2014 $8,000,000,000 2015 $11,300,000,000 2016 $11,300,000,000 2017 $13,900,000,000 2018 $14,300,000,000 2019 and thereafter The applicable amount in the preceding fee year increased by the rate of premium growth (within the meaning of section 36B(b)(3)(A)(ii)). (4) Net premiums written taken into account In general. Covered entity's net premiums written during the data year that are: Percentage of net premiums written taken into account is: Not more than $25,000,000 0 More than $25,000,000 but not more than $50,000,000 50 More than $50,000,000 100 (ii) Controlled groups. (iii) Partial exclusion for certain exempt activities. (b) Determination of net premiums written In general. (2) Presumption for United States health risks. (c) Determination of amounts taken into account. (2) For each fee year, the IRS will calculate the aggregate net premiums written for health insurance of United States health risks taken into account for all covered entities during the data year. The resulting number is the denominator of the fraction described in paragraph (d)(2) of this section. (d) Allocated fee calculated. (1) The numerator of which is the covered entity's net premiums written for health insurance of United States health risks during the data year taken into account (described in paragraph (c)(1) of this section); and (2) The denominator of which is the aggregate net premiums written for health insurance of United States health risks for all covered entities during the data year taken into account (described in paragraph (c)(2) of this section). § 57.5 Notice of preliminary fee calculation. (a) Content of notice. (1) The covered entity's allocated fee; (2) The covered entity's net premiums written for health insurance of United States health risks; (3) The covered entity's net premiums written for health insurance of United States health risks taken into account after the application of § 57.4(a)(4); (4) The aggregate net premiums written for health insurance of United States health risks taken into account for all covered entities; and (5) Instructions for how to submit a corrected Form 8963, “Report of Health Insurance Provider Information,” to correct any errors through the error correction process. (b) Timing of notice. § 57.6 Error correction process. (a) In general. (b) Time and manner. (c) Finality. § 57.7 Notification and fee payment. (a) Content of notice. (1) The covered entity's allocated fee; (2) The covered entity's net premiums written for health insurance of United States health risks; (3) The covered entity's net premiums written for health insurance of United States health risks taken into account after the application of § 57.4(a)(4); (4) The aggregate net premiums written for health insurance of United States health risks taken into account for all covered entities; and (5) The final determination on the covered entity's corrected Form 8963, “Report of Health Insurance Provider Information,” if any. (b) Timing of notice. (c) Differences in preliminary fee calculation and final calculation. (d) Payment of final fee. (e) Controlled groups. § 57.8 Tax treatment of fee. (a) Treatment as an excise tax. (b) Deficiency procedures. (c) Limitation on assessment. (d) Application of section 275. § 57.9 Refund claims. Any claim for a refund of the fee must be made by the entity that paid the fee to the government and must be made on Form 843, “Claim for Refund and Request for Abatement,” in accordance with the instructions for that form. § 57.10 Applicability date. (a) Except as provided in paragraphs (b) and (c) of this section, §§ 57.1 through 57.9 apply to any fee that is due on or after September 30, 2014. (b) Paragraphs (b)(3) and (c)(3)(ii) of § 57.2. (c) Section 57.3(a)(2)(ii) applies to Forms 8963, including corrected Forms 8963, filed after December 31, 2019. [T.D. 9711, 80 FR 10335, Feb. 26, 2015, as amended by T.D. 9830, 83 FR 8175, Feb. 26, 2018; T.D. 9881, 84 FR 61547, Nov. 13, 2019] § 57.6302-1 Method of paying the health insurance providers fee. (a) Fee to be paid by electronic funds transfer. (b) Effective/Applicability date.