Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 50931 

of protection because the term ‘‘price 

election’’ is not applicable to all plans 

of insurance. 

List of Subjects in 7 CFR Part 402 

Crop insurance, Reporting and 

recordkeeping requirements. 

Accordingly, as set forth in the 

preamble, the Federal Crop Insurance 

Corporation proposes to amend 7 CFR 

part 402 as follows: 

PART 402—CATASTROPHIC RISK 

PROTECTION ENDORSEMENT 

1. The authority citation for 7 CFR 

part 402 continues to read as follows: 

Authority: 7 U.S.C. 1506(l), 1506(o). 

2. Amend § 402.4 as follows: 

a. Revise introductory text preceding 

section 1; 

b. Remove the definitions in section 1 

for ‘‘approved yield,’’ ‘‘county,’’ 

‘‘expected market price,’’ ‘‘FSA,’’ 

‘‘household,’’ ‘‘limited resource farmer,’’ 

‘‘Secretary,’’ and ‘‘USDA;’’ 

c. Revise section 2(a) introductory 

text; 

d. Revise section 3(a); 

e. Revise section 4(a); 

f. Amend section 4(b) by removing the 

phrase ‘‘expected market price’’ and 

adding the phrase ‘‘price election’’ in its 

place; 

g. Amend section 4(c) by removing 

the phrase ‘‘Actuarial Table or the 

Special Provisions’’ and adding the 

phrase ‘‘actuarial documents’’ in its 

place; 

h. Remove section 4(d); 

i. Amend section 6(b) introductory 

text by removing the phrase ‘‘Special 

Provisions’’ and adding the phrase 

‘‘actuarial documents’’ in its place; 

j. Amend section 6(b)(1) by removing 

the phrase ‘‘Special Provisions’’ and 

adding the phrase ‘‘actuarial 

documents’’ in its place; 

k. Revise section 7; and 

l. Amend section 9 by adding the 

phrase ‘‘, projected prices, dollar 

amounts of insurance, or dollar amounts 

of protection’’ after the phrase ‘‘multiple 

price elections’’ in the two instances 

that it appears. 

The revised text reads as follows: 

§ 402.4 Catastrophic Risk Protection 

Endorsement Provisions. 

* * * * * 

If a conflict exists among the policy 

provisions; the order of priority is: (1) 

This Endorsement; (2) the Special 

Provisions; (3) any other Actuarial 

Documents except the Special 

Provisions; (4) the Commodity Exchange 

Price Provisions, if applicable; and (5) 

any of the policies specified in section 

2, with (1) controlling (2), etc. 

* * * * * 

2. Eligibility, Life of Policy, 

Cancellation, and Termination. 

(a) You must have one of the 

following policies in force to elect this 

Endorsement: 

(1) The Common Crop Insurance 

Policy Basic Provisions (7 CFR 457.8) 

and applicable Crop Provisions 

(Catastrophic risk protection coverage is 

not available under individual revenue 

plans of insurance such as the Revenue 

Protection and Revenue Protection with 

Harvest Price Exclusion plans of 

insurance); 

(2) The Group Risk Plan of Insurance 

Basic Provisions (7 CFR 407.9) and 

applicable Crop Provisions, or its 

successor provisions, if available for 

catastrophic risk protection coverage 

(Catastrophic risk protection coverage is 

not available under area revenue plans 

of insurance such as Group Risk Income 

Protection—Harvest Price Option or 

Group Risk Income Protection plans of 

insurance or successor plans of 

insurance); or 

(3) Other crop policy only if 

catastrophic risk protection coverage is 

provided in the applicable crop policy. 

* * * * * 

3. Unit Division. 

(a) This section is in lieu of the unit 

provisions specified in the applicable 

crop policy and is not applicable if you 

are insured under the Group Risk Plan 

of Insurance Basic Provisions (7 CFR 

407.9) and applicable Crop Provisions, 

or its successor provisions. 

* * * * * 

4. Insurance Guarantees, Coverage 

Levels, and Prices for Determining 

Indemnities. 

(a) Unless otherwise specified in the 

actuarial documents, catastrophic risk 

protection coverage will offer protection 

equal to: 

(1) Fifty percent (50%) of your 

approved yield indemnified at fifty-five 

percent (55%) of the price election or 

projected price, as applicable, if you are 

insured under the Common Crop 

Insurance Policy Basic Provisions (7 

CFR 457.8) and applicable Crop 

Provisions; 

(2) Sixty-five percent (65%) of the 

expected county yield indemnified at 

forty-five percent (45%) of the 

maximum protection per acre if you are 

insured under the Group Risk Plan of 

Insurance Basic Provisions (7 CFR 

407.9) and applicable Crop Provisions, 

or its successor provisions; or 

(3) A comparable coverage as 

established by FCIC for other crop 

policies only if catastrophic risk 

protection coverage is provided in the 

applicable crop policy. 

