[Federal Register Volume 81, Number 131 (Friday, July 8, 2016)]
[Proposed Rules]
[Pages 44557-44576]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-15940]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 301

[REG-109086-15]
RIN 1545-BN50


Premium Tax Credit NPRM VI

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document contains proposed regulations relating to the 
health insurance premium tax credit (premium tax credit) and the 
individual shared responsibility provision. These proposed regulations 
affect individuals who enroll in qualified health plans through Health 
Insurance Exchanges (Exchanges, also called Marketplaces) and claim the 
premium tax credit, and Exchanges that make qualified health plans 
available to individuals and employers. These proposed regulations also 
affect individuals who are eligible for employer-sponsored health 
coverage and individuals who seek to claim an exemption from the 
individual shared responsibility provision because of unaffordable 
coverage. Although employers are not directly affected by rules 
governing the premium tax credit, these proposed regulations may 
indirectly affect employers through the employer shared responsibility 
provisions and the related information reporting provisions.

DATES: Written (including electronic) comments and requests for a 
public hearing must be received by September 6, 2016.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-109086-15), Room 
5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand-delivered Monday through 
Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-
109086-15), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue NW., Washington, DC, or sent electronically via the Federal 
eRulemaking Portal at http://www.regulations.gov (REG-109086-15).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Shareen Pflanz, (202) 317-4727; concerning the submission of comments 
and/or requests for a public hearing, Oluwafunmilayo Taylor, (202) 317-
6901 (not toll-free calls).

SUPPLEMENTARY INFORMATION: 

Paperwork Reduction Act

    The collection of information contained in this notice of proposed 
rulemaking has been submitted to the Office of Management and Budget in 
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3507(d)). Comments on the collection of information should be sent to 
the Office of Management and Budget, Attn: Desk Officer for the 
Department of the Treasury, Office of Information and Regulatory 
Affairs, Washington, DC 20503, with copies to the Internal Revenue 
Service, Attn: IRS Reports Clearance Officer, SE:W:CAR:MP:T:T:SP, 
Washington, DC 20224. Comments on the collection of information should 
be received by September 6, 2016. Comments are specifically requested 
concerning:
    Whether the proposed collection of information is necessary for the 
proper performance of the functions of the IRS, including whether the 
information will have practical utility;
    How the quality, utility, and clarity of the information to be 
collected may be enhanced;
    How the burden of complying with the proposed collection of 
information may be minimized, including through the application of 
automated collection techniques or other forms of information 
technology; and
    Estimates of capital or start-up costs and costs of operation, 
maintenance, and purchase of services to provide information.
    The collection of information in these proposed regulations is in 
Sec.  1.36B-5. The collection of information is necessary to reconcile 
advance payments of the premium tax credit and determine the allowable 
premium tax credit. The collection of information is required to comply 
with the provisions of section 36B of the Internal Revenue Code (Code). 
The likely respondents are Marketplaces that enroll individuals in 
qualified health plans.
    The burden for the collection of information contained in these 
proposed regulations will be reflected in the burden on Form 1095-A, 
Health Insurance Marketplace Statement, which is the form that will 
request the information from the Marketplaces in the proposed 
regulations.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a valid 
control number assigned by the Office of Management and Budget.

Background

    Beginning in 2014, under the Patient Protection and Affordable Care 
Act,

[[Page 44558]]

Public Law 111-148 (124 Stat. 119 (2010)), and the Health Care and 
Education Reconciliation Act of 2010, Public Law 111-152 (124 Stat. 
1029 (2010)) (collectively, the Affordable Care Act), eligible 
individuals who purchase coverage under a qualified health plan through 
an Exchange may claim a premium tax credit under section 36B of the 
Code. Section 36B was subsequently amended by the Medicare and Medicaid 
Extenders Act of 2010, Public Law 111-309 (124 Stat. 3285 (2010)); the 
Comprehensive 1099 Taxpayer Protection and Repayment of Exchange 
Subsidy Overpayments Act of 2011, Public Law 112-9 (125 Stat. 36 
(2011)); and the Department of Defense and Full-Year Continuing 
Appropriations Act, 2011, Public Law 112-10 (125 Stat. 38 (2011)).
    The Affordable Care Act also added section 5000A to the Code. 
Section 5000A was subsequently amended by the TRICARE Affirmation Act 
of 2010, Public Law 111-159 (124 Stat. 1123 (2010)) and Public Law 111-
173 (124 Stat. 1215 (2010)). Section 5000A provides that, for months 
beginning after December 31, 2013, a nonexempt individual must have 
qualifying healthcare coverage (called minimum essential coverage) or 
make an individual shared responsibility payment.

Applicable Taxpayers

    To be eligible for a premium tax credit, an individual must be an 
applicable taxpayer. Among other requirements, under section 36B(c)(1) 
an applicable taxpayer is a taxpayer whose household income for the 
taxable year is between 100 percent and 400 percent of the Federal 
poverty line (FPL) for the taxpayer's family size (or is a lawfully 
present non-citizen who has income below 100 percent of the FPL and is 
ineligible for Medicaid). A taxpayer's family size is equal to the 
number of individuals in the taxpayer's family. Under section 
36B(d)(1), a taxpayer's family consists of the individuals for whom the 
taxpayer claims a personal exemption deduction under section 151 for 
the taxable year. Taxpayers may claim a personal exemption deduction 
for themselves, a spouse, and each of their dependents.
    Under section 1412 of the Affordable Care Act, advance payments of 
the premium tax credit (advance credit payments) may be made directly 
to insurers on behalf of eligible individuals. The amount of advance 
credit payments made on behalf of a taxpayer in a taxable year is 
determined by a number of factors including projections of the 
taxpayer's household income and family size for the taxable year. 
Taxpayers who receive the benefit of advance credit payments are 
required to file an income tax return to reconcile the amount of 
advance credit payments made during the year with the amount of the 
credit allowable for the taxable year.
    Under Sec.  1.36B-2(b)(6), in general, a taxpayer whose household 
income for a taxable year is less than 100 percent of the applicable 
FPL is nonetheless treated as an applicable taxpayer if (1) the 
taxpayer or a family member enrolls in a qualified health plan, (2) an 
Exchange estimates at the time of enrollment that the taxpayer's 
household income for the taxable year will be between 100 and 400 
percent of the applicable FPL, (3) advance credit payments are 
authorized and paid for one or more months during the taxable year, and 
(4) the taxpayer would be an applicable taxpayer but for the fact that 
the taxpayer's household income for the taxable year is below 100 
percent of the applicable FPL.

Premium Assistance Credit Amount

    Under section 36B(a), a taxpayer's premium tax credit is equal to 
the premium assistance credit amount for the taxable year. Section 
36B(b)(1) and Sec.  1.36B-3(d) generally provide that the premium 
assistance credit amount is the sum of the premium assistance amounts 
for all coverage months in the taxable year for individuals in the 
taxpayer's family. The premium assistance amount for a coverage month 
is the lesser of (1) the premiums for the month for one or more 
qualified health plans that cover a taxpayer or family member 
(enrollment premium), or (2) the excess of the adjusted monthly premium 
for the second lowest cost silver plan (as described in section 
1302(d)(1)(B) of the Affordable Care Act (42 U.S.C. 18022(d)(1)(B)) 
offered through the Exchange for the rating area where the taxpayer 
resides that would provide coverage to the taxpayer's coverage family 
(the benchmark plan), over 1/12 of the product of the taxpayer's 
household income and the applicable percentage for the taxable year 
(the contribution amount). In general, the benchmark plan's adjusted 
monthly premium is the premium an insurer would charge for the plan 
adjusted only for the ages of the covered individuals. The applicable 
percentage is provided in a table that is updated annually and 
represents the portion of a taxpayer's household income that the 
taxpayer is expected to pay if the taxpayer's coverage family enrolls 
in the benchmark plan. See, for example, Rev. Proc. 2014-62, 2014-2 
C.B. 948 (providing the applicable percentage table for taxable years 
beginning in 2016) and Rev. Proc. 2014-37, 2014-2 C.B. 363 (providing 
the applicable percentage table for taxable years beginning in 2015). A 
taxpayer's coverage family refers to all members of the taxpayer's 
family who enroll in a qualified health plan in a month and are not 
eligible for minimum essential coverage as defined in section 5000A(f) 
(other than coverage in the individual market) for that month.
    Under section 1301(a)(1)(B) of the Affordable Care Act, a qualified 
health plan must offer the essential health benefits package described 
in section 1302(a). Under section 1302(b)(1)(J) of the Affordable Care 
Act, the essential health benefits package includes pediatric services, 
including oral and vision care. Section 1302(b)(4)(F) of the Affordable 
Care Act provides that, if an Exchange offers a plan described in 
section 1311(d)(2)(B)(ii)(I) of the Affordable Care Act (42 U.S.C. 
13031(d)(2)(B)(ii)(I)) (a stand-alone dental plan), other health plans 
offered through the Exchange will not fail to be qualified health plans 
solely because the plans do not offer pediatric dental benefits.
    For purposes of calculating the premium assistance amount for a 
taxpayer who enrolls in both a qualified health plan and a stand-alone 
dental plan, section 36B(b)(3)(E) provides that the enrollment premium 
includes the portion of the premium for the stand-alone dental plan 
properly allocable to pediatric dental benefits that are included in 
the essential health benefits required to be provided by a qualified 
health plan.
    Section 36B(b)(3)(B) provides that the benchmark plan with respect 
to an applicable taxpayer is the second lowest cost silver plan offered 
by the Marketplace through which the applicable taxpayer (or a family 
member) enrolled and which provides (1) self-only coverage, in the case 
of unmarried individuals (other than a surviving spouse or head of 
household) who do not claim any dependents, or any other individual who 
enrolls in self-only coverage, and (2) family coverage, in the case of 
any other applicable taxpayer. Section 1.36B-1(l) provides that self-
only coverage means health insurance that covers one individual. 
Section 1.36B-1(m) provides that family coverage means health insurance 
that covers more than one individual.
    Under Sec.  1.36B-3(f)(3), if there are one or more silver-level 
plans offered through the Exchange for the rating area where the 
taxpayer resides that do not cover all members of a taxpayer's

[[Page 44559]]

coverage family under one policy (for example, because of the 
relationships within the family), the benchmark plan premium is the 
second lowest-cost option for covering all members of the taxpayer's 
family, which may be either a single silver-level policy or more than 
one silver-level policy.
    Section 1.36B-3(d)(2) provides that, if a qualified health plan is 
terminated before the last day of a month or an individual is enrolled 
in coverage effective on the date of the individual's birth, adoption, 
or placement for adoption or in foster care, or on the effective date 
of a court order, the premium assistance amount for the month is the 
lesser of the enrollment premiums for the month (reduced by any amounts 
that were refunded) or the excess of the benchmark plan premium for a 
full month of coverage over the full contribution amount for the month.

Coverage Month

    Under section 36B(c)(2)(A) and Sec.  1.36B-3(c)(1), a coverage 
month is generally any month for which the taxpayer or a family member 
is covered by a qualified health plan enrolled in through an Exchange 
on the first day of the month and the premium is paid by the taxpayer 
or through an advance credit payment. However, section 36B(c)(2) 
provides that a month is not a coverage month for an individual who is 
eligible for minimum essential coverage other than coverage in the 
individual market. Under section 36B(c)(2)(B)(ii), minimum essential 
coverage is defined by reference to section 5000A(f). Minimum essential 
coverage includes government-sponsored programs such as most Medicaid 
coverage, Medicare part A, the Children's Health Insurance Program 
(CHIP), most TRICARE programs, most coverage provided to veterans under 
title 38 of the United States Code, and the Nonappropriated Fund Health 
Benefits Program of the Department of Defense. See section 5000A(f)(1) 
and Sec.  1.5000A-2(b). Section 1.36B-2(c)(3)(i) provides that, for 
purposes of section 36B, the government-sponsored programs described in 
section 5000A(f)(1)(A) are not considered eligible employer-sponsored 
plans.
    Under Sec.  1.36B-2(c)(2)(i), an individual generally is treated as 
eligible for government-sponsored minimum essential coverage as of the 
first day of the first full month that the individual meets the 
criteria for coverage and is eligible to receive benefits under the 
government program. However, under Sec.  1.36B-2(c)(2)(v) an individual 
is treated as not eligible for Medicaid, CHIP, or a similar program for 
a period of coverage under a qualified health plan if, when the 
individual enrolls in the qualified health plan, an Exchange determines 
or considers (within the meaning of 45 CFR 155.302(b)) the individual 
to be ineligible for such program. In addition, Sec.  1.36B-2(c)(2)(iv) 
provides that if an individual receiving the benefit of advance credit 
payments is determined to be eligible for a government-sponsored 
program, and that eligibility is effective retroactively, then, for 
purposes of the premium tax credit, the individual is treated as 
eligible for the program no earlier than the first day of the first 
calendar month beginning after the approval.
    Coverage under an eligible employer-sponsored plan is minimum 
essential coverage. In general, an eligible employer-sponsored plan is 
coverage provided by an employer to its employees (and their 
dependents) under a group health plan maintained by the employer. See 
section 5000A(f)(2) and Sec.  1.5000A-2(c). Under section 5000A(f)(3) 
and Sec.  1.5000A-2(g), minimum essential coverage does not include any 
coverage that consists solely of excepted benefits described in section 
2791(c)(1), (c)(2), (c)(3), or (c)(4) of the Public Health Service Act 
(PHS Act) (42 U.S.C. 300gg-91(c)), or regulations issued under those 
provisions (45 CFR 148.220). In general, excepted benefits are benefits 
that are limited in scope or are conditional.
    Under section 36B(c)(2)(C) and Sec.  1.36B-2(c)(3)(i), except as 
provided in the next paragraph of this preamble, an individual is 
treated as eligible for coverage under an eligible employer-sponsored 
plan only if the employee's share of the premium is affordable and the 
coverage provides minimum value. Under section 36B(c)(2)(C), an 
eligible employer-sponsored plan is treated as affordable for an 
employee if the amount of the employee's required contribution (within 
the meaning of section 5000A(e)(1)(B)) for self-only coverage does not 
exceed a specified percentage of the employee's household income. The 
affordability of coverage for individuals related to an employee is 
determined in the same manner. Thus, under section 36B(c)(2)(C)(i) and 
Sec.  1.36B-2(c)(3)(v)(A)(2), an eligible employer-sponsored plan is 
treated as affordable for an individual eligible for the plan because 
of a relationship to an employee if the amount of the employee's 
required contribution for self-only coverage does not exceed a 
specified percentage of the employee's household income.
    Under Sec.  1.36B-2(c)(3)(v)(A)(3), an eligible employer-sponsored 
plan is not considered affordable if, when an individual enrolls in a 
qualified health plan, the Marketplace determines that the eligible 
employer-sponsored plan is not affordable. However, that rule does not 
apply for an individual who, with reckless disregard for the facts, 
provides incorrect information to a Marketplace concerning the 
employee's portion of the annual premium for coverage under the 
eligible employer-sponsored plan. In addition, under section 
36B(c)(2)(C)(iii) and Sec.  1.36B-2(c)(3)(vii)(A), an individual is 
treated as eligible for employer-sponsored coverage if the individual 
actually enrolls in an eligible employer-sponsored plan, even if the 
coverage is not affordable or does not provide minimum value.
    Section 1.36B-2(c)(3)(iii)(A) provides that, subject to the rules 
described above, an employee or related individual may be considered 
eligible for coverage under an eligible employer-sponsored plan for a 
month during a plan year if the employee or related individual could 
have enrolled in the plan for that month during an open or special 
enrollment period. Under Sec.  1.36B-2(c)(3)(ii), plan year means an 
eligible employer-sponsored plan's regular 12-month coverage period (or 
the remainder of a 12-month coverage period for a new employee or an 
individual who enrolls during a special enrollment period).
    Although coverage in the individual market is minimum essential 
coverage under section 5000A(f)(1)(C), under section 36B(c)(2)(B)(i), 
an individual who is eligible for or enrolled in coverage in the 
individual market (whether or not obtained through the Marketplace) 
nevertheless may have a coverage month for purposes of the premium tax 
credit.

