n-14-10.pdf

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

Notice 2014-10

PURPOSE
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 government-sponsored 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:

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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)
(“tuberculosis-related 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 government-sponsored 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

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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

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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, tuberculosis-related services
Medicaid, pregnancy-related 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 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 call).