* * * * * 

7. Insured Crop. 

(a) The crop insured is specified in 

the applicable crop policy, however 

notwithstanding any other policy 

provision requiring the same insurance 

coverage on all insurable acreage of the 

crop in the county, if you purchase 

additional coverage for a crop, you may 

separately insure acreage under 

catastrophic risk protection coverage 

that has been designated as ‘‘high-risk’’ 

land by FCIC, provided that you execute 

a High-Risk Land Exclusion Option and 

obtain a catastrophic risk protection 

coverage policy with the same approved 

insurance provider on or before the 

applicable sales closing date. 

(b) You will be required to pay a 

separate administrative fee for both the 

additional coverage policy and the 

catastrophic risk protection coverage 

policy. 

* * * * * 

Signed in Washington, DC, on August 10, 

2011. 

William J. Murphy, 

Manager, Federal Crop Insurance 

Corporation. 

[FR Doc. 2011–20850 Filed 8–16–11; 8:45 am] 

BILLING CODE 3410–08–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[REG–131491–10] 

RIN 1545–BJ82 

Health Insurance Premium Tax Credit 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Notice of proposed rulemaking 

and notice of public hearing. 

SUMMARY: This document contains 

proposed regulations relating to the 

health insurance premium tax credit 

enacted by the Patient Protection and 

Affordable Care Act and the Health Care 

and Education Reconciliation Act of 

2010, as amended by the Medicare and 

Medicaid Extenders Act of 2010, the 

Comprehensive 1099 Taxpayer 

Protection and Repayment of Exchange 

Subsidy Overpayments Act of 2011, and 

the Department of Defense and FullYear Continuing Appropriations Act, 

2011. These proposed regulations 

provide guidance to individuals who 

enroll in qualified health plans through 

Affordable Insurance Exchanges and 

claim the premium tax credit, and to 

Exchanges that make qualified health 

plans available to individuals and 


Emcdonald on DSK2BSOYB1PROD with PROPOSALS
50932 Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 

employers. This document also provides 

notice of a public hearing on these 

proposed regulations. 

DATES: Written (including electronic) 

comments must be received by October 

31, 2011. Outlines of topics to be 

discussed at the public hearing 

scheduled for November 17, 2011, at 

10 a.m. must be received by November 

10, 2011. 

ADDRESSES: Send submissions to: 

CC:PA:LPD:PR (REG–131491–10), Room 

5203, Internal Revenue Service, PO Box 

7604, Ben Franklin Station, Washington, 

DC 20044. Submissions may be handdelivered Monday through Friday 

between the hours of 8 a.m. and 4 p.m. 

to CC:PA:LPD:PR (REG–131491–10), 

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 (IRS REG–131491– 

10). The public hearing will be held in 

the IRS Auditorium, Internal Revenue 

Building, 1111 Constitution Avenue, 

NW., Washington, DC. 

FOR FURTHER INFORMATION CONTACT: 

Concerning the proposed regulations, 

Shareen S. Pflanz, (202) 622–4920, or 

Frank W. Dunham III, (202) 622–4960; 

concerning the submission of 

comments, the public hearing, and to be 

placed on the building access list to 

attend the public hearing, Funmi 

Taylor, (202) 622–7180 (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 

October 17, 2011. 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 § 1.36B–5. 

The collection of information is 

necessary to properly reconcile the 

amount of the premium tax credit with 

advance credit payments made under 

section 1412 of the Patient Protection 

and Affordable Care Act (42 U.S.C. 

18082). The collection of information is 

required to comply with the provisions 

of section 36B(f)(3) of the Internal 

Revenue Code (Code). The likely 

respondents are Affordable Insurance 

Exchanges established under section 

1311 or 1321 of the Patient Protection 

and Affordable Care Act (42 U.S.C. 

13031 or 42 U.S.C. 18041). 

The burden for the collection of 

information contained in proposed 

regulation § 1.36B–5 will be reflected in 

the burden on a form that the IRS will 

create to request the information in the 

proposed regulation. 

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, 

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), individuals and small businesses 

will be able to purchase private health 

insurance through State-based 

competitive marketplaces called 

Affordable Insurance Exchanges 

(Exchanges). Exchanges will offer 

Americans competition and choice. 