Required Contribution for Employer-Sponsored Coverage

    Under section 36B(c)(2)(C) and Sec.  1.36B-2(c)(3)(v)(A)(1) and 
(2), an eligible employer-sponsored plan is treated as affordable for 
an employee or a related individual if the amount the employee must pay 
for self-only coverage whether by salary reduction or otherwise (the 
employee's required contribution) does not exceed a specified 
percentage of the employee's household income. Under section 
36B(c)(2)(C)(i)(II), an employee's required contribution has the same 
meaning for purposes of the premium tax credit as in section 
5000A(e)(1)(B).
    Section 5000A provides that, for each month, taxpayers must have 
minimum essential coverage, qualify for a health coverage exemption, or 
make an individual shared responsibility

[[Page 44560]]

payment when they file a Federal income tax return. Section 5000A(e)(1) 
and Sec.  1.5000A-3(e)(1) provide that an individual is exempt for a 
month when the individual cannot afford minimum essential coverage. For 
this purpose, an individual cannot afford coverage if the individual's 
required contribution (determined on an annual basis) for minimum 
essential coverage exceeds a specified percentage of the individual's 
household income. Under section 5000A(e)(1)(B)(i) and Sec.  1.5000A-
3(e)(3)(ii)(A), for employees eligible for coverage under an eligible 
employer-sponsored plan, the employee's required contribution is the 
amount an employee would have to pay for self-only coverage (whether 
paid through salary reduction or otherwise) under the plan. For 
individuals eligible to enroll in employer-sponsored coverage because 
of a relationship to an employee (related individual), under section 
5000A(e)(1)(C) and Sec.  1.5000A-3(e)(3)(ii)(B), the required 
contribution is the portion of the annual premium that the employee 
would pay (whether through salary reduction or otherwise) for the 
lowest cost family coverage that would cover the employee and all 
related individuals who are included in the employee's family and are 
not otherwise exempt under Sec.  1.5000A-3.
    Notice 2015-87, 2015-52 I.R.B. 889, provides guidance on 
determining the affordability of an employer's offer of eligible 
employer-sponsored coverage for purposes of sections 36B, 5000A, and 
4980H (and the related information reporting under section 6056).\1\ In 
relevant part, Notice 2015-87 addresses how to determine the 
affordability of an employer's offer of eligible employer-sponsored 
coverage if an employer also makes available an opt-out payment, which 
is a payment that (1) is available only if the employee declines 
coverage (which includes waiving coverage in which the employee would 
otherwise be enrolled) under the employer-sponsored plan, and (2) 
cannot be used to pay for coverage under the employer-sponsored plan. 
The arrangement under which the opt-out payment is made available is an 
opt-out arrangement.
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    \1\ An assessable payment under section 4980H(b) may arise if at 
least one full-time employee (as defined in Sec.  54.4980H-1(a)(21)) 
of the applicable large employer (as defined in Sec.  54.4980H-
1(a)(4)) receives the premium tax credit. A full-time employee 
generally is ineligible for the premium tax credit if the employee 
is offered minimum essential coverage under an eligible employer-
sponsored plan that is affordable and provides minimum value. The 
determination of whether an applicable large employer has made an 
offer of affordable coverage under an eligible employer-sponsored 
plan for purposes of section 4980H(b) generally is based on the 
standard set forth in section 36B, which provides that an offer is 
affordable if the employee's required contribution is at or below 
9.5 percent (as indexed) of the employee's household income. 
However, because an employer generally will not know the taxpayer 
employee's household income, Sec.  54.4980H-5(e)(2) sets forth three 
safe harbors under which an employer may determine affordability 
(solely for purposes of section 4980H) based on information that is 
readily available to the employer (that is, Form W-2 wages, the rate 
of pay, or the Federal poverty line).
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    As Notice 2015-87 explains, the Treasury Department and the IRS 
have determined that it is generally appropriate to treat an opt-out 
payment that is made available under an unconditional opt-out 
arrangement in the same manner as a salary reduction contribution for 
purposes of determining an employee's required contribution under 
sections 36B and 5000A and any related consequences under sections 
4980H(b) and 6056. Accordingly, Notice 2015-87 provides that the 
Treasury Department and the IRS intend to propose regulations 
reflecting this rule and to request comments on those regulations. For 
this purpose, an unconditional opt-out arrangement refers to an 
arrangement providing payments conditioned solely on an employee 
declining coverage under employer-sponsored coverage and not on an 
employee satisfying any other meaningful requirement related to the 
provision of health care to employees, such as a requirement to provide 
proof of coverage through a plan of a spouse's employer.
    Notice 2015-87 also provides that the Treasury Department and the 
IRS anticipate requesting comments on the treatment of conditional opt-
out arrangements, meaning opt-out arrangements under which payments are 
conditioned not only on the employee declining employer-sponsored 
coverage but also on satisfaction of one or more additional meaningful 
conditions (such as the employee providing proof of enrollment in 
coverage provided by a spouse's employer or other coverage).
    Notice 2015-87 provides that, until the applicability date of any 
final regulations (and in any event for plan years beginning before 
2017), individuals may treat opt-out payments made available under 
unconditional opt-out arrangements as increasing the employee's 
required contribution for purposes of sections 36B and 5000A.\2\ In 
addition, for the same period, an individual who can demonstrate that 
he or she meets the condition(s) (in addition to declining the 
employer's health coverage) that must be satisfied to receive an opt-
out payment (such as demonstrating that the employee has coverage under 
a spouse's group health plan) may treat the amount of the conditional 
opt-out payment as increasing the employee's required contribution for 
purposes of sections 36B and 5000A. See the section of this preamble 
entitled ``Effective/Applicability Date'' for additional related 
discussion.
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    \2\ Notice 2015-87 also provides that the Treasury Department 
and the IRS anticipate that the regulations generally will apply 
only for periods after the issuance of final regulations and that 
for the period prior to the applicability date of the final 
regulations, employers are not required to increase the amount of an 
employee's required contribution by the amount of an opt-out payment 
made available under an opt-out arrangement (other than a payment 
made available under a non-relief-eligible opt-out arrangement) for 
purposes of section 6056 (Form 1095-C), and an opt-out payment made 
available under an opt-out arrangement (other than a payment made 
available under a non-relief-eligible opt-out arrangement) will not 
be treated as increasing an employee's required contribution for 
purposes of any potential consequences under section 4980H(b). For a 
discussion of non-relief-eligible opt-out arrangements see Notice 
2015-87, Q&A-9.
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    Notice 2015-87 included a request for comments on opt-out 
arrangements. The Treasury Department and the IRS received a number of 
comments, and the comments are discussed in section 2.f. of this 
preamble entitled ``Opt-out arrangements and an employee's required 
contribution.''

Information Reporting

    Section 36B(f)(3) provides that Exchanges must report to the IRS 
and to taxpayers certain information required to administer the premium 
tax credit. Section 1.36B-5(c)(1) provides that the information 
required to be reported annually includes (1) identifying information 
for each enrollee, (2) identifying information for the coverage, (3) 
the amount of enrollment premiums and advance credit payments for the 
coverage, (4) the premium for the benchmark plan used to calculate the 
amount of the advance credit payments made on behalf of the taxpayer or 
other enrollee, if advance credit payments were made, and the benchmark 
plan premium that would apply to all individuals enrolled in the 
coverage if advance credit payments were not made, and (5) the dates 
the coverage started and ended. Section 1.36B-5(c)(3)(i) provides that 
an Exchange must report this information for each family enrolled in 
the coverage.

Explanation of Provisions

1. Effective/Applicability Date

    Except as otherwise provided in this section, these regulations are 
proposed to apply for taxable years beginning after December 31, 2016. 
As indicated in

[[Page 44561]]

this section, taxpayers may rely on certain provisions of the proposed 
regulations for taxable years ending after December 31, 2013. In 
addition, several rules are proposed to apply for taxable years 
beginning after December 31, 2018. See the later section of this 
preamble entitled ``Effective/Applicability Date'' for information on 
the applicability date for the regulations on opt-out arrangements.

2. Eligibility

a. Applicable Taxpayers
    To avoid repayments of advance credit payments for taxpayers who 
experience an unforeseen decline in income, the existing regulations 
provide that if an Exchange determines at enrollment that the 
taxpayer's household income will be at least 100 percent but will not 
exceed 400 percent of the applicable FPL, the taxpayer will not lose 
his or her status as an applicable taxpayer solely because household 
income for the year turns out to be below 100 percent of the applicable 
FPL. To reduce the likelihood that individuals who recklessly or 
intentionally provide inaccurate information to an Exchange will 
benefit from an Exchange determination, the proposed regulations 
provide that a taxpayer whose household income is below 100 percent of 
the FPL for the taxpayer's family size is not treated as an applicable 
taxpayer if, with intentional or reckless disregard for the facts, the 
taxpayer provided incorrect information to an Exchange for the year of 
coverage.
b. Exchange Determination of Ineligibility for Medicaid or CHIP
    Similar to the rule for taxpayers who received the benefit of 
advance credit payments but ended the taxable year with household 
income below 100 percent of the applicable FPL, the existing 
regulations do not require a repayment of advance credit payments for 
taxpayers with household income within the range for eligibility for 
certain government-sponsored programs if an Exchange determined or 
considered (within the meaning of 45 CFR 155.302(b)) the taxpayer or a 
member of the taxpayer's family to be ineligible for the program. To 
reduce the likelihood that individuals who recklessly or intentionally 
provide inaccurate information to an Exchange will benefit from an 
Exchange determination, the proposed regulations provide that an 
individual who was determined or considered by an Exchange to be 
ineligible for Medicaid, CHIP, or a similar program (such as a Basic 
Health Program) may be treated as eligible for coverage under the 
program if, with intentional or reckless disregard for the facts, the 
individual (or a person claiming a personal exemption for the 
individual) provided incorrect information to the Exchange.
c. Nonappropriated Fund Health Benefits Program
    The existing regulations under section 36B provide that government-
sponsored programs described in section 5000A(f)(1)(A), which include 
the Nonappropriated Fund Health Benefits Program of the Department of 
Defense, established under section 349 of the National Defense 
Authorization Act for Fiscal Year 1995 (Public Law 103-337; 10 U.S.C. 
1587 note), are not eligible employer-sponsored plans. However, Sec.  
1.5000A-2(c)(2) provides that, because the Nonappropriated Fund Health 
Benefits Program (Program) is offered by an instrumentality of the 
Department of Defense to its employees, the Program is an eligible 
employer-sponsored plan. The proposed regulations conform the section 
36B regulations to the section 5000A regulations and provide that the 
Program is treated as an eligible employer-sponsored plan for purposes 
of determining if an individual is eligible for minimum essential 
coverage under section 36B. Thus, if coverage under the Program does 
not provide minimum value (under Sec.  1.36B-2(c)(3)(vi)) or is not 
affordable (under Sec.  36B-2(c)(3)(v)) for an individual who does not 
enroll in the coverage, he or she is not treated as eligible for 
minimum essential coverage under the Program for purposes of premium 
tax credit eligibility.
d. Eligibility for Employer-Sponsored Coverage for Months During a Plan 
Year
    The existing regulations under section 36B provide that an 
individual is eligible for minimum essential coverage through an 
eligible employer-sponsored plan if the individual had the opportunity 
to enroll in the plan and the plan is affordable and provides minimum 
value. The Treasury Department and the IRS are aware that in some 
instances individuals may not be allowed an annual opportunity to 
decide whether to enroll in eligible employer-sponsored coverage. This 
lack of an annual opportunity to enroll in employer-sponsored coverage 
should not limit an individual's annual choice from available coverage 
options through the Marketplace with the possibility of benefitting 
from the premium tax credit. Thus, the proposed regulations clarify 
that if an individual declines to enroll in employer-sponsored coverage 
for a plan year and does not have the opportunity to enroll in that 
coverage for one or more succeeding plan years, for purposes of section 
36B, the individual is treated as ineligible for that coverage for the 
succeeding plan year or years for which there is no enrollment 
opportunity.\3\
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    \3\ Note that for purposes of section 4980H, in general, an 
applicable large employer will not be treated as having made an 
offer of coverage to a full-time employee for a plan year if the 
employee does not have an effective opportunity to elect to enroll 
in the coverage at least once with respect to the plan year. For 
this purpose, a plan year must be twelve consecutive months, unless 
a short plan year of less than twelve consecutive months is 
permitted for a valid business purpose. For additional rules on the 
definition of ``offer'' and ``plan year'' under section 4980H, see 
Sec. Sec.  54.4980H-1(a)(35), 54.4980H-4(b), and 54.4980H-5(b).
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e. Excepted Benefits
    Under section 36B and Sec.  1.36B-2(c)(3)(vii)(A), an individual is 
treated as eligible for minimum essential coverage through an eligible 
employer-sponsored plan if the individual actually enrolls in the 
coverage, even if the coverage is not affordable or does not provide 
minimum value. Although health coverage that consists solely of 
excepted benefits may be a group health plan and, therefore, is an 
eligible employer-sponsored plan under section 5000A(f)(2) and Sec.  
1.5000A-2(c)(1), section 5000A(f)(3) provides that health coverage that 
consists solely of excepted benefits is not minimum essential coverage. 
Therefore, individuals enrolled in a plan consisting solely of excepted 
benefits still must obtain minimum essential coverage to satisfy the 
individual shared responsibility provision. The proposed regulations 
clarify that for purposes of section 36B an individual is considered 
eligible for coverage under an eligible employer-sponsored plan only if 
that plan is minimum essential coverage. Accordingly, an individual 
enrolled in or offered a plan consisting solely of excepted benefits is 
not denied the premium tax credit by virtue of that excepted benefits 
offer or coverage. Taxpayers may rely on this rule for all taxable 
years beginning after December 31, 2013.
f. Opt-Out Arrangements and an Employee's Required Contribution
    Sections 1.36B-2(c)(3)(v) and 1.5000A-3(e)(3)(ii)(A) provide that, 
in determining whether employer-sponsored coverage is affordable to an 
employee, an employee's required contribution for the coverage includes 
the amount by which the employee's salary would be reduced to enroll in 
the

