Part III. Administrative, Procedural, and Miscellaneous

Section 5000A Transition Relief for Individuals with Certain Government- Sponsored Limited-Benefit Health Coverage

Notice 2014–10

This notice provides relief from the individual shared responsibility payment required under § 5000A of the Internal Revenue Code for months in 2014 in which individuals have, under Medicaid and chapter 55 of Title 10, U.S.C., limited-benefit health coverage that is not minimum essential coverage.

BACKGROUND

For each month beginning after December 31, 2013, § 5000A requires individuals to either maintain minimum essential coverage for themselves and any nonexempt family members, qualify for an exemption, or include an individual shared responsibility payment with their Federal income tax return. A taxpayer is liable under § 5000A for any nonexempt individual whom the taxpayer may claim as a dependent.

Under § 5000A(f)(1)(A), minimum essential coverage includes coverage under certain specified government-sponsored programs (“government-sponsored minimum essential coverage”). On August 30, 2013, the Treasury Department and the Internal Revenue Service (IRS) published final regulations under § 5000A. The final regulations provide that governmentsponsored minimum essential coverage includes coverage under the Medicaid program under Title XIX of the Social Security Act (42 U.S.C. 1396 and following sections), other than the following limited coverage under Medicaid:

optional coverage of family planning services under section 1902(a)(10)(A)(ii)(XXI) of the Social Security Act (42 U.S.C. 1396a(a)(10)(A)(ii)(XXI)) (“family planning services Medicaid”), optional coverage of tuberculosis-related services under section 1902(a)(10)(A)(ii)(XII) of the Social Security Act (42 U.S.C. 1396a(a)(10)(A)(ii)(XII) (“tuberculosisrelated services Medicaid”), coverage

of pregnancy-related services under section 1902(a)(10)(A)(i)(IV) and (a)(10)(A)(ii)(IX) of the Social Security Act (42 U.S.C. 1396a(a)(10)(A)(i)(IV), (a)(10)(A)(ii)(IX)) (“pregnancy-related Medicaid”), and coverage limited to treatment of emergency medical conditions in accordance with 8 U.S.C. 1611(b)(1)(A), as authorized by section 1903(v) of the Social Security Act (42 U.S.C. 1396b(v)) (“emergency medical conditions Medicaid”). The final § 5000A regulations also provide that governmentsponsored minimum essential coverage includes medical coverage under chapter 55 of Title 10, U.S.C., including coverage under the TRICARE program.

The final § 5000A regulations reserve on whether certain government-sponsored programs that provide limited benefits are minimum essential coverage, including (i) coverage authorized under section 1115 of the Social Security Act (“Section 1115 demonstration projects”); (ii) coverage for medically needy individuals, see section 1902(a)(10)(C) of the Social Security Act (42 U.S.C. 1396a(a)(10)(C)) and 42 CFR 435.300 and following sections; (iii) coverage under section 1079(a), 1086(c)(1), or 1086(d)(1) of Title 10, U.S.C., for certain individuals who are excluded from TRICARE coverage for health care services from private sector providers and only eligible for space available care in a facility for the uniformed services (“space available care”); and (iv) coverage under sections 1074a and 1074b of Title 10, U.S.C., for individuals not on active duty who are entitled to episodic care for an injury, illness, or disease incurred or aggravated in the line of duty (“line-of-duty care”). See § 1.5000A–2(b)(2) (78 FR 53646, 53658). The preamble to the final § 5000A regulations indicates that future guidance will provide that the government-sponsored limited-benefit coverage reserved on in the final § 5000A regulations is not minimum essential coverage. However, the preamble to the final § 5000A regulations also indicates that, if future rulemaking clarifies that such limited-benefit coverage is not minimum essential coverage, individuals with that coverage for a month in 2014 will not be subject to the § 5000A

individual shared responsibility payment for that month. See T.D. 9632 (78 FR 53646, 53648–53650). Proposed regulations (REG–141036– 13) published concurrently with this notice provide that coverage under certain Section 1115 demonstration projects authorized under section 1115(a)(2) of the Social Security Act (42 U.S.C. 1315(a)(2)), coverage for medically needy individuals, space available care, and line-of-duty care is not government-sponsored minimum essential coverage.