Insurance companies will compete for 

business on a level playing field, driving 

down costs. Consumers will have a 

choice of health plans to fit their needs 

and Exchanges will give individuals and 

small businesses the same purchasing 

power as big businesses. The 

Departments of Health and Human 

Services and Treasury are working in 

close coordination to release guidance 

related to Exchanges, in several phases. 

The first in this series was a Request for 

Comment relating to Exchanges, 

published in the Federal Register on 

August 3, 2010 (75 FR 45584). Second, 

Initial Guidance to States on Exchanges 

was issued on November 18, 2010. 

Third, proposed regulations on the 

application, review, and reporting 

process for waivers for State innovation 

was published in the Federal Register 

on March 14, 2011 (76 FR 13553). 

Fourth, two proposed regulations were 

published in the Federal Register on 

July 15, 2011 (76 FR 41866 and 76 FR 

41930) to implement components of the 

Exchange and health insurance 

premium stabilization policies in the 

Affordable Care Act. Fifth, three 

proposed regulations, including this 

one, are being published in the Federal 

Register on August 17, 2011 to provide 

guidance on the eligibility 

determination process related to 

enrollment in a qualified health plan or 

insurance affordability program; on 

Medicaid, the Children’s Health 

Insurance Program (CHIP), and other 

State health coverage programs; and 

these proposed regulations on the 

premium tax credit. 

Section 1401 of the Affordable Care 

Act amended the Code to add section 

36B, allowing a refundable premium tax 

credit to help individuals and families 

afford health insurance coverage. 

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 FullYear Continuing Appropriations Act, 

2011, Public Law 112–10 (125 Stat. 38 

(2011)). The section 36B credit is 

designed to make a qualified health plan 

affordable by reducing a taxpayer’s outof-pocket premium cost. 

Under section 1411 of the Affordable 

Care Act (42 U.S.C. 18081), an Exchange 

makes an advance determination of 

credit eligibility for individuals 

enrolling in coverage through the 

Exchange and seeking financial 

assistance. Using information available 

at the time of enrollment, the Exchange 

determines (1) whether the individual 

meets the income and other 

requirements for advance credit 

payments, and (2) the amount of the 

advance payments. Advance payments 

are made monthly under section 1412 of 

the Affordable Care Act (42 U.S.C. 

18082) to the issuer of the qualified 

health plan in which the individual 

enrolls. 


Emcdonald on DSK2BSOYB1PROD with PROPOSALS
Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 50933 

Eligibility 

To be eligible for a premium tax 

credit, an individual must be an 

applicable taxpayer. Under section 

36B(c)(1), an applicable taxpayer is a 

taxpayer (1) With household income for 

the taxable year between 100 percent 

and 400 percent of the federal poverty 

line (FPL) for the taxpayer’s family size, 

(2) who may not be claimed as a 

dependent by another taxpayer, and (3) 

who files a joint return if married. 

Section 36B(c)(1)(B) provides that a 

taxpayer who is an alien lawfully 

present in the United States, whose 

household income is 100 percent of the 

FPL or less, and who is not eligible for 

Medicaid, nonetheless is treated as an 

applicable taxpayer. Under section 

36B(e)(2), an individual is lawfully 

present if the individual is, and is 

reasonably expected to be for the entire 

period of enrollment for which the 

credit is claimed, a U.S. citizen or 

national or an alien lawfully present in 

the United States. 

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. Section 152 provides 

that a taxpayer’s dependent may be a 

qualifying child or qualifying relative, 

including an unrelated individual who 

lives with the taxpayer. Family size is 

equal to the number of individuals in 

the taxpayer’s family. 

Section 36B(d)(2) defines household 

income as the modified adjusted gross 

income of all individuals included in 

family size who are required to file an 

income tax return. Modified adjusted 

gross income means adjusted gross 

income (within the meaning of section 

62) increased by amounts excluded from 

gross income under section 911 and taxexempt interest a taxpayer receives or 

accrues during the taxable year. 

Under section 36B(b)(1), a taxpayer’s 

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. Section 36B(c)(2)(A) provides 

that a coverage month is any month for 

which the taxpayer or any family 

member is covered by a qualified health 

plan enrolled in through an Exchange 

and the premium is paid by the taxpayer 

or through an advance credit payment. 

Under section 36B(c)(2)(B), a coverage 

month for an individual does not 

include a month in which the 

individual is eligible for minimum 

essential coverage, as defined in section 

5000A(f), other than coverage offered in 

the individual market. Minimum 

essential coverage may be governmentsponsored coverage such as Medicare, 

Medicaid, CHIP, TRICARE, and 

veterans’ health care under Title 38 

U.S.C. Certain employer-sponsored 

plans also may be minimum essential 

coverage. In general, under section 

36B(c)(2)(C), an individual is eligible for 

employer-sponsored minimum essential 

coverage only if the employee’s share of 

the premiums is affordable and the 

coverage provides minimum value. 