[[Page 44562]]

coverage.\4\ If an employer makes an opt-out payment available to an 
employee, the choice between cash and health coverage presented by the 
opt-out arrangement is analogous to the cash-or-coverage choice 
presented by the option to pay for coverage by salary reduction. In 
both cases, the employee may purchase the employer-sponsored coverage 
only at the price of forgoing a specified amount of cash compensation 
that the employee would otherwise receive--salary, in the case of a 
salary reduction, or an equal amount of other compensation, in the case 
of an opt-out payment. Therefore, the economic cost to the employee of 
the employer-sponsored coverage is the same under both arrangements. 
Accordingly, the employee's required contribution generally should be 
determined similarly regardless of the type of payment that an employee 
must forgo.
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    \4\ Section 5000A(e)(1)(C) and Sec.  1.5000A-3(e)(3)(ii)(B) 
provide that, for purposes of the individual shared responsibility 
provision, the required contribution for individuals eligible to 
enroll in employer coverage because of a relationship to an employee 
(related individual) is the portion of the annual premium that the 
employee would pay (whether through salary reduction or otherwise) 
for the lowest cost family coverage that would cover the employee 
and all related individuals who are included in the employee's 
family and are not otherwise exempt under Sec.  1.5000A-3.
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    Notice 2015-87 requested comments on the proposed treatment of opt-
out arrangements outlined in Q&A-9 of that notice. Several commenters 
objected to the proposal that the amount of an available unconditional 
opt-out payment increases the employee's required contribution on the 
basis that forgoing opt-out payments as part of enrolling in coverage 
has not traditionally been viewed by employers or employees as 
economically equivalent to making a salary reduction election and that 
such a rule would discourage employers from making opt-out payments 
available. None of the commenters, however, offered a persuasive 
economic basis for distinguishing unconditional opt-out payments from 
other compensation that an employee must forgo to enroll in employer-
sponsored coverage, such as a salary reduction. Because forgoing an 
unconditional opt-out payment is economically equivalent to forgoing 
salary pursuant to a salary reduction election, and because Sec. Sec.  
1.36B-2(c)(3)(v) and 1.5000A-3(e)(3)(ii)(A) provide that the employee's 
required contribution includes the amount of any salary reduction, the 
proposed regulations adopt the approach described in Notice 2015-87 for 
opt-out payments made available under unconditional opt-out 
arrangements and provide that the amount of an opt-out payment made 
available to the employee under an unconditional opt-out arrangement 
increases the employee's required contribution.\5\
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    \5\ To distinguish between opt-out payments and employer 
contributions to a section 125 cafeteria plan (which in some cases 
could be paid in cash to an employee who declines coverage in the 
health plan or other available benefits), the proposed regulations 
further clarify that an amount provided as an employer contribution 
to a cafeteria plan and that may be used by the employee to purchase 
minimum essential coverage is not an opt-out payment, whether or not 
the employee may receive the amount as a taxable benefit. This 
provision clarifies that the effect on an employee's required 
contribution of employer contributions to a cafeteria plan is 
determined under Sec.  1.36B-2(c)(3)(v)(A)(6) rather than Sec.  
1.36B-2(c)(3)(v)(A)(7).
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    Notice 2015-87 provides that, for periods prior to the 
applicability date of any final regulations, employers are not required 
to increase the amount of an employee's required contribution by 
amounts made available under an opt-out arrangement for purposes of 
section 4980H(b) or section 6056 (in particular Form 1095-C, Employer-
Provided Health Insurance Offer and Coverage), except that, for periods 
after December 16, 2015, the employee's required contribution must 
include amounts made available under an unconditional opt-out 
arrangement that is adopted after December 16, 2015. However, Notice 
2015-87 provided that, for this purpose, an opt-out arrangement will 
not be treated as adopted after December 16, 2015, under limited 
circumstances, including in cases in which a board, committee, or 
similar body or an authorized officer of the employer specifically 
adopted the opt-out arrangement before December 16, 2015.
    Some commenters requested clarification that an unconditional opt-
out arrangement that is required under the terms of a collective 
bargaining agreement in effect before December 16, 2015, should be 
treated as having been adopted prior to December 16, 2015, and that 
amounts made available under such an opt-out arrangement should not be 
included in an employee's required contribution for purposes of 
sections 4980H(b) or 6056 through the expiration of the collective 
bargaining agreement that provides for the opt-out arrangement. The 
Treasury Department and the IRS now clarify that, under Notice 2015-87, 
for purposes of sections 4980H(b) and 6056, an unconditional opt-out 
arrangement that is required under the terms of a collective bargaining 
agreement in effect before December 16, 2015, will be treated as having 
been adopted prior to December 16, 2015. In addition, until the later 
of (1) the beginning of the first plan year that begins following the 
expiration of the collective bargaining agreement in effect before 
December 16, 2015 (disregarding any extensions on or after December 16, 
2015), or (2) the applicability date of these regulations with respect 
to sections 4980H and 6056, employers participating in the collective 
bargaining agreement are not required to increase the amount of an 
employee's required contribution by amounts made available under such 
an opt-out arrangement for purposes of sections 4980H(b) or 6056 (Form 
1095-C). The Treasury Department and the IRS further adopt these 
commenters' request that this treatment apply to any successor employer 
adopting the opt-out arrangement before the expiration of the 
collective bargaining agreement in effect before December 16, 2015 
(disregarding any extensions on or after December 16, 2015). Commenters 
raised the issue of whether other types of agreements covering 
employees may need a similar extension of the relief through the end of 
the agreement's term. The Treasury Department and the IRS request 
comments identifying the types of agreements raising this issue due to 
their similarity to collective bargaining agreements because, for 
example, the agreement is similar in scope to a collective bargaining 
agreement, binding on the parties involved for a multi-year period, and 
subject to a statutory or regulatory regime.
    Several commenters suggested that, notwithstanding the proposal on 
unconditional opt-out arrangements, the amount of an opt-out payment 
made available should not increase an employee's required contribution 
if the opt-out payment is conditioned on the employee having minimum 
essential coverage through another source, such as a spouse's employer-
sponsored plan. These commenters argued that the amount of such a 
conditional opt-out payment should not affect the affordability of an 
employer's offer of employer-sponsored coverage for an employee who 
does not satisfy the applicable condition because that employee is 
ineligible to receive the opt-out payment. Moreover, commenters argued 
that an employee who satisfies the condition (that is, who has 
alternative minimum essential coverage) is ineligible for the premium 
tax credit and does not need to determine the affordability of the 
employer's coverage offer. Thus, the commenters asserted, an amount 
made available under such an arrangement should be excluded from the 
required contribution.
    While it is clear that the availability of an unconditional opt-out 
payment increases an individual's required

[[Page 44563]]

contribution, the effect of the availability of a conditional opt-out 
payment is less obvious. In particular, under an unconditional opt-out 
arrangement, an individual who enrolls in the employer coverage loses 
the opt-out payment as a direct result of enrolling in the employer 
coverage. By contrast, in the case of a conditional opt-out 
arrangement, the availability of the opt-out payment may depend on 
information that is not generally available to the employer (who, if it 
is an applicable large employer, must report the required contribution 
under section 6056 and whose potential liability under section 4980H 
may be affected). Because of this difficulty of ascertaining which 
individuals could have met the condition and, therefore, would actually 
forgo the opt-out payment when enrolling in employer-sponsored 
coverage, it generally is not feasible to have a rule under which the 
required contribution perfectly captures the cost of coverage for each 
specific individual offered a conditional opt-out payment.
    Similarly, another way to view opt-out payments that are 
conditioned on alternative coverage is that, rather than raising the 
cost to the employee of the employer's coverage, they reduce the cost 
to the employee of the alternative coverage. However, because employers 
generally do not have information about the existence and cost of other 
options available to the individual, it is not practical to take into 
account any offer of coverage other than the offer made by the employer 
in determining the required contribution with respect to the employer 
coverage (that is, the coverage that the employee must decline to 
receive the opt-out payment).
    While commenters indicated that the required contribution with 
respect to the employer coverage does not matter for an individual 
enrolled in any other minimum essential coverage because the individual 
would be ineligible for the premium tax credit, this statement is not 
true if the other coverage is individual market coverage. In 
particular, while enrollment in most types of minimum essential 
coverage results in an individual being ineligible for a premium tax 
credit, that is not the case for coverage in the individual market. 
Moreover, for individual market coverage offered through a Marketplace, 
the required contribution with respect to the employer coverage 
frequently will be relevant in determining whether the individual is 
eligible for a premium tax credit. In such cases, as in the case of an 
unconditional opt-out payment, the availability of a conditional opt-
out payment effectively increases the cost to the individual of 
enrolling in the employer coverage (at least relative to Marketplace 
coverage).
    Further, an opt-out arrangement that is conditioned on an 
employee's ability to obtain other coverage (if that coverage can be 
coverage in the individual market, whether inside or outside the 
Marketplace) does not generally raise the issues described earlier in 
this section of the preamble regarding the difficulty of ascertaining 
which individuals could meet the condition under a conditional opt-out 
arrangement. This is because generally all individuals are able to 
obtain coverage in the individual market, pursuant to the guaranteed 
issue requirements in section 2702 of the PHS Act. Thus, in the sense 
that all individuals can satisfy the applicable condition, such an opt-
out arrangement is similar to an unconditional opt-out arrangement.
    In an effort to provide a workable rule that balances these 
competing concerns, the proposed regulations provide that amounts made 
available under conditional opt-out arrangements are disregarded in 
determining the required contribution if the arrangement satisfies 
certain conditions (an ``eligible opt-out arrangement''), but otherwise 
the amounts are taken into account. The proposed regulations define an 
``eligible opt-out arrangement'' as an arrangement under which the 
employee's right to receive the opt-out payment is conditioned on (1) 
the employee declining to enroll in the employer-sponsored coverage and 
(2) the employee providing reasonable evidence that the employee and 
all other individuals for whom the employee reasonably expects to claim 
a personal exemption deduction for the taxable year or years that begin 
or end in or with the employer's plan year to which the opt-out 
arrangement applies (employee's expected tax family) have or will have 
minimum essential coverage (other than coverage in the individual 
market, whether or not obtained through the Marketplace) during the 
period of coverage to which the opt-out arrangement applies. For 
example, if an employee's expected tax family consists of the employee, 
the employee's spouse, and two children, the employee would meet this 
requirement by providing reasonable evidence that the employee, the 
employee's spouse, and the two children, will have coverage under the 
group health plan of the spouse' s employer for the period to which the 
opt-out arrangement applies.\6\
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    \6\ The Treasury Department and the IRS note that if an opt-out 
payment is conditioned on an employee obtaining individual market 
coverage, that opt-out arrangement could act as a reimbursement 
arrangement for some or all of the employee's premium for that 
individual market coverage; therefore, the opt-out arrangement could 
operate as an employer payment plan as discussed in Notice 2015-87, 
Notice 2015-17, 2015-14 I.R.B. 845, and Notice 2013-54, 2013-40 
I.R.B. 287. Nothing in these proposed regulations is intended to 
affect the prior guidance on employer payment plans.
---------------------------------------------------------------------------

    The Treasury Department and the IRS invite comments on this 
proposed rule, including suggestions for other workable rules that 
result in the required contribution more accurately reflecting the 
individual's cost of coverage while minimizing undesirable consequences 
and incentives.
    For purposes of the proposed eligible opt-out arrangement rule, 
reasonable evidence of alternative coverage includes the employee's 
attestation that the employee and all other members of the employee's 
expected tax family, if any, have or will have minimum essential 
coverage (other than coverage in the individual market, whether or not 
obtained through the Marketplace) or other reasonable evidence. 
Notwithstanding the evidence of alternative coverage required under the 
arrangement, to qualify as an eligible opt-out arrangement, the 
arrangement must also provide that any opt-out payment will not be made 
(and the payment must not in fact be made) if the employer knows or has 
reason to know that the employee or any other member of the employee's 
expected tax family does not have (or will not have) the required 
alternative coverage. An eligible opt-out arrangement must also require 
that the evidence of coverage be provided no less frequently than every 
plan year to which the eligible opt-out arrangement applies, and that 
the evidence be provided no earlier than a reasonable period before the 
commencement of the period of coverage to which the eligible opt-out 
arrangement applies. Obtaining the reasonable evidence (such as an 
attestation) as part of the regular annual open enrollment period that 
occurs within a few months before the commencement of the next plan 
year of employer-sponsored coverage meets this reasonable period 
requirement. Alternatively, the eligible opt-out arrangement would be 
permitted to require evidence of alternative coverage to be provided 
later, such as after the plan year starts, which would enable the 
employer to require evidence that the employee and other members of the

[[Page 44564]]

employee's expected tax family have already obtained the alternative 
coverage.
    Commenters on Notice 2015-87 generally stated that typical 
conditions under an opt-out arrangement include a requirement that the 
employee have alternative coverage through employer-sponsored coverage 
of a spouse or another relative, such as a parent. Provided that, as 
required under the opt-out arrangement, the employee provided 
reasonable evidence of this alternative coverage for the employee and 
the other members of the employee's expected tax family, and met the 
related conditions described in this preamble, these types of opt-out 
arrangements would be eligible opt-out arrangements, and opt-out 
payments made available under such arrangements would not increase the 
employee's required contribution.
    The Treasury Department and the IRS did not receive comments on 
opt-out arrangements indicating that the meaningful conditions imposed 
include any requirement other than one relating to alternative 
coverage. Therefore, the proposed rules do not address other opt-out 
conditions and would not treat an opt-out arrangement based on other 
conditions as an eligible opt-out arrangement. However, the Treasury 
Department and the IRS invite comments on whether opt-out payments are 
made subject to additional types of conditions in some cases, whether 
those types of conditions should be addressed in further guidance, and, 
if so, how.
    One commenter suggested that, if opt-out payments conditioned on 
alternative coverage are not included in an employee's required 
contribution, rules will be needed for cases in which an employee 
receives an opt-out payment and that employee's alternative coverage 
subsequently terminates. The commenter suggested that, in that case, 
the termination of the alternative coverage should have no impact on 
the determination of the employee's required contribution for the 
employer-sponsored coverage from which the employee opted out. In 
response, under the proposed regulations, provided that the reasonable 
evidence requirement is met, the amount of an opt-out payment made 
available under an eligible opt-out arrangement may continue to be 
excluded from the employee's required contribution for the remainder of 
the period of coverage to which the opt-out payment originally applied. 
The opt-out payment may be excluded for this period even if the 
alternative coverage subsequently terminates for the employee or any 
other member of the employee's expected tax family, regardless of 
whether the opt-out payment is required to be adjusted or terminated 
due to the loss of alternative coverage, and regardless of whether the 
employee is required to provide notice of the loss of alternative 
coverage to the employer.
    The Treasury Department and the IRS are aware that the way in which 
opt-out arrangements affect the calculation of affordability is 
important not only to an employee and the other members of the 
employee's expected tax family in determining whether they may be 
eligible for a premium tax credit or whether an individual may be 
exempt under the individual shared responsibility provisions, but also 
to an employer subject to the employer shared responsibility provisions 
under section 4980H in determining whether the employer may be subject 
to an assessable payment under section 4980H(b). An employer subject to 
the employer shared responsibility provisions will be subject to a 
payment under section 4980H(b) only with respect to a full-time 
employee who receives a premium tax credit, and an employee will not be 
eligible for the premium tax credit if the employer's offer of coverage 
was affordable and provided minimum value.\7\ Commenters expressed 
concern that if the rule adopted for conditional opt-outs required an 
employee to provide reasonable evidence that the employee has or will 
have minimum essential coverage, the employer may not know whether the 
employee is being truthful and has obtained (or will obtain) such 
coverage, or how long such coverage will continue. Under these proposed 
regulations, however, the employee's required contribution will not be 
increased by an opt-out payment made available under an eligible opt-
out arrangement, provided that the arrangement provides that the 
employer makes the payment only if the employee provides reasonable 
evidence of alternative coverage and the employer does not know or have 
reason to know that the employee or any other member of the employee's 
expected tax family fails or will fail to meet the requirement to have 
alternative coverage (other than individual market coverage, whether or 
not obtained through the Marketplace).
---------------------------------------------------------------------------

    \7\ The affordability rules under section 36B, including rules 
regarding opt-out payments, may also affect the application of 
section 4980H(a) because one element that is required for an 
applicable large employer to be subject to an assessable payment 
under section 4980H(a) is that at least one full-time employee must 
receive the premium tax credit.
---------------------------------------------------------------------------

