[Federal Register Volume 78, Number 22 (Friday, February 1, 2013)]
[Rules and Regulations]
[Pages 7264-7265]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-02136]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9611]
RIN 1545-BL49
Health Insurance Premium Tax Credit
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
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SUMMARY: This document contains final regulations relating to the
health insurance premium tax credit enacted by the Patient Protection
and Affordable Care Act and the Health Care and Education
Reconciliation Act of 2010. These final regulations provide guidance to
individuals related to employees who may enroll in eligible employer-
sponsored coverage and who wish to enroll in qualified health plans
through Affordable Insurance Exchanges (Exchanges) and claim the
premium tax credit.
DATES: Effective date: These regulations are effective on February 1,
2013.
Applicability date: For date of applicability, see Sec. 1.36B-
1(o).
FOR FURTHER INFORMATION CONTACT: Andrew S. Braden, (202) 622-4960 (not
a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains final regulations that amend the Income Tax
Regulations (26 CFR part 1) under section 36B of the Internal Revenue
Code (Code) regarding whether health coverage under an employer-
sponsored plan is affordable for individuals who are eligible to enroll
in the plan by reason of their relationship to an employee (related
individuals).
On August 17, 2011, a notice of proposed rulemaking (REG-131491-10)
was published in the Federal Register (76 FR 50931). On May 23, 2012,
final regulations (TD 9590) were published in the Federal Register (77
FR 30377). The final regulations reserved a rule (Sec. 1.36B-
2(c)(3)(v)(A)(2)) for determining affordability of employer-sponsored
coverage for related individuals. Written comments responding to the
proposed and final regulations were received. The comments are
available for public inspection at www.regulations.gov or on request. A
public hearing was held on November 17, 2011. After consideration of
all the comments, the proposed rule is adopted without change by this
Treasury decision.
[[Page 7265]]
Explanation of Provisions and Summary of Comments
The proposed regulations provided that, for taxable years beginning
before January 1, 2015, an eligible employer-sponsored plan is
affordable for related individuals if the portion of the annual premium
the employee must pay for self-only coverage (the required contribution
percentage) does not exceed 9.5% of the taxpayer's household income.
While several comments supported this rule, other comments asserted
that the affordability of coverage for related individuals should be
based on the portion of the annual premium the employee must pay for
family coverage.
These final regulations adopt the proposed rule without change. The
language of section 36B, through a cross-reference to section
5000A(e)(1)(B), specifies that the affordability test for related
individuals is based on the cost of self-only coverage. By contrast,
section 5000A, which establishes the shared responsibility payment
applicable to individuals for failure to maintain minimum essential
coverage, addresses affordability for employees in section
5000A(e)(1)(B) and, separately, for related individuals in section
5000A(e)(1)(C). Thus, proposed regulations under section 5000A, which
the Treasury Department is releasing concurrently with these final
regulations, provide that, for purposes of applying the affordability
exemption from the shared responsibility payment in the case of related
individuals, the required contribution is based on the premium the
employee would pay for employer-sponsored family coverage.
Effective/Applicability Date
These final regulations apply to taxable years ending after
December 31, 2013.
Special Analyses
This Treasury decision is not a significant regulatory action as
defined in Executive Order 12866, as supplemented by Executive Order
13563. Therefore, a regulatory assessment is not required. Section
553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does
not apply to these regulations, and, because the regulations do not
impose a collection of information requirement on small entities, the
Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply.
Pursuant to section 7805(f) of the Code, the notice of proposed
rulemaking that preceded these final regulations was submitted to the
Chief Counsel for Advocacy of the Small Business Administration for
comment on its impact on small business.
Drafting Information
The principal authors of these final regulations are Frank W.
Dunham III and Stephen J. Toomey of the Office of Associate Chief
Counsel (Income Tax and Accounting). However, other personnel from the
IRS and the Treasury Department participated in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
Accordingly, 26 CFR part 1 is amended as follows:
PART 1--INCOME TAXES
0
Paragraph 1. The authority citation for part 1 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 2. Section 1.36B-2 is amended by revising paragraphs
(c)(3)(v)(A)(2) and (c)(3)(v)(D), Example 2, to read as follows:
Sec. 1.36B-2 Eligibility for premium tax credit.
* * * * *
(c) * * *
(3) * * *
(v) * * *
(A) * * *
(2) Affordability for related individual. Except as provided in
paragraph (c)(3)(v)(A)(3) of this section, an eligible employer-
sponsored plan is affordable for a related individual if the portion of
the annual premium the employee must pay for self-only coverage does
not exceed the required contribution percentage, as described in
paragraph (c)(3)(v)(A)(1) of this section.
* * * * *
(D) * * *
Example 2. Basic determination of affordability for a related
individual. The facts are the same as in Example 1, except that C is
married to J and X's plan requires C to contribute $5,300 for
coverage for C and J for 2014 (11.3 percent of C's household
income). Because C's required contribution for self-only coverage
($3,450) does not exceed 9.5 percent of household income, under
paragraph (c)(3)(v)(A)(2) of this section, X's plan is affordable
for C and J, and C and J are eligible for minimum essential coverage
for all months in 2014.
* * * * *
Steven T. Miller,
Deputy Commissioner for Services and Enforcement.
Approved: January 25, 2013.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2013-02136 Filed 1-30-13; 11:15 am]
BILLING CODE 4830-01-P