However, under section 36B(c)(2)(C)(iii), 

an individual is treated as eligible for 

employer-sponsored minimum essential 

coverage if the individual actually 

enrolls in an eligible employersponsored plan, even if the coverage 

does not meet the affordability and 

minimum value requirements. 

Under section 5000A(f)(1)(E), the 

Department of Health and Human 

Services, in coordination with the 

Treasury Department, may designate 

other health benefits coverage as 

minimum essential coverage. 

Regulations under section 5000A are 

expected to provide additional guidance 

on minimum essential coverage. 

Credit Computation 

Section 36B(b)(1) provides 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, 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))) (the benchmark plan) 

that applies to the taxpayer over 1⁄12 of 

the product of the taxpayer’s household 

income and the applicable percentage 

for the taxable year. The adjusted 

monthly premium, in general, is the 

premium an insurer would charge for 

the plan adjusted only for the ages of the 

covered individuals. 

Therefore, the monthly premium 

assistance amount is the lesser of the 

premium for the qualified health plan in 

which a taxpayer or family member 

enrolls, or the excess of the premium for 

the benchmark plan over the applicable 

percentage of the taxpayer’s household 

income. In general, this percentage of 

the taxpayer’s household income 

represents the amount of the taxpayer’s 

required out-of-pocket contribution to 

the premium cost if the taxpayer 

purchases the benchmark plan. The 

remainder of the premium for the 

benchmark plan is the premium 

assistance amount. 

A taxpayer’s applicable percentage 

increases as the taxpayer’s household 

income as a percentage of the FPL (FPL 

percentage) for the taxpayer’s family 

size increases. For 2014, the applicable 

percentage is 2 percent for taxpayers 

with household income up to 133 

percent of the FPL and increases from 

3 percent to 9.5 percent for taxpayers 

with household incomes between 133 

percent and 400 percent of the FPL. The 

applicable percentages may be adjusted 

after 2014. 

Taxpayers must pay the difference 

between the premium assistance 

amount and the premium for the plan 

they choose. The amount of a taxpayer’s 

credit is limited to the amount of actual 

premiums for the taxable year. 

Individuals not lawfully present are 

not eligible to enroll in a qualified 

health plan through an Exchange. 

Accordingly, section 36B(e)(1)(A) 

provides that, for a household with at 

least one individual not lawfully 

present, the portion (if any) of the 

premium attributable to that individual 

is not included in determining the 

taxpayer’s credit. Section 36B(e)(1)(B) 

provides that the family size for 

computing the FPL percentage for a 

family with at least one unlawfully 

present individual is determined by 

excluding the unlawfully present 

individual. Household income for 

computing the FPL percentage and 

determining the applicable percentage is 

the product of the taxpayer’s household 

income (determined without regard to 

section 36B(e)) and a fraction, the 

numerator of which is the FPL for the 

taxpayer’s family size excluding 

individuals who are not lawfully 

present, and the denominator of which 

is the FPL for the taxpayer’s family size 

including individuals who are not 

lawfully present. 

Reconciliation 

A taxpayer must reconcile the actual 

credit for the taxable year computed on 

the taxpayer’s tax return with the 

amount of advance payments. If a 

taxpayer’s credit amount exceeds the 

amount of the taxpayer’s advance 

payments for the taxable year, the 

taxpayer may receive the excess as an 

income tax refund. If a taxpayer’s 

advance payments exceed the taxpayer’s 

credit amount, the taxpayer owes the 

excess as an additional income tax 

liability. However, section 36B(f)(2)(B) 

places a graduated set of caps on the 

additional tax liability for taxpayers 

with household income under 400 

percent of the FPL. The repayment 


Emcdonald on DSK2BSOYB1PROD with PROPOSALS
50934 Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 

limitation amounts range from $600 to 

$2,500 (one-half that amount for single 

taxpayers) depending on FPL, and are 

adjusted to reflect changes in the cost of 

living beginning in 2015. 

Section 36B(g) directs the Secretary of 

the Treasury to issue regulations that 

provide for coordinating the premium 

tax credit with the program for advance 

payments and for reconciling the credit 

and advance payments when the 

taxpayer’s filing status changes during 

the taxable year. 

Information Reporting 

Section 36B(f)(3) directs an Exchange 

to report to the IRS and taxpayers 

certain information relating to health 

plans provided through the Exchange, 

including the amount of any advance 

credit payments. 