    Some commenters requested exceptions for special circumstances from 
the general rule that the employee's required contribution is increased 
by the amount of an opt-out payment made available. These circumstances 
include (1) conditional opt-out payments that are required under the 
terms of a collective bargaining agreement and (2) opt-out payments 
that are below a de minimis amount. Regarding opt-out arrangements 
contained in collective bargaining agreements, the Treasury Department 
and the IRS anticipate that the proposed treatment of eligible opt-out 
arrangements, generally, will address the concerns raised in the 
comments. Accordingly, the Treasury Department and the IRS do not 
propose to provide a permanent exception for opt-out arrangements 
provided under collective bargaining agreements. Earlier in this 
section of the preamble, however, the Treasury Department and the IRS 
clarify and expand the transition relief provided under Notice 2015-87 
for opt-out arrangements provided under collective bargaining 
agreements in effect before December 16, 2015. As for an exception for 
de minimis amounts, the Treasury Department and the IRS decline to 
adopt such an exception because there is neither a statutory nor an 
economic basis for establishing a de minimis threshold under which an 
unconditional opt-out payment would be excluded from the employee's 
required contribution.
g. Effective Date of Eligibility for Minimum Essential Coverage When 
Advance Credit Payments Discontinuance Is Delayed
    Section 36B and the regulations under section 36B provide that an 
individual who may enroll in minimum essential coverage outside the 
Marketplace (other than individual market coverage) for a month is 
generally not allowed a premium tax credit for that month. 
Consequently, individuals enrolled in a qualified health plan with 
advance credit payments must return to the Exchange to report 
eligibility for other minimum essential coverage so the Exchange can 
discontinue the advance credit payments for Marketplace coverage. 
Similarly, individuals enrolled in a qualified health plan with advance 
credit payments may be determined eligible for coverage under a 
government-sponsored program, such as Medicaid. In some cases, 
individuals may inform the Exchange of their opportunity to enroll in 
other minimum essential coverage or receive approval for coverage under 
a government-sponsored program after the time for which the Exchange 
can discontinue advance credit payments for the next

[[Page 44565]]

month. Because taxpayers should generally not have to repay the advance 
credit payments for that next month in these circumstances, the 
proposed regulations provide a rule for situations in which an 
Exchange's discontinuance of advance credit payments is delayed. Under 
the proposed regulations, if an individual who is enrolled in a 
qualified health plan for which advance credit payments are made 
informs the Exchange that the individual is or will soon be eligible 
for other minimum essential coverage and that advance credit payments 
should be discontinued, but the Exchange does not discontinue advance 
credit payments for the first calendar month beginning after the month 
the individual notifies the Exchange, the individual is treated as 
eligible for the other minimum essential coverage no earlier than the 
first day of the second calendar month beginning after the first month 
the individual may enroll in the other minimum essential coverage. 
Similarly, if a determination is made that an individual is eligible 
for Medicaid or CHIP but advance credit payments are not discontinued 
for the first calendar month beginning after the eligibility 
determination, the individual is treated as eligible for Medicaid or 
CHIP no earlier than the first day of the second calendar month 
beginning after the determination. Taxpayers may rely on this rule for 
all taxable years beginning after December 31, 2013.

3. Premium Assistance Amount

a. Payment of Taxpayer's Share of Premiums for Advance Credit Payments 
Following Appeal Determinations
    Under Sec.  1.36B-3(c)(1)(ii), a month in which an individual who 
is enrolled in a qualified health plan is a coverage month for the 
individual only if the taxpayer's share of the premium for the 
individual's coverage for the month is paid by the unextended due date 
of the taxpayer's income tax return for the year of coverage, or the 
premium is fully paid by advance credit payments.
    One of the functions of an Exchange is to make determinations as to 
whether an individual who enrolls in a qualified health plan is 
eligible for advance credit payments for the coverage. If an Exchange 
determines that the individual is not eligible for advance credit 
payments, the individual may appeal that decision. An individual who is 
initially determined ineligible for advance credit payments, does not 
enroll in a qualified health plan under the contested determination, 
and is later determined to be eligible for advance credit payments 
through the appeals process, may elect to be retroactively enrolled in 
a health plan through the Exchange. In that case, the individual is 
treated as having been enrolled in the qualified health plan from the 
date on which the individual would have enrolled had he or she 
initially been determined eligible for advance credit payments. If 
retroactively enrolled, the deadline for paying premiums for the 
retroactive coverage may be after the unextended due date for filing an 
income tax return for the year of coverage. Consequently, the proposed 
regulations provide that a taxpayer who is eligible for advance credit 
payments pursuant to an eligibility appeal for a member of the 
taxpayer's coverage family who, based on the appeals decision, 
retroactively enrolls in a qualified health plan, is considered to have 
met the requirement in Sec.  1.36B-3(c)(1)(ii) for a month if the 
taxpayer pays the taxpayer's share of the premium for coverage under 
the plan for the month on or before the 120th day following the date of 
the appeals decision. Taxpayers may rely on this rule for all taxable 
years beginning after December 31, 2013.
b. Month That Coverage Is Terminated
    Section 1.36B-3(d)(2) provides that if a qualified health plan is 
terminated before the last day of a month, the premium assistance 
amount for the month is the lesser of the enrollment premiums for the 
month (reduced by any amounts that were refunded), or the excess of the 
benchmark plan premium for a full month of coverage over the full 
contribution amount for the month. Section 1.36B-3(c)(2) provides that 
an individual whose enrollment in a qualified health plan is effective 
on the date of the individual's birth or adoption, or placement for 
foster care, or upon the effective date of a court order, is treated as 
enrolled as of the first day of the month and, therefore, the month of 
enrollment may be a coverage month. The regulations, however, do not 
expressly address how the premium assistance amount is computed when a 
covered individual disenrolls before the last day of a month but the 
plan is not terminated because other individuals remain enrolled. For 
purposes of the premium tax credit, the premium assistance amount for 
an individual who is not enrolled for an entire month should be the 
same regardless of the circumstances causing the partial-month 
coverage, provided that the individual was enrolled, or is treated as 
enrolled, as of the first day of the month (that is, so long as the 
month is a coverage month). Accordingly, to provide consistency for all 
individuals who have a coverage month that is less than a full calendar 
month, the proposed regulations provide that the premium assistance 
amount for a month is the lesser of the enrollment premiums for the 
month (reduced by any amounts that were refunded), or the excess of the 
benchmark plan premium over the contribution amount for the month. 
Taxpayers may rely on this rule for all taxable years beginning after 
December 31, 2013.

4. Benchmark Plan Premium

a. Effective/Applicability Date of Benchmark Plan Rules
    The rules relating to the benchmark plan in this section are 
proposed to apply for taxable years beginning after December 31, 2018.
b. Pediatric Dental Benefits
    Under section 1311(d)(2)(B) of the Affordable Care Act, only 
qualified health plans, including stand-alone dental plans offering 
pediatric dental benefits, may be offered through a Marketplace. In 
general, a qualified health plan is required to provide coverage for 
all ten essential health benefits described in section 1302(b) of the 
Affordable Care Act, including pediatric dental coverage. However, 
under section 1302(b)(4)(F), a plan that does not provide pediatric 
dental benefits may nonetheless be a qualified health plan if it covers 
each essential health benefit described in section 1302(b) other than 
pediatric dental benefits and if it is offered through a Marketplace in 
which a stand-alone dental plan offering pediatric dental benefits is 
offered as well.
    Section 36B(b)(3)(E) and Sec.  1.36B-3(k) provide that if an 
individual enrolls in both a qualified health plan and a stand-alone 
dental plan, the portion of the premium for the stand-alone dental plan 
properly allocable to pediatric dental benefits is treated as a premium 
payable for the individual's qualified health plan. Thus, in 
determining a taxpayer's premium assistance amount for a month in which 
a member of the taxpayer's coverage family is enrolled in a stand-alone 
dental plan, the taxpayer's enrollment premium includes the portion of 
the premium for the stand-alone dental plan allocable to pediatric 
dental benefits. The existing regulations do not provide a similar 
adjustment for the taxpayer's applicable benchmark plan premium to 
reflect the cost of pediatric dental benefits in cases where the 
second-lowest cost silver plan does not provide pediatric dental 
benefits.
    Section 36B(b)(3)(B) provides that the applicable benchmark plan 
with respect

[[Page 44566]]

to a taxpayer is the second lowest cost silver plan available through 
the applicable Marketplace that provides ``self-only coverage'' or 
``family coverage,'' depending generally on whether the coverage family 
includes one or more individuals. Neither the Code nor the Affordable 
Care Act defines the terms ``self-only coverage'' or ``family 
coverage'' for this purpose.
    Under the existing regulations, the references in section 
36B(b)(3)(B) to plans that provide self-only coverage and family 
coverage are interpreted to refer to all qualified health plans offered 
through the applicable Marketplace, regardless of whether the coverage 
offered by those plans includes all ten essential health benefits. 
Because qualified health plans that do not offer pediatric dental 
benefits tend to be cheaper than qualified health plans that cover all 
ten essential health benefits, the second lowest-cost silver plan (and 
therefore the premium tax credit) for taxpayers purchasing coverage 
through a Marketplace in which stand-alone dental plans are offered is 
likely to not account for the cost of obtaining pediatric dental 
coverage.
    The Treasury Department and the IRS believe that the current rule 
frustrates the statute's goal of making coverage that provides the 
essential health benefits affordable to individuals eligible for the 
premium tax credit. Accordingly, the proposed regulations reflect a 
modification in the interpretation of the terms ``self-only coverage'' 
and ``family coverage'' in section 36B(b)(3)(B) to refer to coverage 
that provides each of the essential health benefits described in 
section 1302(b) of the Affordable Care Act. This coverage may be 
obtained from either a qualified health plan alone or from a qualified 
health plan in combination with a stand-alone dental plan. In 
particular, self-only coverage refers to coverage obtained from such 
plans where the coverage family is a single individual. Similarly, 
family coverage refers to coverage obtained from such plans where the 
coverage family includes more than one individual.
    Consistent with this interpretation, the proposed regulations 
provide that for taxable years beginning after December 31, 2018, if an 
Exchange offers one or more silver-level qualified health plans that do 
not cover pediatric dental benefits, the applicable benchmark plan is 
determined by ranking (1) the premiums for the silver-level qualified 
health plans that include pediatric dental benefits offered by the 
Exchange and (2) the aggregate of the premiums for the silver-level 
qualified health plans offered by the Exchange that do not include 
pediatric dental benefits plus the portion of the premium allocable to 
pediatric dental benefits for stand-alone dental plans offered by the 
Exchange. In constructing this ranking, the premium for the lowest-cost 
silver plan that does not include pediatric dental benefits is added to 
the premium allocable to pediatric dental benefits for the lowest cost 
stand-alone dental plan, and similarly, the premium for the second 
lowest-cost silver plan that does not include pediatric dental benefits 
is added to the premium allocable to pediatric dental benefits for the 
second lowest-cost stand-alone dental plan. The second lowest-cost 
amount from this combined ranking is the taxpayer's applicable 
benchmark plan premium.
c. Coverage Family Members Residing in Different Locations
    Under Sec.  1.36B-3(f), a taxpayer's applicable benchmark plan is 
the second lowest cost silver plan offered at the time a taxpayer or 
family member enrolls in a qualified health plan through the Exchange 
for the rating area where the taxpayer resides. Under Sec.  1.36B-
3(f)(4), if members of a taxpayer's family reside in different states 
and enroll in separate qualified health plans, the premium for the 
taxpayer's applicable benchmark plan is the sum of the premiums for the 
applicable benchmark plans for each group of family members living in 
the same state.
    Referring to the residence of the taxpayer to establish the cost 
for a benchmark health plan is appropriate when the taxpayer and all 
members of the taxpayer's coverage family live in the same location 
because it reflects the cost of available coverage for the taxpayer's 
coverage family. However, because premiums and plan availability may 
vary based on location, the existing rule for a taxpayer whose family 
members reside in different locations in the same state may not 
accurately reflect the cost of available coverage. In addition, the 
rules for calculating the premium tax credit should operate the same 
for families residing in multiple locations within a state and families 
residing in multiple states. Accordingly, Sec.  1.36B-3(f)(4) of the 
proposed regulations provides that if a taxpayer's coverage family 
members reside in multiple locations, whether within the same state or 
in different states, the taxpayer's benchmark plan is determined based 
on the cost of available coverage in the locations where members of the 
taxpayer's coverage family reside. In particular, if members of a 
taxpayer's coverage family reside in different locations, the 
taxpayer's benchmark plan premium is the sum of the premiums for the 
applicable benchmark plans for each group of coverage family members 
residing in different locations, based on the plans offered to the 
group through the Exchange for the rating area where the group resides. 
If all members of a taxpayer's coverage family reside in a single 
location that is different from where the taxpayer resides, the 
taxpayer's benchmark plan premium is the premium for the applicable 
benchmark plan for the coverage family, based on the plans offered to 
the taxpayer's coverage family through the Exchange for the rating area 
where the coverage family resides.
d. Aggregation of Silver-Level Policies
    Section 1.36B-3(f)(3) provides that if one or more silver-level 
plans offered through an Exchange do not cover all members of a 
taxpayer's coverage family under one policy (for example, because an 
issuer will not cover a taxpayer's dependent parent on the same policy 
the taxpayer enrolls in), the premium for the applicable benchmark plan 
may be the premium for a single policy or for more than one policy, 
whichever is the second lowest-cost silver option. This rule does not 
specify which combinations of policies must be taken into account for 
this purpose, suggesting that all such combinations must be considered, 
which is unduly complex for taxpayers, difficult for Exchanges to 
implement, and difficult for the IRS to administer. Accordingly, to 
clarify and simplify the benchmark premium determination for situations 
in which a silver-level plan does not cover all the members of a 
taxpayer's coverage family under one policy, the proposed regulations 
delete the existing rule and provide a new rule in its place.
    Under the proposed regulations, if a silver-level plan offers 
coverage to all members of a taxpayer's coverage family who reside in 
the same location under a single policy, the plan premium taken into 
account for purposes of determining the applicable benchmark plan is 
the premium for that policy. In contrast, if a silver-level plan would 
require multiple policies to cover all members of a taxpayer's coverage 
family who reside in the same location, the plan premium taken into 
account for purposes of determining the applicable benchmark plan is 
the sum of the premiums for self-only policies under the plan for each 
member of the coverage family who resides in the same location. Under 
the proposed regulations, similar rules would apply to the portion of 
premiums for stand-alone dental plans allocable to pediatric

[[Page 44567]]

dental coverage taken into account for purposes of determining the 
premium for a taxpayer's applicable benchmark plan.
    Comments are requested on the rule contained in the proposed 
regulations, as well as on an alternative rule under which the plan 
premium taken into account for purposes of determining a taxpayer's 
applicable benchmark plan would be equal to the sum of the self-only 
policies under a plan for each member of the taxpayer's coverage 
family, regardless of whether all members of the taxpayer's coverage 
family could be covered under a single policy under the plan.
e. Silver-Level Plan Not Available for Enrollment
    Section 1.36B-3(f)(5) provides that if a qualified health plan is 
closed to enrollment for a taxpayer or a member of the taxpayer's 
coverage family, that plan is disregarded in determining the taxpayer's 
applicable benchmark plan. Similarly, Sec.  1.36B-3(f)(6) provides that 
a plan that is the applicable benchmark plan for a taxpayer does not 
cease to be the applicable benchmark plan solely because the plan or a 
lower cost plan terminates or closes to enrollment during the taxable 
year. Because stand-alone dental plans are considered in determining a 
taxpayer's applicable benchmark plan under the proposed regulations, 
the proposed regulations provide consistency in the treatment of 
qualified health plans and stand-alone dental plans that are closed to 
enrollment or that terminate during the taxable year.
f. Only One Silver-Level Plan Offered to the Coverage Family
    In general, Sec.  1.36B-3(f)(1) provides that a taxpayer's 
applicable benchmark plan is the second lowest-cost silver-level plan 
available to the taxpayer for self-only or family coverage. However, 
for taxpayers who reside in certain locations, only one silver-level 
plan providing such coverage may be available. Section 1.36B-3(f)(8) of 
the proposed regulations clarifies that if there is only one silver-
level qualified health plan offered through the Exchange that would 
cover all members of the taxpayer's coverage family (whether under one 
policy or multiple policies), that silver-level plan is used for 
purposes of the taxpayer's applicable benchmark plan. Similarly, if 
there is only one stand-alone dental plan offered through the Exchange 
that would cover all members of the taxpayer's coverage family (whether 
under one policy or multiple policies), the portion of the premium of 
that plan that is allocable to pediatric dental benefits is used for 
purposes of determining the taxpayer's applicable benchmark plan.