DISCUSSION

Individuals enrolled in family planning services Medicaid, tuberculosis-related services Medicaid, pregnancy-related Medicaid, emergency medical conditions Medicaid, certain Section 1115 demonstration projects, coverage for medically needy individuals, space available care, or line-of-duty care may not know when enrolling for the 2014 coverage year that such coverage is not minimum essential coverage. Accordingly, to provide relief to individuals in this situation (or to taxpayers who are liable under § 5000A for other individuals in this situation), and consistent with the preamble to the final regulations, the § 5000A shared responsibility payment is not imposed with respect to an individual for months in 2014 when the individual has coverage under family planning services Medicaid, tuberculosisrelated services Medicaid, pregnancyrelated Medicaid, emergency medical conditions Medicaid, a Section 1115 demonstration project authorized under section 1115(a)(2) of the Social Security Act (42 U.S.C. 1315(a)(2)), coverage for medically needy individuals, space available care, or line-of-duty care.

The relief provided by this notice applies only for determining a taxpayer’s § 5000A individual shared responsibility payment for not maintaining minimum essential coverage in 2014. Solely for the purpose of determining whether a period without coverage qualifies as a short coverage gap described in § 5000A(e)(4), an individual will be treated as having minimum essential coverage for any month in 2014

Bulletin No. 2014–9 605 February 24, 2014

when that individual is eligible for the transition relief provided by this notice.

DRAFTING INFORMATION

The principal author of this notice is John B. Lovelace of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding this notice contact Mr. Lovelace at (202) 317-7006 (not a toll-free number).

2014 Calendar Year Resident Population Figures

Notice 2014–12

This notice advises State and local housing credit agencies that allocate lowincome housing tax credits under § 42 of the Internal Revenue Code, and States and other issuers of tax-exempt private activity bonds under § 141, of the population figures to use in calculating: (1) the 2014 calendar year population-based component of the State housing credit ceiling (Credit Ceiling) under § 42(h)(3)(C)(ii); (2) the 2014 calendar year volume cap (Volume Cap) under § 146; and (3) the 2014 volume limit (Volume Limit) under § 142(k)(5).

Generally, § 146(j) requires determining the population figures for the population-based component of both the Credit Ceiling and the Volume Cap for any calendar year on the basis of the most recent census estimate of the resident population of a State (or issuing authority) released by the U.S. Census Bureau before the beginning of the calendar year. Similarly, § 142(k)(5) bases the Volume Limit on the State population.

Sections 42(h)(3)(H) and 146(d)(2) require adjusting for inflation the population-based component of the Credit Ceiling and the Volume Cap. The adjustments for the 2014 calendar year are in Rev. Proc. 2013–35, 2013–47 I.R.B. 537. Section 3.08 of Rev. Proc. 2013–35 provides that, for calendar year 2014, the amount for calculating the Credit Ceiling under § 42(h)(3)(C)(ii) is the greater of $2.30 multiplied by the State population, or $2,635,000. Further, section 3.19 of Rev. Proc. 2013–35 provides that the

amount for calculating the Volume Cap under § 146(d)(1) for calendar year 2014 is the greater of $100 multiplied by the State population, or $296,825,000.

For the 50 states, the District of Columbia, and Puerto Rico, the population figures for calculating the Credit Ceiling, the Volume Cap, and the Volume Limit for the 2014 calendar year are the resident population estimates released electronically by the U.S. Census Bureau on December 30, 2013, in Press Release CB13tps111. For American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands, the population figures for the 2014 calendar year are the 2013 midyear population figures in the U.S. Census Bureau’s International Data Base (IDB). The U.S. Census Bureau electronically announced an update of the IDB on June 27, 2012, in Press Release CB12-118. For convenience, these figures are reprinted below.

Resident Population Figures

Alabama 4,833,722

Alaska 735,132

American Samoa 54,719

Arizona 6,626,624

Arkansas 2,959,373

California 38,332,521

Colorado 5,268,367

Connecticut 3,596,080

Delaware 925,749

District of Columbia 646,449

Florida 19,552,860

Georgia 9,992,167

Guam 160,378

Hawaii 1,404,054

Idaho 1,612,136

Illinois 12,882,135

Indiana 6,570,902

Iowa 3,090,416

Kansas 2,893,957

Kentucky 4,395,295

Louisiana 4,625,470

Maine 1,328,302

Maryland 5,928,814

Massachusetts 6,692,824

Michigan 9,895,622

Minnesota 5,420,380

Mississippi 2,991,207

The principal authors of this notice are Jian H. Grant, Office of the Associate Chief Counsel (Passthroughs and Special Industries), and Timothy L. Jones, Office of the Associate Chief Counsel (Financial Institutions and Products). For further information regarding this notice, please contact Ms. Grant at (202) 317-4137 (not a toll-free number).

26 CFR 601.204: Changes in accounting periods and in methods of accounting. (Also Part I, §§ 162, 263(a), 263A, 446, 481; 1.446–1.)

Rev. Proc. 2014–16