Explanation of Provisions 

1. Eligibility for the Premium Tax Credit 

The proposed regulations provide that 

a taxpayer is eligible for the credit for 

a taxable year if the taxpayer is an 

applicable taxpayer and the taxpayer or 

a member of the taxpayer’s family (1) is 

enrolled in one or more qualified health 

plans through an Exchange established 

under section 1311 or 1321 of the 

Affordable Care Act (42 U.S.C. 13031 or 

42 U.S.C. 18041) and (2) is not eligible 

for minimum essential coverage other 

than coverage in the individual market. 

a. Applicable Taxpayer 

i. Lawfully Present Aliens 

In general, to be an applicable 

taxpayer, a taxpayer must have 

household income that is at least 100 

percent but not more than 400 percent 

of the FPL. Under section 36B(c)(1)(B), 

a lawfully present alien with household 

income under 100 percent of the FPL 

and not eligible for Medicaid is treated 

as having household income of 100 

percent of the FPL for purposes of 

qualifying as an applicable taxpayer. 

The proposed regulations provide that 

premium assistance amounts for these 

taxpayers are computed based on actual 

household income. The proposed 

regulations define lawfully present by 

reference to 45 CFR 152.2, which 

determines lawful presence for purposes 

of the Pre-Existing Condition Insurance 

Plan Program. 

ii. Taxpayers With Household Income 

Under 100 Percent of the FPL 

The proposed regulations clarify the 

treatment of a taxpayer who receives 

advance credit payments but has 

household income below 100 percent of 

the FPL for the taxable year. 

Taxpayers with household incomes 

below 100 percent of the FPL (other 

than lawfully present aliens) are not 

eligible for the premium tax credit 

because they are eligible to receive 

assistance through Medicaid. However, 

an Exchange may approve a taxpayer for 

advance credit payments based on 

projecting a level of household income 

for the taxable year that makes the 

taxpayer ineligible for Medicaid. If, 

contrary to that projection, the 

taxpayer’s actual household income for 

the taxable year is under 100 percent of 

the FPL (for example, because the 

taxpayer experiences a change in 

circumstances, such as a job loss, during 

the year), the taxpayer would not be an 

applicable taxpayer, and would not be 

eligible for the credit under the general 

rule. Accordingly, the proposed 

regulations provide a special rule 

treating a taxpayer with household 

income below 100 percent of the FPL as 

an applicable taxpayer if, when a 

taxpayer enrolls in a qualified health 

plan, an Exchange projects that 

household income for the taxpayer will 

be between 100 and 400 percent of the 

FPL for the taxable year and approves 

advance credit payments. Premium 

assistance amounts for these taxpayers 

also are computed based on actual 

household income and not a deemed 

household income that equals 100 

percent of the FPL. 

iii. Individuals Who Are Incarcerated or 

Not Lawfully Present 

Under section 1312(f) of the 

Affordable Care Act, individuals who 

are incarcerated (other than pending 

disposition of charges) or not lawfully 

present in the United States may not 

enroll in a qualified health plan through 

an Exchange. However, these 

individuals may have family members 

who are eligible for Exchange coverage. 

Accordingly, the proposed regulations 

provide that an individual who is not 

lawfully present in the United States or 

is incarcerated, although not eligible to 

enroll in a qualified health plan, may be 

an applicable taxpayer if a family 

member is eligible to and does enroll in 

a qualified health plan. 

b. Minimum Essential Coverage 

i. Government-Sponsored Coverage 

Under the proposed regulations, an 

individual generally is eligible for 

government-sponsored minimum 

essential coverage for any month that 

the individual meets the requirements 

for coverage under a governmentsponsored program described in section 

5000A(f)(1)(A). However, for purposes 

of the premium tax credit, an individual 

is eligible for minimum essential 

coverage under a veterans’ health care 

program only if the individual is 

enrolled in a veteran’s health care 

program identified as minimum 

essential coverage in regulations issued 

under section 5000A. The 

Commissioner may define eligibility for 

specific government-sponsored 

programs further in published guidance 

of general applicability, see 

§ 601.601(d)(2) of this chapter. For 

example, it is expected that future 

guidance will provide that a person is 

eligible for Medicaid on the basis of 

being blind or disabled or needing longterm care services only when a State 

Medicaid agency or the Social Security 

Administration, as appropriate, 

determines that the individual is blind 

or disabled or requires long-term care 

services. 