5. Reconciliation of Advance Credit Payments

    Section 301.6011-8 provides that a taxpayer who receives the 
benefit of advance credit payments must file an income tax return for 
that taxable year on or before the due date for the return (including 
extensions of time for filing) and reconcile the advance credit 
payments. In addition, the regulations under section 36B provide that 
if advance credit payments are made for coverage of an individual for 
whom no taxpayer claims a personal exemption deduction, the taxpayer 
who attests to the Exchange to the intention to claim a personal 
exemption deduction for the individual as part of the determination 
that the taxpayer is eligible for advance credit payments for coverage 
of the individual must reconcile the advance credit payments.
    Questions have been raised concerning how these two rules apply, 
and consequently which individual must reconcile advance credit 
payments, when a taxpayer (a parent, for example) attests that he or 
she will claim a personal exemption deduction for an individual, the 
advance payments are made with respect to coverage for the individual, 
the taxpayer does not claim a personal exemption deduction for the 
individual, and the individual does not file a tax return for the year. 
The intent of the existing regulation is that the taxpayer, not the 
individual for whose coverage advance credit payments were made, must 
reconcile the advance credit payments in situations in which a taxpayer 
attests to the intention to claim a personal exemption for the 
individual and no one claims a personal exemption deduction for the 
individual. Consequently, the proposed regulations clarify that if 
advance credit payments are made for coverage of an individual for whom 
no taxpayer claims a personal exemption deduction, the taxpayer who 
attests to the Exchange to the intention to claim a personal exemption 
deduction for the individual, not the individual for whose coverage the 
advance credit payments were made, must file a tax return and reconcile 
the advance credit payments.

6. Information Reporting

a. Two or More Families Enrolled in Single Qualified Health Plan
    Section 1.36B-3(h) provides that if a qualified health plan covers 
more than one family under a single policy (for example, a plan covers 
a taxpayer and the taxpayer's child who is 25 and not a dependent of 
the taxpayer), the premium tax credit is computed for each applicable 
taxpayer covered by the plan. In addition, in computing the tax credit 
for each taxpayer, premiums for the qualified health plan the taxpayers 
purchase (the enrollment premiums) are allocated to each taxpayer in 
proportion to the premiums for each taxpayer's applicable benchmark 
plan.
    The existing regulations provide that the Exchange must report the 
enrollment premiums for each family, but do not specify the manner in 
which the Exchange must divide the enrollment premiums among the 
families enrolled in the policy. Consequently, the proposed regulations 
clarify that when multiple families enroll in a single qualified health 
plan and advance credit payments are made for the coverage, the 
enrollment premiums reported by the Exchange for each family is the 
family's allocable share of the enrollment premiums, which is based on 
the proportion of each family's applicable benchmark plan premium.
b. Partial Months of Enrollment
    The existing regulations do not specify how the enrollment premiums 
and benchmark plan premiums are reported in cases in which one or more 
individuals is enrolled or disenrolled in coverage mid-month. To ensure 
that this reporting is consistent with the rules for calculating the 
premium assistance amounts for partial months of coverage, the proposed 
regulations provide that, if an individual is enrolled in a qualified 
health plan after the first day of a month, generally no value should 
be reported for the individual's enrollment premium or benchmark plan 
premium for that month. However, if an individual's coverage in a 
qualified health plan is terminated before the last day of a month, or 
an individual is enrolled in coverage after the first day of a month 
and the coverage is effective on the date of the individual's birth, 
adoption, or placement for adoption or in foster care, or on the 
effective date of a court order, an Exchange must report the premium 
for the applicable benchmark plan for a full month of coverage 
(excluding the premium allocated to benefits in excess of essential 
health benefits). In addition, the proposed regulations provide that 
the Exchange must report the enrollment premiums for the month 
(excluding the premium allocated to benefits in excess of essential 
health benefits), reduced by any amount that was refunded due to the 
plan's termination.

[[Page 44568]]

c. Use of Electronic Media
    Section 301.6011-2(b) provides that if the use of certain forms, 
including the Form 1095 series, is required by the applicable 
regulations or revenue procedures for the purpose of making an 
information return, the information required by the form must be 
submitted on magnetic media. Form 1095-A should not have been included 
in Sec.  301.6011-2 because Form 1095-A is not an information return. 
Consequently, the proposed regulations replace the general reference in 
Sec.  301.6011-2(b) to the forms in the 1095 series with specific 
references to Forms 1095-B and 1095-C, but not Form 1095-A.

Effective/Applicability Date

    Except as otherwise provided, these regulations are proposed to 
apply for taxable years beginning after December 31, 2016. In addition, 
taxpayers may rely on certain provisions of the proposed regulations 
for taxable years ending after December 31, 2013, as indicated earlier 
in this preamble. In addition, rules relating to the benchmark plan 
described in section 4 of this preamble are proposed to apply for 
taxable years beginning after December 31, 2018.
    Notwithstanding the proposed applicability date, nothing in the 
proposed regulations is intended to limit any relief for opt-out 
arrangements provided in Notice 2015-87, Q&A 9, or in section 2.f of 
the preamble to these proposed regulations (regarding opt-out 
arrangements provided for in collective bargaining agreements). For 
purposes of sections 36B and 5000A, although under the proposed 
regulations amounts made available under an eligible opt-out 
arrangement are not added to an employee's required contribution, for 
periods before the final regulations are applicable and, if later, 
through the end of the most recent plan year beginning before January 
1, 2017, an individual who can demonstrate that he or she meets the 
condition for an opt-out payment under an eligible opt-out arrangement 
is permitted to treat the opt-out payment as increasing the employee's 
required contribution.\8\
---------------------------------------------------------------------------

    \8\ For periods prior to the applicability date, an individual 
who cannot demonstrate that he or she meets the condition for an 
opt-out payment under an eligible opt-out arrangement is not 
permitted to treat the opt-out payment as increasing the employee's 
required contribution.
---------------------------------------------------------------------------

    For purposes of the consequences of these regulations under 
sections 4980H and 6056 (and in particular Form 1095-C), the 
regulations regarding opt-out arrangements are proposed to be first 
applicable for plan years beginning on or after January 1, 2017,\9\ and 
for the period prior to this applicability date employers are not 
required to increase the amount of an employee's required contribution 
by the amount of an opt-out payment made available under an opt-out 
arrangement (other than a payment made available under a non-relief-
eligible opt-out arrangement \10\). See also section 2.f of this 
preamble for transition relief provided under Notice 2015-87 as 
clarified and expanded for opt-out arrangements contained in collective 
bargaining agreements in effect before December 16, 2015. See Sec.  
601.601(d)(2)(ii)(b).
---------------------------------------------------------------------------

    \9\ Notice 2015-87, Q&A 9 provides that the Treasury Department 
and the IRS anticipate that the regulations on opt-out arrangements 
generally will apply only for periods after the issuance of final 
regulations. The Treasury Department and the IRS anticipate 
finalizing these regulations prior to the end of 2016.
    \10\ For a discussion of non-relief-eligible opt-out 
arrangements see Notice 2015-87, Q&A-9.
---------------------------------------------------------------------------

Special Analyses

    Certain IRS regulations, including this one, are exempt from the 
requirements of Executive Order 12866, as supplemented and reaffirmed 
by Executive Order 13563. Therefore, a regulatory assessment is not 
required. It has also been determined that section 553(b) of the 
Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to 
these regulations.
    It is hereby certified that these regulations will not have a 
significant economic impact on a substantial number of small entities. 
This certification is based on the fact that the information collection 
required under these regulations is imposed under section 36B. 
Consistent with the statute, the proposed regulations require a person 
that provides minimum essential coverage to an individual to file a 
return with the IRS reporting certain information and to furnish a 
statement to the responsible individual who enrolled an individual or 
family in the coverage. These regulations merely provide the method of 
filing and furnishing returns and statements under section 36B. 
Moreover, the proposed regulations attempt to minimize the burden 
associated with this collection of information by limiting reporting to 
the information that the IRS requires to verify minimum essential 
coverage and administer tax credits.
    Based on these facts, a Regulatory Flexibility Analysis under the 
Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required.
    Pursuant to section 7805(f) of the Code, this notice of proposed 
rulemaking has been submitted to the Chief Counsel for Advocacy of the 
Small Business Administration for comment on its impact on small 
business.

Comments and Requests for Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any comments that are submitted timely 
to the IRS as prescribed in this preamble under the ADDRESSES heading. 
Treasury and the IRS request comments on all aspects of the proposed 
rules. All comments will be available at www.regulations.gov or upon 
request. A public hearing will be scheduled if requested in writing by 
any person who timely submits written comments. If a public hearing is 
scheduled, notice of the date, time, and place for the hearing will be 
published in the Federal Register.

Drafting Information

    The principal authors of these proposed regulations are Shareen S. 
Pflanz 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 the development of the 
regulations.

List of Subjects

26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 301

    Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income 
taxes, Penalties, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR parts 1 and 301 are proposed to be amended as 
follows:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 is amended by adding 
entries in numerical order to read in part as follows:

    Authority: 26 U.S.C. 7805 * * *

0
Par. 2. Section 1.36B-0 is amended by:
0
1. Adding the entries for Sec. Sec.  1.36B-2(b)(6)(i) and (ii).
0
2. Adding entries for Sec. Sec.  1.36B-2(c)(3)(v)(A)(7), (v)(A)(7)(i), 
(ii), (iii), (iii)(A), (iii)(B), (iii)(C), and (iv).
0
3. Redesignating entry for Sec.  1.36B-2(c)(4) as (c)(5) and adding new 
entries for Sec.  1.36B-2(c)(4), (c)(4)(i), (ii), (ii)(A), and (ii)(B).

[[Page 44569]]

0
4. Redesignating entry for Sec.  1.36B-3(c)(4) as (c)(5) and adding a 
new entry for Sec.  1.36B-3(c)(4).
0
5. Revising entries for Sec. Sec.  1.36B-3(d)(1) and (d)(2).
0
6. Revising entries for Sec. Sec.  1.36B-3(f)(3), (4), (5), (6), and 
(7).
0
7. Adding entries for Sec. Sec.  1.36B-3(f)(8), (9), and (10).
0
8. Adding entries for Sec. Sec.  1.36B-5(c)(3)(iii).
    The revisions and additions read as follows:


Sec.  1.36B-0  Table of contents.

* * * * *
Sec.  1.36B-2 Eligibility for premium tax credit.
* * * * *
    (b) * * *
    (6) * * *
    (i) In general.
    (ii) Exceptions.
* * * * *
    (c) * * *
    (3) * * *
    (v) * * *
    (A) * * *
    (7) Opt-out arrangements.
    (i) In general.
    (ii) Eligible opt-out arrangements.
    (iii) Definitions.
    (A) Opt-out payment.
    (B) Opt-out arrangement.
    (C) Eligible opt-out arrangement.
    (iv) Examples.
* * * * *
    (4) Special eligibility rules.
    (i) Related individuals not claimed as a personal exemption 
deduction.
    (ii) Exchange unable to discontinue advance credit payments.
    (A) In general.
    (B) Medicaid or CHIP.
* * * * *
Sec.  1.36B-3 Computing the premium assistance credit amount.
* * * * *
    (c) * * *
    (4) Appeals of coverage eligibility.
    (d) * * *
    (1) Premium assistance amount.
    (2) Examples.
* * * * *
    (f) * * *
    (3) Silver-level plan not covering pediatric dental benefits.
    (4) Family members residing in different locations.
    (5) Single or multiple policies needed to cover the family.
    (i) Policy covering a taxpayer's family.
    (ii) Policy not covering a taxpayer's family.
    (6) Plan not available for enrollment.
    (7) Benchmark plan terminates or closes to enrollment during the 
year.
    (8) Only one silver-level plan offered to the coverage family.
    (9) Effective date.
    (10) Examples.
* * * * *
Sec.  1.36B-5 Information reporting by Exchanges.
* * * * *
    (c) * * *
    (3) * * *
    (iii) Partial month of coverage.
    (A) In general.
    (B) Certain mid-month enrollments.
* * * * *
0
Par. 3. Section 1.36B-1 is amended by revising paragraphs (l), (m), and 
(o) to read as follows:


Sec.  1.36B-1  Premium tax credit definitions.

* * * * *
    (l) Self-only coverage. Self-only coverage means health insurance 
that covers one individual and provides coverage for the essential 
health benefits as defined in section 1302(b)(1) of the Affordable Care 
Act (42 U.S.C. 18022).
    (m) Family coverage. Family coverage means health insurance that 
covers more than one individual and provides coverage for the essential 
health benefits as defined in section 1302(b)(1) of the Affordable Care 
Act (42 U.S.C. 18022).
* * * * *
    (o) Effective/applicability date. Except for paragraphs (l) and 
(m), this section applies to taxable years ending after December 31, 
2013. Paragraphs (l) and (m) of this section apply to taxable years 
beginning after December 31, 2018. Paragraphs (l) and (m) of Sec.  
1.36B-1 as contained in 26 CFR part I edition revised as of April 1, 
2016, apply to taxable years ending after December 31, 2013, and 
beginning before January 1, 2019.
0
Par. 4. Section 1.36B-2 is amended by:
0
1. Revise paragraph (b)(6) introductory text, (b)(6)(i) and (ii).
0
2. Adding three new sentences to the end of paragraph (c)(2)(v).
0
3. Revising paragraph (c)(3)(i).
0
4. Revising paragraph (c)(3)(iii)(A).
0
5. Adding three new sentences to the end of paragraph (c)(3)(v)(A)(3).
0
6. Adding new paragraphs (c)(3)(v)(A)(7)
0
7. Revising paragraph (c)(4).
0
8. Adding a new paragraph (e).


Sec.  1.36B-2  Eligibility for premium tax credit.