In general, an individual is treated as 

eligible for a government-sponsored 

program on the first day of the first full 

month in which the individual may 

receive benefits. Thus, taxpayers would 

not lose eligibility for the credit for a 

month in which the taxpayer or a family 

member is technically eligible for a 

government program but cannot yet 

receive benefits due to, for example, the 

need for administrative processing. 

However, an individual who fails to 

complete the requirements to obtain 

coverage available under a governmentsponsored program (other than coverage 

under the veteran’s health care program) 

reasonably promptly is treated as 

eligible for the coverage on the first day 

of the second calendar month following 

the event that establishes eligibility 

(such as reaching age 65 for Medicare). 

An individual receiving advance 

credit payments may apply and be 

approved for government-sponsored 

minimum essential coverage such as 

Medicaid that, after approval, is 

effective retroactively (overlapping 

some advance payment coverage 

months). The proposed regulations 

provide that an individual in this 

situation is treated as eligible for 

minimum essential coverage no sooner 

than the first day of the first calendar 

month after the approval. 

Comments are requested on whether 

rules should provide additional 

flexibility if operational challenges 

prevent timely transition from coverage 

under a qualified health plan to 

coverage under a government-sponsored 

program. 

A taxpayer whom an Exchange has 

determined to be ineligible for 

Medicaid, CHIP, or a similar program at 

the time of enrollment may end up with 

household income for the taxable year 

within the eligibility criteria for these 


Emcdonald on DSK2BSOYB1PROD with PROPOSALS
Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 50935 

1 In addition, the statute provides for the 

Comptroller General, within 5 years of enactment, 

to conduct a study, including legislative 

recommendations, on the affordability of coverage, 

including whether the percentage of household 

income specified in section 36B(c)(2)(C) ‘‘is the 

appropriate level for determining whether 

employer-provided coverage is affordable for an 

employee and whether such level may be lowered 

without significantly increasing the costs to the 

Federal Government and reducing employerprovided coverage.’’ See section 1401(c)(1) of the 

Affordable Care Act. 

programs. Therefore, the proposed 

regulations provide that an individual is 

treated as not eligible for Medicaid, 

CHIP, or a similar program for the 

months of coverage under a qualified 

health plan if an Exchange determines 

that the individual is not eligible when 

the individual enrolls. If the individual 

subsequently enrolls in Medicaid, CHIP, 

or a similar program, however, the full 

months of enrollment in the 

government-sponsored coverage are not 

coverage months. 

ii. Employer-Sponsored Coverage 

A. In General 

Section 5000A(f)(1)(B) provides that 

minimum essential coverage includes 

coverage under an eligible employersponsored plan. Under section 

5000A(f)(2), an eligible employersponsored plan is a group health plan or 

group health insurance coverage offered 

by an employer to an employee that is 

a governmental plan (within the 

meaning of section 2791(d)(8) of the 

Public Health Service Act (42 U.S.C. 

300gg–91(d)(8))), any other plan or 

coverage offered in the small or large 

group market, or a grandfathered plan 

offered in the group market. Regulations 

under section 5000A are expected to 

provide that an employer-sponsored 

plan will not fail to be minimum 

essential coverage solely because it is a 

plan to reimburse employees for 

medical care for which reimbursement 

is not provided under a policy of 

accident and health insurance (a selfinsured plan). 

Continuation coverage required under 

federal law or required under a state law 

that provides comparable continuation 

coverage is eligible employer-sponsored 

coverage. The proposed regulations 

provide a special rule that an individual 

eligible to enroll in continuation 

coverage is eligible for minimum 

essential coverage only if the individual 

enrolls in the coverage. 

The proposed regulations provide that 

an individual generally is eligible for 

minimum essential coverage through an 

eligible employer-sponsored plan for a 

month during a plan year if the 

individual had the opportunity to enroll 

in the plan, even if the enrollment 

period has since closed. Thus, once an 

individual fails to enroll in eligible 

employer-sponsored coverage during an 

employer-sponsored plan’s enrollment 

period after having had the opportunity 

to do so (assuming the coverage is 

affordable and provides minimum 

value), the months during the plan year 

are not coverage months for the 

individual, notwithstanding that the 

individual is precluded from later 

enrolling in the employer-sponsored 

coverage for those months because the 

enrollment period has expired. 

Under section 36B(c)(2)(C), an 

individual generally is eligible for 

employer-sponsored minimum essential 

coverage only if the employee’s share of 

the premiums is affordable and the 

coverage provides minimum value. An 

individual is treated as eligible for 

minimum essential coverage through an 

eligible employer-sponsored plan, 

however, if the individual actually 

enrolls in the coverage, including 

coverage that does not meet the 

requirements for affordability and 

minimum value. 

B. Affordability of Employer-Sponsored 

Coverage 

Section 36B(c)(2)(C)(i) prescribes the 

standards for determining whether 

employer-sponsored coverage is 

affordable for an employee as well as for 

other individuals. In the case of an 

employee, under section 36B(c)(2)(C)(i), 

an employer-sponsored plan is not 

affordable if ‘‘the employee’s required 

contribution (within the meaning of 

section 5000A(e)(1)(B)) with respect to 

the plan exceeds 9.5 percent of the 

applicable taxpayer’s household 

income’’ for the taxable year. This 

percentage may be adjusted after 2014.1

In the case of an individual other than 

an employee, section 36B(c)(2)(C)(i) 

provides that ‘‘this clause shall also 

apply to an individual who is eligible to 

enroll in the plan by reason of a 

relationship the individual bears to the 

employee.’’ The cross-referenced section 

5000A(e)(1)(B) defines the term 

‘‘required contribution’’ for this purpose 

as ‘‘the portion of the annual premium 

which would be paid by the individual 

* * * for self-only coverage.’’ 

Thus, the statutory language specifies 

that for both employees and others 

(such as spouses or dependents) who 

are eligible to enroll in employersponsored coverage by reason of their 

relationship to an employee (related 

individuals), the coverage is 

unaffordable if the required contribution 

for ‘‘self-only’’ coverage (as opposed to 

family coverage or other coverage 

applicable to multiple individuals) 

exceeds 9.5 percent of household 

income. See Joint Committee on 

Taxation, General Explanation of Tax 

Legislation Enacted in the 111th 

Congress, JCS–2–11 (March 2011) at 265 

(stating that, for purposes of the 

premium tax credit provisions of the 

Act, ‘‘[u]naffordable is defined as 

coverage with a premium required to be 

paid by the employee that is more than 

9.5 percent of the employee’s household 

income, based on the self-only 

coverage’’). 

Consistent with these statutory 

provisions, the proposed regulations 

provide that an employer-sponsored 

plan also is affordable for a related 

individual for purposes of section 36B 

if the employee’s required contribution 

for self-only coverage under the plan 

does not exceed 9.5 percent of the 

applicable taxpayer’s household income 

for the taxable year, even if the 

employee’s required contribution for the 

family coverage does exceed 9.5 percent 

of the applicable taxpayer’s household 

income for the year. 

Although the affordability test for 

related individuals for purposes of the 

premium tax credit is based on the cost 

of self-only coverage, future proposed 

regulations under section 5000A are 

expected to provide that the 

affordability test for purposes of 

applying the individual responsibility 

requirement to related individuals is 

based on the employee’s required 

contribution for employer-sponsored 

family coverage. Section 5000A 

addresses affordability for employees in 

section 5000A(e)(1)(B) and, separately, 

for related individuals in section 

5000A(e)(1)(C). 

C. Employee Affordability Safe Harbor 

The proposed regulations provide an 

employee safe harbor for individuals 

who were offered eligible employersponsored coverage that ultimately 

proves to be affordable based on 

household income for the taxable year 

but who declined the offer because, at 

the time of enrollment in a qualified 

health plan, the Exchange determined 

that the employer coverage would be 

unaffordable. Under the safe harbor, an 

eligible employer-sponsored plan is 

treated as unaffordable for an entire 

plan year. Thus, for the months during 

the plan year (which may coincide or 

overlap with the taxable year) a taxpayer 

will not lose credit eligibility because, 

as a result of changes during the taxable 

year, the employer coverage would have 

been affordable based on the household 

income for that taxable year. The 

taxpayer may, however, lose credit 

eligibility for other reasons, for example 

if the taxpayer’s household income for 


Emcdonald on DSK2BSOYB1PROD with PROPOSALS
50936 Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 

the taxable year exceeds 400 percent of 

the FPL. Regulations under section 

4980H are expected to provide that an 

employer is not subject to a penalty 

merely because an employee receives a 

premium tax credit under this employee 

safe harbor if the employer offered to its 

employees affordable coverage that 

otherwise meets the requirements of 

section 4980H. 

D. Affordability Safe Harbor for 

Employers 

In general, an applicable large 

employer (as defined in section 

4980H(c)(2)) that offers health coverage 

to its full-time employees and their 

dependents is subject to the assessable 

payment under section 4980H(b) if at 

least one full-time employee is certified 

to receive a premium tax credit or costsharing reduction because the employersponsored coverage either does not 

provide minimum value or is 

unaffordable to the employee. 