* * * * *
    (b) * * *
    (6) Special rule for taxpayers with household income below 100 
percent of the Federal poverty line for the taxable year--(i) In 
general. A taxpayer (other than a taxpayer described in paragraph 
(b)(5) of this section) whose household income for a taxable year is 
less than 100 percent of the Federal poverty line for the taxpayer's 
family size is treated as an applicable taxpayer for the taxable year 
if--
    (A) The taxpayer or a family member enrolls in a qualified health 
plan through an Exchange for one or more months during the taxable 
year;
    (B) An Exchange estimates at the time of enrollment that the 
taxpayer's household income will be at least 100 percent but not more 
than 400 percent of the Federal poverty line for the taxable year;
    (C) Advance credit payments are authorized and paid for one or more 
months during the taxable year; and
    (D) The taxpayer would be an applicable taxpayer if the taxpayer's 
household income for the taxable year was at least 100 but not more 
than 400 percent of the Federal poverty line for the taxpayer's family 
size.
    (ii) Exceptions. This paragraph (b)(6) does not apply for an 
individual who, with intentional or reckless disregard for the facts, 
provides incorrect information to an Exchange for the year of coverage. 
A reckless disregard of the facts occurs if the taxpayer makes little 
or no effort to determine whether the information provided to the 
Exchange is accurate under circumstances that demonstrate a substantial 
deviation from the standard of conduct a reasonable person would 
observe. A disregard of the facts is intentional if the taxpayer knows 
the information provided to the Exchange is inaccurate.
* * * * *
    (c) * * *
    (2) * * *
    (v) * * * This paragraph (c)(2)(v) does not apply for an individual 
who, with intentional or reckless disregard for the facts, provides 
incorrect information to an Exchange for the year of coverage. A 
reckless disregard of the facts occurs if the taxpayer makes little or 
no effort to determine whether the information provided to the Exchange 
is accurate under circumstances that demonstrate a substantial 
deviation from the standard of conduct a reasonable person would 
observe. A disregard of the facts is intentional if the taxpayer knows 
that information provided to the Exchange is inaccurate.
* * * * *
    (3) * * *
    (i) In general. For purposes of section 36B, an employee who may 
enroll in an eligible employer-sponsored plan (as defined in section 
5000A(f)(2) and the regulations under that section) that is minimum 
essential coverage, and an individual who may enroll in the plan 
because of a relationship to the employee (a related individual), are 
eligible for minimum essential coverage under the plan for any month 
only if the plan is affordable and provides minimum value. Except for 
the Nonappropriated Fund Health Benefits

[[Page 44570]]

Program of the Department of Defense, established under section 349 of 
the National Defense Authorization Act for Fiscal Year 1995 (Pub. L. 
103-337; 10 U.S.C. 1587 note), government-sponsored minimum essential 
coverage is not an eligible employer-sponsored plan. The 
Nonappropriated Fund Health Benefits Program of the Department of 
Defense is considered eligible employer-sponsored coverage, but not 
government-sponsored coverage, for purposes of determining if an 
individual is eligible for minimum essential coverage under this 
section.
* * * * *
    (iii) * * *
    (A) Failure to enroll in plan. An employee or related individual 
may be eligible for minimum essential coverage under an eligible 
employer-sponsored plan for a month during a plan year if the employee 
or related individual could have enrolled in the plan for that month 
during an open or special enrollment period for the plan year. If an 
enrollment period relates to coverage for not only the upcoming plan 
year (or the current plan year in the case of an enrollment period 
other than an open enrollment period), but also coverage in one or more 
succeeding plan years, this paragraph (c)(3)(iii)(A) applies only to 
eligibility for the coverage in the upcoming plan year (or the current 
plan year in the case of an enrollment period other than an open 
enrollment period).
* * * * *
    (v) * * *
    (A) * * *
    (3) * * * This paragraph (c)(3)(v)(A)(3) does not apply for an 
individual who, with intentional or reckless disregard for the facts, 
provides incorrect information to an Exchange concerning the portion of 
the annual premium for coverage for the employee or related individual 
under the plan. A reckless disregard of the facts occurs if the 
taxpayer makes little or no effort to determine whether the information 
provided to the Exchange is accurate under circumstances that 
demonstrate a substantial deviation from the standard of conduct a 
reasonable person would observe. A disregard of the facts is 
intentional if the taxpayer knows that the information provided to the 
Exchange is inaccurate.
* * * * *
    (7) Opt-out arrangements--(i) In general. Except as otherwise 
provided in this paragraph (c)(3)(v)(A)(7), the amount of an opt-out 
payment made available to an employee under an opt-out arrangement 
increases the employee's required contribution for purposes of 
determining the affordability of the eligible employer-sponsored plan 
to which the opt-out arrangement relates, regardless of whether the 
employee enrolls in the eligible employer-sponsored plan or declines to 
enroll in that coverage and is paid the opt-out payment.
    (ii) Eligible opt-out arrangements. The amount of an opt-out 
payment made available to an employee under an eligible opt-out 
arrangement does not increase the employee's required contribution for 
purposes of determining the affordability of the eligible employer-
sponsored plan to which the eligible opt-out arrangement relates, 
regardless of whether the employee enrolls in the eligible employer-
sponsored plan or is paid the opt-out payment.
    (iii) Definitions. The following definitions apply for purposes of 
this paragraph (c)(3)(v)(A)(7):
    (A) Opt-out payment. The term opt-out payment means a payment that 
is available only if an employee declines coverage, including waiving 
coverage in which the employee would otherwise be enrolled, under an 
eligible employer-sponsored plan and that is not permitted to be used 
to pay for coverage under the eligible employer-sponsored plan. An 
amount provided as an employer contribution to a cafeteria plan that is 
permitted to be used by the employee to purchase minimum essential 
coverage is not an opt-out payment, whether or not the employee may 
receive the amount as a taxable benefit. See paragraph (c)(3)(v)(A)(6) 
of this section for the treatment of employer contributions to a 
cafeteria plan.
    (B) Opt-out arrangement. The term opt-out arrangement means the 
arrangement under which an opt-out payment is made available.
    (C) Eligible opt-out arrangement. The term eligible opt-out 
arrangement means an arrangement under which an employee's right to 
receive an opt-out payment is conditioned on the employee providing 
reasonable evidence that the employee and all other individuals for 
whom the employee reasonably expects to claim a personal exemption 
deduction for the taxable year or years that begin or end in or with 
the employer's plan year to which the opt-out arrangement applies 
(employee's expected tax family) have or will have minimum essential 
coverage (other than coverage in the individual market, whether or not 
obtained through the Marketplace) during the period of coverage to 
which the opt-out arrangement applies. For this purpose, reasonable 
evidence of alternative coverage may include the employee's attestation 
that the employee and all other members of the employee's expected tax 
family have or will have minimum essential coverage (other than 
coverage in the individual market, whether or not obtained through the 
Marketplace) for the relevant period. Regardless of the evidence of 
alternative coverage required under the arrangement, to be an eligible 
opt-out arrangement, the arrangement must provide that the opt-out 
payment will not be made, and the employer in fact must not make the 
payment, if the employer knows or has reason to know that the employee 
or any other member of the employee's expected tax family does not have 
or will not have the alternative coverage. The arrangement must also 
require that the evidence of the alternative coverage be provided no 
less frequently than every plan year to which the eligible opt-out 
arrangement applies, and that it must be provided no earlier than a 
reasonable period of time before the commencement of the period of 
coverage to which the eligible opt-out arrangement applies. If the 
reasonable evidence (such as an attestation) is obtained as part of the 
regular annual open enrollment period that occurs within a few months 
before the commencement of the next plan year of employer-sponsored 
coverage, it will qualify as being provided no earlier than a 
reasonable period of time before commencement of the applicable period 
of coverage. An eligible opt-out arrangement is also permitted to 
require evidence of alternative coverage to be provided at a later 
date, such as after the plan year starts, which would enable the 
employer to require evidence that the employee and all other members of 
the employee's expected tax family have already obtained the 
alternative coverage. Nothing in this rule prohibits an employer from 
requiring reasonable evidence of alternative coverage other than an 
attestation in order for an employee to qualify for an opt-out payment 
under an eligible opt-out arrangement. Further, provided that the 
reasonable evidence requirement is met, the amount of an opt-out 
payment made available under an eligible opt-out arrangement continues 
to be excluded from the employee's required contribution for the 
remainder of the period of coverage to which the opt-out payment 
originally applied even if the alternative coverage subsequently 
terminates for the employee or for any other member of the employee's 
expected tax family, regardless of whether the opt-out payment is 
required to be adjusted or terminated due to the loss of alternative 
coverage, and

[[Page 44571]]

regardless of whether the employee is required to provide notice of the 
loss of alternative coverage to the employer.
    (iv) Examples. The following examples illustrate the provisions of 
this paragraph (c)(3)(v)(A)(7). In each example, the eligible employer-
sponsored plan's plan year is the calendar year.

     Example 1. Taxpayer B is an employee of Employer X, which 
offers its employees coverage under an eligible employer-sponsored 
plan that requires B to contribute $3,000 for self-only coverage. X 
also makes available to B a payment of $500 if B declines to enroll 
in the eligible employer-sponsored plan. Therefore, the $500 opt-out 
payment made available to B under the opt-out arrangement increases 
B's required contribution under X's eligible employer-sponsored plan 
from $3,000 to $3,500, regardless of whether B enrolls in the 
eligible employer-sponsored plan or declines to enroll and is paid 
the opt-out payment.
    Example 2. The facts are the same as in Example 1, except that 
availability of the $500 opt-out payment is conditioned not only on 
B declining to enroll in X's eligible employer-sponsored plan but 
also on B providing reasonable evidence no earlier than the regular 
annual open enrollment period for the next plan year that B and all 
other members of B's expected tax family are or will be enrolled in 
minimum essential coverage through another source (other than 
coverage in the individual market, whether or not obtained through 
the Marketplace). B's expected tax family consists of B and B's 
spouse, C, who is an employee of Employer Y. During the regular 
annual open enrollment period for the upcoming plan year, B declines 
coverage under X's eligible employer-sponsored plan and provides X 
with reasonable evidence that B and C will be enrolled in Y's 
employer-sponsored plan, which is minimum essential coverage. The 
opt-out arrangement provided by X is an eligible opt-out 
arrangement, and, therefore, the $500 opt-out payment made available 
to B does not increase B's required contribution under X's eligible 
employer-sponsored plan. B's required contribution for self-only 
coverage under X's eligible employer-sponsored plan is $3,000.
    Example 3. The facts are the same as in Example 2, except that B 
and C have two children that B expects to claim as dependents for 
the taxable year that coincides with the upcoming plan year. During 
the regular annual open enrollment period for the upcoming plan 
year, B declines coverage under X's eligible employer-sponsored plan 
and provides X with reasonable evidence that B and C will be 
enrolled in Y's employer-sponsored plan, which is minimum essential 
coverage. However, B does not provide reasonable evidence that B's 
children will be enrolled in minimum essential coverage (other than 
coverage in the individual market, whether or not obtained through 
the Marketplace); therefore, X determines B is not eligible for the 
opt-out payment, and B does not receive it. The $500 opt-out payment 
made available under the opt-out arrangement does not increase B's 
required contribution under X's eligible employer-sponsored plan 
because the opt-out arrangement provided by X is an eligible opt-out 
arrangement. B's required contribution for self-only coverage under 
X's eligible employer-sponsored plan is $3,000.
    Example 4. Taxpayer D is married and is employed by Employer Z, 
which offers its employees coverage under an eligible employer-
sponsored plan that requires D to contribute $2,000 for self-only 
coverage. Z also makes available to D a payment of $300 if D 
declines to enroll in the eligible employer-sponsored plan and 
provides reasonable evidence no earlier than the regular annual open 
enrollment period for the next plan year that D is or will be 
enrolled in minimum essential coverage through another source (other 
than coverage in the individual market, whether or not obtained 
through the Marketplace); the opt-out arrangement is not conditioned 
on whether the other members of D's expected tax family have other 
coverage. This opt-out arrangement is not an eligible opt-out 
arrangement because it does not condition the right to receive the 
opt-out payment on D providing reasonable evidence that D and the 
other members of D's expected tax family have (or will have) minimum 
essential coverage (other than coverage in the individual market, 
whether or not obtained through the Marketplace). Therefore, the 
$300 opt-out payment made available to D under the opt-out 
arrangement increases D's required contribution under Z's eligible 
employer-sponsored plan. D's required contribution for self-only 
coverage under Z's eligible employer-sponsored plan is $2,300.
* * * * *
    (4) Special eligibility rules--(i) Related individual not claimed 
as a personal exemption deduction. An individual who may enroll in 
minimum essential coverage because of a relationship to another person 
eligible for the coverage, but for whom the other eligible person does 
not claim a personal exemption deduction under section 151, is treated 
as eligible for minimum essential coverage under the coverage only for 
months that the related individual is enrolled in the coverage.
    (ii) Exchange unable to discontinue advance credit payments--(A) In 
general. If an individual who is enrolled in a qualified health plan 
for which advance credit payments are made informs the Exchange that 
the individual is or will soon be eligible for other minimum essential 
coverage and that advance credit payments should be discontinued, but 
the Exchange does not discontinue advance credit payments for the first 
calendar month beginning after the month the individual informs the 
Exchange, the individual is treated as eligible for the other minimum 
essential coverage no earlier than the first day of the second calendar 
month beginning after the first month the individual may enroll in the 
other minimum essential coverage.
    (B) Medicaid or CHIP. If a determination is made that an individual 
who is enrolled in a qualified health plan for which advance credit 
payments are made is eligible for Medicaid or CHIP but the advance 
credit payments are not discontinued for the first calendar month 
beginning after the eligibility determination, the individual is 
treated as eligible for the Medicaid or CHIP no earlier than the first 
day of the second calendar month beginning after the eligibility 
determination.
* * * * *
    (e) Effective/applicability date. (1) Except as provided in 
paragraph (f)(2) of this section, this section applies to taxable years 
ending after December 31, 2013.
    (2) Paragraph (b)(6)(ii), the last three sentences of paragraph 
(c)(2)(v), paragraph (c)(3)(i), paragraph (c)(3)(iii)(A), the last 
three sentences of paragraph (c)(3)(v)(A)(3), paragraph 
(c)(3)(v)(A)(7), and paragraph (c)(4) of this section apply to taxable 
years beginning after December 31, 2016. Paragraphs (b)(6), (c)(3)(i), 
(c)(3)(iii)(A), and (c)(4) of Sec.  1.36B-2 as contained in 26 CFR part 
I edition revised as of April 1, 2016, apply to taxable years ending 
after December 31, 2013, and beginning before January 1, 2017.
0
Par. 5. Section 1.36B-3 is amended by:
0
1. Redesignating paragraph (c)(4) as paragraph (c)(5) and adding a new 
paragraph (c)(4).
0
2. Revising paragraph (d)(1).
0
3. Revising paragraph (d)(2).
0
4. Revising paragraph (f)
0
5. Adding paragraph (n).


Sec.  1.36B-3  Computing the premium tax credit amount.

* * * * *
    (c) * * *
    (4) Appeals of coverage eligibility. A taxpayer who is eligible for 
advance credit payments pursuant to an eligibility appeal decision 
implemented under 45 CFR 155.545(c)(1)(ii) for coverage of a member of 
the taxpayer's coverage family who, based on the appeal decision, 
retroactively enrolls in a qualified health plan is considered to have 
met the requirement in paragraph (c)(1)(ii) of this section for a month 
if the taxpayer pays the taxpayer's share of the premiums for coverage 
under the plan for the month on or before the 120th day following the 
date of the appeals decision.
* * * * *
    (d) * * *

[[Page 44572]]

    (1) Premium assistance amount. The premium assistance amount for a 
coverage month is the lesser of--
    (i) The premiums for the month, reduced by any amounts that were 
refunded, for one or more qualified health plans in which a taxpayer or 
a member of the taxpayer's family enrolls (enrollment premiums); or
    (ii) The excess of the adjusted monthly premium for the applicable 
benchmark plan (benchmark plan premium) over 1/12 of the product of a 
taxpayer's household income and the applicable percentage for the 
taxable year (the taxpayer's contribution amount).
    (2) Examples. The following examples illustrate the rules of 
paragraph (d)(1) of this section.

    Example 1. Taxpayer Q is single and has no dependents. Q enrolls 
in a qualified health plan with a monthly premium of $400. Q's 
monthly benchmark plan premium is $500, and his monthly contribution 
amount is $80. Q's premium assistance amount for a coverage month is 
$400 (the lesser of $400, Q's monthly enrollment premium, and $420, 
the difference between Q's monthly benchmark plan premium and Q's 
contribution amount).
    Example 2. (i) Taxpayer R is single and has no dependents. R 
enrolls in a qualified health plan with a monthly premium of $450. 
The difference between R's benchmark plan premium and contribution 
amount for the month is $420. R's premium assistance amount for a 
coverage month is $420 (the lesser of $450 and $420).
    (ii) The issuer of R's qualified health plan is notified that R 
died on September 20. The issuer terminates coverage as of that date 
and refunds the remaining portion of the September enrollment 
premiums ($150) for R's coverage.
    (iii) Under paragraph (d)(1) of this section, R's premium 
assistance amount for September is the lesser of the enrollment 
premiums for the month, reduced by any amounts that were refunded 
($300 ($450 - $150)) or the difference between the benchmark plan 
premium and the contribution amount for the month ($420). R's 
premium assistance amount for September is $300, the lesser of $420 
and $300.
    Example 3. The facts are the same as in Example 2 of this 
paragraph (d)(2), except that the qualified health plan issuer does 
not refund any enrollment premiums for September. Under paragraph 
(d)(1) of this section, R's premium assistance amount for September 
is $420, the lesser of $450 and $420.
* * * * *
    (f) Applicable benchmark plan--(1) In general. Except as otherwise 
provided in this paragraph (f), the applicable benchmark plan for each 
coverage month is the second-lowest-cost silver plan (as described in 
section 1302(d)(1)(B) of the Affordable Care Act (42 U.S.C. 
18022(d)(1)(B))) offered to the taxpayer's coverage family through the 
Exchange for the rating area where the taxpayer resides for--
    (i) Self-only coverage for a taxpayer--
    (A) Who computes tax under section 1(c) (unmarried individuals 
other than surviving spouses and heads of household) and is not allowed 
a deduction under section 151 for a dependent for the taxable year;
    (B) Who purchases only self-only coverage for one individual; or
    (C) Whose coverage family includes only one individual; and
    (ii) Family coverage for all other taxpayers.
    (2) Family coverage. The applicable benchmark plan for family 
coverage is the second lowest-cost silver plan that would cover the 
members of the taxpayer's coverage family (such as a plan covering two 
adults if the members of a taxpayer's coverage family are two adults).
    (3) Silver-level plan not covering pediatric dental benefits. If 
one or more silver-level qualified health plans offered through an 
Exchange do not cover pediatric dental benefits, the premium for the 
applicable benchmark plan is determined based on the second lowest-cost 
option among--
    (i) The silver-level qualified health plans that provide pediatric 
dental benefits offered by the Exchange to the members of the coverage 
family;
    (ii) The lowest-cost silver-level qualified health plan that does 
not provide pediatric dental benefits offered by the Exchange to the 
members of the coverage family in conjunction with the lowest-cost 
portion of the premium for a stand-alone dental plan (within the 
meaning of section 1311(d)(2)(B)(ii) of the Affordable Care Act (42 
U.S.C. 13031(d)(2)(B)(ii)) offered through the Exchange to the members 
of the coverage family that is properly allocable to pediatric dental 
benefits determined under guidance issued by the Secretary of Health 
and Human Services; and
    (iii) The second-lowest-cost silver-level qualified health plan 
that does not provide pediatric dental benefits offered by the Exchange 
to the members of the coverage family in conjunction with the second-
lowest-cost portion of the premium for a stand-alone dental plan 
(within the meaning of section 1311(d)(2)(B)(ii) of the Affordable Care 
Act (42 U.S.C. 13031(d)(2)(B)(ii)) offered through the Exchange to the 
members of the coverage family that is properly allocable to pediatric 
dental benefits determined under guidance issued by the Secretary of 
Health and Human Services.
    (4) Family members residing in different locations. If members of a 
taxpayer's coverage family reside in different locations, the 
taxpayer's benchmark plan premium is the sum of the premiums for the 
applicable benchmark plans for each group of coverage family members 
residing in different locations, based on the plans offered to the 
group through the Exchange where the group resides. If all members of a 
taxpayer's coverage family reside in a single location that is 
different from where the taxpayer resides, the taxpayer's benchmark 
plan premium is the premium for the applicable benchmark plan for the 
coverage family, based on the plans offered through the Exchange to the 
taxpayer's coverage family for the rating area where the coverage 
family resides.
    (5) Single or multiple policies needed to cover the family--(i) 
Policy covering a taxpayer's family. If a silver-level plan or a stand-
alone dental plan offers coverage to all members of a taxpayer's 
coverage family who reside in the same location under a single policy, 
the premium (or allocable portion thereof, in the case of a stand-alone 
dental plan) taken into account for the plan for purposes of 
determining the applicable benchmark plan under paragraphs (f)(1), 
(f)(2), and (f)(3) of this section is the premium for this single 
policy.
    (ii) Policy not covering a taxpayer's family. If a silver-level 
qualified health plan or a stand-alone dental plan would require 
multiple policies to cover all members of a taxpayer's coverage family 
who reside in the same location (for example, because of the 
relationships within the family), the premium (or allocable portion 
thereof, in the case of a standalone dental plan) taken into account 
for the plan for purposes of determining the applicable benchmark plan 
under paragraphs (f)(1), (f)(2), and (f)(3) of this section is the sum 
of the premiums (or allocable portion thereof, in the case of a stand-
alone dental plan) for self-only policies under the plan for each 
member of the coverage family who resides in the same location.
    (6) Plan not available for enrollment. A silver-level qualified 
health plan or a stand-alone dental plan that is not open to enrollment 
by a taxpayer or family member at the time the taxpayer or family 
member enrolls in a qualified health plan is disregarded in determining 
the applicable benchmark plan.
    (7) Benchmark plan terminates or closes to enrollment during the 
year. A silver-level qualified health plan or a stand-alone dental plan 
that is used for purposes of determining the applicable benchmark plan 
under this paragraph (f)

[[Page 44573]]

for a taxpayer does not cease to be the applicable benchmark plan for a 
taxable year solely because the plan or a lower cost plan terminates or 
closes to enrollment during the taxable year.
    (8) Only one silver-level plan offered to the coverage family. If 
there is only one silver-level qualified health plan providing 
pediatric dental benefits, one silver-level qualified health plan not 
providing pediatric dental benefits, or one stand-alone dental plan 
offered through an Exchange that would cover all members of a 
taxpayer's coverage family who reside in the same location (whether 
under one policy or multiple policies), that plan is used for purposes 
of determining the taxpayer's applicable benchmark plan.
    (9) Examples. The following examples illustrate the rules of this 
paragraph (f). Unless otherwise stated, in each example the plans are 
open to enrollment to a taxpayer or family member at the time of 
enrollment and are offered through the Exchange for the rating area 
where the taxpayer resides:

    Example 1. Single taxpayer enrolls in a qualified health plan. 
Taxpayer A is single, has no dependents, and enrolls in a qualified 
health plan. The Exchange in the rating area in which A resides 
offers only silver-level qualified health plans that provide 
pediatric dental benefits. Under paragraphs (f)(1) and (f)(2) of 
this section, A's applicable benchmark plan is the second lowest 
cost silver plan providing self-only coverage for A.
    Example 2. Single taxpayer enrolls with dependent in a qualified 
health plan. Taxpayer B is single and claims her daughter, C, as a 
dependent. B purchases family coverage for herself and C. The 
Exchange in the rating area in which B and C reside offers qualified 
health plans that provide pediatric dental benefits but does not 
offer qualified health plans without pediatric dental benefits. 
Under paragraphs (f)(1) and (f)(2) of this section, B's applicable 
benchmark plan is the second lowest-cost silver plan providing 
family coverage to B and C.
    Example 3. Benchmark plan for a coverage family with a family 
member eligible for pediatric dental benefits. (i) Taxpayer D's 
coverage family consists of D and D's 10-year old son, E, who is a 
dependent of D and eligible for pediatric dental benefits. The 
Exchange in the rating area in which D and E reside offers three 
silver-level qualified health plans, two of which provide pediatric 
dental benefits (S1 and S2) and one of which does not (S3), in which 
D and E may enroll. The Exchange also offers two stand-alone dental 
plans (DP1 and DP2) available to D and E. The monthly premiums 
allocable to essential health benefits for the silver-level plans 
are as follows:

S1--$1,250
S2--$1,200
S3--$1,180

    (ii) The monthly premiums, and the portion of the premium 
allocable to pediatric dental benefits, for the two dental plans are 
as follows:

DP1--$100 ($25 allocable to pediatric dental benefits)
DP2--$80 ($40 allocable to pediatric dental benefits).

    (iii) Under paragraph (f)(3) of this section, D's applicable 
benchmark plan is the second lowest cost option among the following 
offered by the rating area in which D resides: silver-level 
qualified health plans providing pediatric dental benefits ($1,250 
for S1 and $1,200 for S2); the lowest-cost silver-level qualified 
health plan not providing pediatric dental benefits, in conjunction 
with the lowest-cost portion of the premium for a stand-alone dental 
plan properly allocable to pediatric dental benefits ($1,180 for S3 
in conjunction with $25 for DP1 = $1,205); and the second lowest 
cost silver-level qualified health plan not providing pediatric 
health benefits, in conjunction with the second lowest-cost portion 
of the premium for a stand-alone dental plan allocable to pediatric 
dental benefits ($1,180 for S3 in conjunction with $40 for DP2 = 
$1,220). Under paragraph (f)(8) of this section, S3, as the lone 
silver-level qualified health plan not providing pediatric dental 
benefits offered by the Exchange, is treated as the second lowest-
cost silver-level qualified health plan not providing pediatric 
dental benefits. Under paragraph (e) of this section, the adjusted 
monthly premium for D's applicable benchmark plan is $1,205.
    Example 4. Benchmark plan for a coverage family with no family 
members eligible for pediatric dental coverage. (i) The facts are 
the same as in Example 3, except Taxpayer D's coverage family 
consists of D and D's 22-year old son, F, who is a dependent of D 
and not eligible for pediatric dental coverage and the monthly 
premiums allocable to essential health benefits for the silver-level 
plans are as follows:

S1--$1,210
S2--$1,190
S3--$1,180

    (ii) Because no one in D's coverage family is eligible for 
pediatric dental benefits, $0 of the premium for a stand-alone 
dental plan is allocable to pediatric dental benefits in determining 
A's applicable benchmark plan. Consequently, under paragraphs 
(f)(1), (f)(2), and (f)(3) of this section, D's applicable benchmark 
plan is the second lowest-cost option among the following options 
offered by the rating area in which D resides: silver-level 
qualified health plans providing pediatric dental benefits ($1,210 
for S1 and $1,190 for S2), the lowest-cost silver-level qualified 
health plan not providing pediatric dental benefits, in conjunction 
with the lowest-cost portion of the premium for a stand-alone dental 
plan properly allocable to pediatric dental benefits ($1,180 for S3 
in conjunction with $0 for DP1 = $1,180), and the second lowest cost 
silver-level qualified health plan not providing pediatric health 
benefits, in conjunction with the second lowest-cost portion of the 
premium for a stand-alone dental plan allocable to pediatric dental 
benefits ($1,180 for S3 in conjunction with $0 for DP2 = $1,180). 
Under paragraph (e) of this section, the adjusted monthly premium 
for D's applicable benchmark plan is $1,180.
    Example 5. Single taxpayer enrolls with dependent and 
nondependent in a qualified health plan. Taxpayer G is single and 
resides with his daughter, H, and with his teenage son, I, but may 
only claim I as a dependent. G, H, and I enroll in coverage through 
the Exchange in the rating area in which they all reside. The 
Exchange offers only silver-level plans providing pediatric dental 
benefits. Under paragraphs (f)(1) and (f)(2) of this section, G's 
applicable benchmark plan is the second lowest-cost silver plan 
covering G and I. However, H may qualify for a premium tax credit if 
H is otherwise eligible. See paragraph (h) of this section.
    Example 6. Change in coverage family. Taxpayer J is single and 
has no dependents when she enrolls in a qualified health plan. The 
Exchange in the rating area in which she resides offers only silver-
level plans that provide pediatric dental benefits. On August 1, J 
has a child, K, whom she claims as a dependent. J enrolls in a 
qualified health plan covering J and K effective August 1. Under 
paragraphs (f)(1) and (f)(2) of this section, J's applicable 
benchmark plan for January through July is the second lowest-cost 
silver plan providing self-only coverage for J, and J's applicable 
benchmark plan for the months August through December is the second 
lowest-cost silver plan covering J and K.
    Example 7. Minimum essential coverage for some coverage months. 
Taxpayer L claims his daughter, M, as a dependent. L and M enroll in 
a qualified health plan through an Exchange that offers only silver-
level plans that provide pediatric dental benefits. L, but not M, is 
eligible for government-sponsored minimum essential coverage for 
September to December. Thus, under paragraph (c)(1)(iii) of this 
section, January through December are coverage months for M, and 
January through August are coverage months for L. Because, under 
paragraphs (d) and (f)(1) of this section, the premium assistance 
amount for a coverage month is computed based on the applicable 
benchmark plan for that coverage month, L's applicable benchmark 
plan for January through August is the second lowest-cost option 
covering L and M. Under paragraph (f)(1)(i)(C) of this section, L's 
applicable benchmark plan for September through December is the 
second lowest-cost silver plan providing self-only coverage for M.
    Example 8. Family member eligible for minimum essential coverage 
for the taxable year. The facts are the same as in Example 7, except 
that L is not eligible for government-sponsored minimum essential 
coverage for any months and M is eligible for government sponsored 
minimum essential coverage for the entire year. Under paragraph 
(f)(1)(i)(C) of this section, L's applicable benchmark plan is the 
second lowest-cost silver plan providing self-only coverage for L.
    Example 9. Benchmark plan premium for a coverage family with 
family members who reside in different locations. (i) Taxpayer N's 
coverage family consists of N and her three dependents O, P, and Q. 
N, O, and P reside together but Q resides in a different location. 
Under paragraphs (f)(1), (f)(2), and (f)(3) of

[[Page 44574]]

this section, the monthly applicable benchmark plan premium for N, 
O, and P is $1,000 and the monthly applicable benchmark plan premium 
for Q is $220.
    (ii) Under paragraph (f)(4) of this section, because the members 
of N's coverage family reside in different locations, the monthly 
premium for N's applicable benchmark plan is the sum of $1,000, the 
monthly premiums for the applicable benchmark plan for N, O, and P, 
who reside together, and $220, the monthly applicable benchmark plan 
premium for Q, who resides in a different location than N, O, and P. 
Consequently, the premium for N's applicable benchmark plan is 
$1,220.
    Example 10. Aggregation of silver-level policies for plans not 
covering a family under a single policy. (i) Taxpayers R and S are 
married and live with S's mother, T, whom they claim as a dependent. 
The Exchange for their rating area offers self-only and family 
coverage at the silver level through Issuers A, B, and C, which each 
offer only one silver-level plan. The silver-level plans offered by 
Issuers A and B do not cover R, S, and T under a single policy. The 
silver-level plan offered by Issuer A costs the following monthly 
amounts for self-only coverage of R, S, and T, respectively: $400, 
$450, and $600. The silver-level plan offered by Issuer B costs the 
following monthly amounts for self-only coverage of R, S, and T, 
respectively: $250, $300, and $450. The silver-level plan offered by 
Issuer C provides coverage for R, S, and T under one policy for a 
$1,200 monthly premium.
    (ii) Under paragraph (f)(5) of this section, Issuer C's silver-
level plan that covers R, S, and T under one policy ($1,200 monthly 
premium) and Issuer A's and Issuer B's silver-level plans that do 
not cover R, S and T under one policy are considered in determining 
R's and S's applicable benchmark plan. In addition, under paragraph 
(f)(5)(ii) of this section, in determining R's and S's applicable 
benchmark plan, the premium taken into account for Issuer A's plan 
is $1,450 (the aggregate premiums for self-only policies covering R 
($400), S ($450), and T ($600) and the premium taken into account 
for Issuer B's plan is $1,000 (the aggregate premiums for self-only 
policies covering R ($250), S ($300), and T ($450). Consequently, 
R's and S's applicable benchmark plan is the Issuer C silver-level 
plan covering R's and S's coverage family and the premium for their 
applicable benchmark plan is $1,200.
    Example 11. Benchmark plan premium for a taxpayer with family 
members who cannot enroll in one policy and who reside in different 
locations. (i) Taxpayer U's coverage family consists of U, U's 
mother, V, and U's two daughters, W and X. U and V reside together 
in Location 1 and W and X reside together in Location 2. The 
Exchange in the rating area in which U and V reside does not offer a 
silver-level plan that covers U and V under a single policy, whereas 
all the silver-level plans offered through the Exchange in the 
rating area in which W and X reside cover W and X under a single 
policy. Both Exchanges offer only silver-level plans that provide 
pediatric dental benefits. The silver plan offered by the Exchange 
for the rating area in which U and V reside that would cover U and V 
under self-only policies with the second-lowest aggregate premium 
costs $400 a month for self-only coverage for U and $600 a month for 
self-only coverage for V. The monthly premium for the second-lowest 
cost silver plan covering W and X that is offered by the Exchange 
for the rating area in which W and X reside is $500.
    (ii) Under paragraph (f)(5)(ii) of this section, because 
multiple policies are required to cover U and V, the members of U's 
coverage family who reside together in Location 1, the premium taken 
into account in determining U's benchmark plan is $1,000, the sum of 
the premiums for the second-lowest aggregate cost of self-only 
policies covering U ($400) and V ($600) offered by the Exchange to U 
and V for the rating area in which U and V reside. Under paragraph 
(f)(5)(i) of this section, because all silver-level plans offered by 
the Exchange in which W and X reside cover W and X under a single 
policy, the premium for W and X's coverage that is taken into 
account in determining U's benchmark plan is $500, the second-lowest 
cost silver policy covering W and X that is offered by the Exchange 
for the rating area in which W and X reside. Under paragraph (f)(4) 
of this section, because the members of U's coverage family reside 
in different locations, U's monthly benchmark plan premium is 
$1,500, the sum of the premiums for the applicable benchmark plans 
for each group of family members residing in different locations 
($1,000 for U and V, who reside in Location 1, plus $500 for W and 
X, who reside in Location 2).
    Example 12. Qualified health plan closed to enrollment. Taxpayer 
Y has two dependents, Z and AA. Y, Z, and AA enroll in a qualified 
health plan through the Exchange for the rating area where the 
family resides. The Exchange, which offers only qualified health 
plans that include pediatric dental benefits, offers silver-level 
plans J, K, L, and M, which are, respectively, the first, second, 
third, and fourth lowest cost silver plans covering Y's family. When 
Y's family enrolls, Plan J is closed to enrollment. Under paragraph 
(f)(6) of this section, Plan J is disregarded in determining Y's 
applicable benchmark plan, and Plan L is used in determining Y's 
applicable benchmark plan.
    Example 13. Benchmark plan closes to new enrollees during the 
year. (i) Taxpayers BB, CC, and DD each have coverage families 
consisting of two adults. In that rating area, Plan 2 is the second 
lowest cost silver plan and Plan 3 is the third lowest cost silver 
plan covering the two adults in each coverage family offered through 
the Exchange. The BB and CC families each enroll in a qualified 
health plan that is not the applicable benchmark plan (Plan 4) in 
November during the annual open enrollment period. Plan 2 closes to 
new enrollees the following June. Thus, on July 1, Plan 3 is the 
second lowest cost silver plan available to new enrollees through 
the Exchange. The DD family enrolls in a qualified health plan in 
July.
    (ii) Under paragraphs (f)(1), (f)(2), (f)(3), and (f)(7) of this 
section, the silver-level plan that BB and CC use to determine their 
applicable benchmark plan for all coverage months during the year is 
Plan 2. The applicable benchmark plan that DD uses to determine DD's 
applicable benchmark plan is Plan 3, because Plan 2 is not open to 
enrollment through the Exchange when the DD family enrolls.
    Example 14. Benchmark plan terminates for all enrollees during 
the year. The facts are the same as in Example 13, except that Plan 
2 terminates for all enrollees on June 30. Under paragraphs (f)(1), 
(f)(2), (f)(3), and (f)(7) of this section, Plan 2 is the silver-
level plan that BB and CC use to determine their applicable 
benchmark plan for all coverage months during the year, and Plan 3 
is the applicable benchmark plan that DD uses.
    Example 15. Exchange offers only one silver-level plan. Taxpayer 
EE's coverage family consists of EE, his spouse FF, and their two 
dependent children GG and HH, who all reside together. The Exchange 
for the rating area in which they reside offers only one silver-
level plan that EE's family may enroll in and the plan does not 
provide pediatric dental benefits. The Exchange also offers one 
stand-alone dental plan in which the family may enroll. Under 
paragraph (f)(8) of this section, the silver-level plan and the 
stand-alone dental plan offered by the Exchange are used for 
purposes of determining EE's applicable benchmark plan under 
paragraph (f)(3) of this section. Moreover, the lone silver-level 
plan and the lone stand-alone dental plan offered by the Exchange 
are used for purposes of determining EE's applicable benchmark plan 
regardless of whether these plans cover EE's family under a single 
policy or multiples policies.
* * * * *
    (n) Effective/applicability date. (1) Except as provided in 
paragraph (o)(2) of this section, this section applies to taxable years 
ending after December 31, 2013.
    (2) Paragraphs (c)(4) and (d)(2) apply to taxable years beginning 
after December 31, 2016. Paragraphs (f)(1), (f)(3), (f)(4), (f)(6), 
(f)(7), (f)(8), and (f)(9) of this section apply to taxable years 
beginning after December 31, 2018. Paragraphs (c)(4) and (d)(2) of 
Sec.  1.36B-3 as contained in 26 CFR part I edition revised as of April 
1, 2016, apply to taxable years ending after December 31, 2013, and 
beginning before January 1, 2017. Paragraphs (f)(1), (f)(3), (f)(4), 
(f)(6), and (f)(7) of Sec.  1.36B-3 as contained in 26 CFR part I 
edition revised as of April 1, 2016, apply to taxable years ending 
after December 31, 2013, and beginning before January 1, 2019.
0
Par. 6. Section 1.36B-5 is amended by:
0
1. Adding a new sentence to the end of paragraph (c)(3)(i).
0
2. Adding paragraphs (c)(3)(iii) and (h).


Sec.  1.36B-5  Information reporting by Exchanges.

* * * * *
    (c) * * *

[[Page 44575]]

    (3) --* * *
    (i) * * * If advance credit payments are made for coverage under 
the plan, the enrollment premiums reported to each family under 
paragraph (c)(1)(viii) of this section are the premiums allocated to 
the family under Sec.  1.36B-3(h) (allocating enrollment premiums to 
each taxpayer in proportion to the premiums for each taxpayer's 
applicable benchmark plan).
* * * * *
    (iii) Partial month of coverage--(A) In general. Except as provided 
in paragraph (c)(iii)(B) of this section, if an individual is enrolled 
in a qualified health plan after the first day of a month, the amount 
reported for that month under paragraphs (c)(1)(iv), (c)(1)(v), and 
(c)(1)(viii) of this section is $0.
    (B) Certain mid-month enrollments. If an individual's qualified 
health plan is terminated before the last day of a month, or if an 
individual is enrolled in coverage after the first day of a month and 
the coverage is effective on the date of the individual's birth, 
adoption, or placement for adoption or in foster care, or on the 
effective date of a court order, the amount reported under paragraphs 
(c)(1)(iv) and (c)(1)(v) of this section is the premium for the 
applicable benchmark plan for a full month of coverage (excluding the 
premium allocated to benefits in excess of essential health benefits) 
and the amount reported under paragraph (c)(1)(viii) of this section is 
the enrollment premium for the month, reduced by any amounts that were 
refunded.
* * * * *
    (h) Effective/applicability date. Except for the last sentence of 
paragraph (c)(3)(i) of this section and paragraph (c)(3)(iii) of this 
section, this section applies to taxable years ending after December 
31, 2013. The last sentence of paragraph (c)(3)(i) of this section and 
paragraph (c)(3)(iii) of this section apply to taxable years beginning 
after December 31, 2016. Paragraph (c)(3)(iii) of Sec.  1.36B-5 as 
contained in 26 CFR part I edition revised as of April 1, 2016, applies 
to taxable years ending after December 31, 2013, and beginning before 
January 1, 2017.
0
Par. 7. Section 1.5000A-3 is amended by adding a new paragraph 
(e)(3)(ii)(G) to read as follows:


Sec.  1.5000A-3  Exempt individuals.

* * * * *
    (e) * * *
    (3) * * *
    (ii) * * *
    (G) Opt-out arrangements--(1) In general. Except as otherwise 
provided in this paragraph (e)(3)(ii)(G), the amount of an opt-out 
payment made available to an employee under an opt-out arrangement 
increases the employee's (or related individual's) required 
contribution for purposes of determining the affordability of the 
eligible employer-sponsored plan to which the opt-out arrangement 
relates, regardless of whether the employee (or related individual) 
enrolls in the eligible employer-sponsored plan or declines to enroll 
in that coverage and is paid the opt-out payment.
    (2) Eligible opt-out arrangements. The amount of an opt-out payment 
made available to an employee under an eligible opt-out arrangement 
does not increase the employee's (or related individual's) required 
contribution for purposes of determining the affordability of the 
eligible employer-sponsored plan to which the eligible opt-out 
arrangement relates, regardless of whether the employee (or related 
individual) enrolls in the eligible employer-sponsored plan or is paid 
the opt-out payment.
    (3) Definitions. The following definitions apply for purposes of 
this paragraph (e)(3)(ii)(G):
    (A) Opt-out payment. The term opt-out payment means a payment that 
is available only if an employee declines coverage, including waiving 
coverage in which the employee would otherwise be enrolled, under an 
eligible employer-sponsored plan and that is not permitted to be used 
to pay for coverage under the eligible employer-sponsored plan. An 
amount provided as an employer contribution to a cafeteria plan that is 
permitted to be used by the employee to purchase minimum essential 
coverage is not an opt-out payment, whether or not the employee may 
receive the amount as a taxable benefit. See paragraph (e)(3)(ii)(E) of 
this section for the treatment of employer contributions to a cafeteria 
plan.
    (B) Opt-out arrangement. The term opt-out arrangement means the 
arrangement under which an opt-out payment is made available.
    (C) Eligible opt-out arrangement. The term eligible opt-out 
arrangement means an arrangement under which an employee's right to 
receive an opt-out payment is conditioned on the employee providing 
reasonable evidence that the employee and all other individuals for 
whom the employee reasonably expects to claim a personal exemption 
deduction for the taxable year or years that begin or end in or with 
the employer's plan year to which the opt-out arrangement applies 
(employee's expected tax family) have, or will have, minimum essential 
coverage (other than coverage in the individual market, whether or not 
obtained through the Marketplace) during the period of coverage to 
which the opt-out arrangement applies. For this purpose, reasonable 
evidence of alternative coverage may include the employee's attestation 
that the employee and all other members of the employee's expected tax 
family have, or will have, minimum essential coverage (other than 
coverage in the individual market, whether or not obtained through the 
Marketplace) for the relevant period. Regardless of the evidence of 
alternative coverage required under the arrangement, to be an eligible 
opt-out arrangement, the arrangement must provide that the opt-out 
payment will not be made, and the employer in fact must not make the 
payment, if the employer knows or has reason to know that the employee 
or any other member of the employee's expected tax family does not 
have, or will not have, the alternative coverage. The arrangement must 
also require that the evidence of the alternative coverage be provided 
no less frequently than every plan year to which the eligible opt-out 
arrangement applies, and that it must be provided no earlier than a 
reasonable period of time before the commencement of the period of 
coverage to which the eligible opt-out arrangement applies. If the 
reasonable evidence (such as an attestation) is obtained as part of the 
regular annual open enrollment period that occurs within a few months 
before the commencement of the next plan year of employer-sponsored 
coverage, it will qualify as being provided no earlier than a 
reasonable period of time before commencement of the applicable period 
of coverage. An eligible opt-out arrangement is also permitted to 
require evidence of alternative coverage to be provided at a later 
date, such as after the plan year starts, which would enable the 
employer to require evidence that the employee and all other members of 
the employee's expected tax family have already obtained the 
alternative coverage. Nothing in this rule prohibits an employer from 
requiring reasonable evidence of alternative coverage other than an 
attestation in order for an employee to qualify for an opt-out payment 
under an eligible opt-out arrangement. Further, provided that the 
reasonable evidence requirement is met, the amount of an opt-out 
payment made available under an eligible opt-out arrangement continues 
to be excluded from the employee's required contribution for the 
remainder of the period of coverage to which the opt-out payment 
originally applied even if the

[[Page 44576]]

alternative coverage subsequently terminates for the employee or for 
any other member of the employee's expected tax family, regardless of 
whether the opt-out payment is required to be adjusted or terminated 
due to the loss of alternative coverage, and regardless of whether the 
employee is required to provide notice of the loss of alternative 
coverage to the employer.
* * * * *
0
Par. 8. Section 1.5000A-5 is amended by revising paragraph (c).


Sec.  1.5000A-5  Administration and procedure.

* * * * *
    (c) Effective/applicability date. (1) Except as provided in 
paragraph (c)(2), this section and Sec. Sec.  1.5000A-1 through 
1.5000A-4 apply for months beginning after December 31, 2013.
    (2) Paragraph (e)(3)(ii)(G) of Sec.  1.5000A-3 applies to months 
beginning after December 31, 2016.
0
Par. 9. Revise Sec.  1.6011-8 to read as follows:


Sec.  1.6011-8  Requirement of income tax return for taxpayers who 
claim the premium tax credit under section 36B.

    (a) Requirement of return. Except as otherwise provided in this 
paragraph (a), a taxpayer who receives the benefit of advance payments 
of the premium tax credit under section 36B must file an income tax 
return for that taxable year on or before the due date for the return 
(including extensions of time for filing) and reconcile the advance 
credit payments. However, if advance credit payments are made for 
coverage of an individual for whom no taxpayer claims a personal 
exemption deduction, the taxpayer who attests to the Exchange to the 
intention to claim a personal exemption deduction for the individual as 
part of the determination that the taxpayer is eligible for advance 
credit payments must file a tax return and reconcile the advance credit 
payments.
    (b) Effective/applicability date. Except as otherwise provided, 
this section applies for taxable years beginning after December 31, 
2016. Paragraph (a) of Sec.  1.6011-8 as contained in 26 CFR part I 
edition revised as of April 1, 2016, applies to taxable years ending 
after December 31, 2013, and beginning before January 1, 2017.


Sec.  301.6011-2  [Amended]

0
Par. 10. Section 301.6011-2(b)(1) is amended by adding ``1095-B, 1095-
C'' after ``1094 series'', and removing ``1095 series''.

John Dalrymple,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2016-15940 Filed 7-6-16; 11:15 am]
 BILLING CODE 4830-01-P