Employers have commented that they 

will not know their employees’ actual 

household income. As a result, even if 

an employer intends to offer affordable 

coverage to all full-time employees, one 

or more full-time employees may be 

certified to receive the premium tax 

credit, and the employer may be subject 

to the assessable payment under 

4980H(b). Future proposed regulations 

under section 4980H are expected to 

provide an affordability safe harbor for 

employers. Under this anticipated safe 

harbor, an employer that meets certain 

requirements, including offering its fulltime employees (and their dependents) 

the opportunity to enroll in eligible 

employer-sponsored coverage, will not 

be subject to an assessable payment 

under section 4980H(b) with respect to 

an employee who receives a premium 

tax credit or cost-sharing reduction for 

a taxable year if the employee portion of 

the self-only premium for the 

employer’s lowest cost plan that 

provides minimum value does not 

exceed 9.5 percent of the employee’s 

current W–2 wages from the employer. 

Giving employers the ability to base 

their affordability calculations on their 

employees’ wages (which employers 

know) instead of employees’ household 

income (which employers generally do 

not know) is intended to provide a more 

workable and predictable method of 

facilitating affordable employersponsored coverage for the benefit of 

both employers and employees. 

Notwithstanding this safe harbor, 

employees’ eligibility for a premium tax 

credit would continue to be based on 

affordability of employer-sponsored 

coverage relative to employees’ 

household income. Accordingly, some 

employees—among the small percentage 

of employees whose household income 

is less than their wages from the 

employer—would receive a premium 

tax credit without resulting in an 

assessable payment by their employer. 

The Treasury Department and the IRS 

intend to issue a request for comments 

on this affordability safe harbor for 

employers. 

E. Minimum Value 

Section 36B(c)(2)(C)(ii) provides that 

an eligible employer-sponsored plan 

generally provides minimum value if 

the plan’s share of the total allowed 

costs of benefits provided under the 

plan is at least 60 percent of those costs. 

Under section 1302(d)(2) of the 

Affordable Care Act (42 U.S.C. 

18022(d)(2)), regulations to be issued by 

the Secretary of Health and Human 

Services will apply in determining the 

percentage of ‘‘the total allowed costs of 

benefits’’ provided under a group health 

plan or health insurance coverage that 

are covered by that plan or coverage. 

The regulations under section 

1302(d)(2) are expected to be proposed 

later this year and to reflect the fact that 

employer-sponsored group health plans 

and health insurance coverage in the 

large group market are not required to 

provide each of the essential health 

benefits or each of the 10 categories of 

benefits described in section 1302(b)(1) 

of the Affordable Care Act. It is also 

anticipated that the regulations will 

seek to further the objective of 

preserving the existing system of 

employer-sponsored coverage, but 

without permitting the statutory 

employer responsibility standards to be 

avoided. We also are contemplating 

whether to provide appropriate 

transition relief with respect to the 

minimum value requirement for 

employers currently offering health care 

coverage. 

2. Computing the Premium Tax Credit 

A taxpayer’s credit is the sum of the 

premium assistance amounts for each 

coverage month in the taxable year. A 

premium assistance amount is 

computed for each coverage month 

during the taxable year based on several 

factors: household income, family size, 

applicable percentage, benchmark plan 

premium, and actual plan premium. A 

month during which no one in the 

taxpayer’s family is enrolled in a 

qualified health plan through an 

Exchange is not a coverage month. A 

month is a coverage month only if the 

taxpayer pays the premium for coverage 

or receives the benefit of an advance 

payment. The premium assistance 

amount for a month that is not a 

coverage month is zero. Household 

income is determined on an annual 

basis and is prorated for each month to 

determine the monthly premium 

assistance amount. The applicable 

percentage is the same for each month 

because it is derived from annual 

household income and family size. A 

taxpayer’s benchmark plan premium 

may change during the year if, for 

example, there are changes in the 

members of the household covered 

through the Exchange or the taxpayer 

moves to a new State with different plan 

rates. 

a. Premiums Paid on Behalf of the 

Taxpayer 

The proposed regulations provide 

that, in determining whether a month is 

a coverage month, premiums that 

another person pays for the coverage of 

the taxpayer or a family member are 

treated as paid by the taxpayer. 

b. Applicable Benchmark Plan 

Under section 36B(b)(2), the monthly 

premium for the applicable second 

lowest cost silver plan offered through 

an Exchange is the benchmark for 

computing a taxpayer’s monthly 

premium assistance amount. To 

determine the amount of premium tax 

credit, a taxpayer must compute the 

difference between the premium for this 

plan and the applicable percentage of 

the taxpayer’s household income, 

regardless of the qualified health plan 

the taxpayer purchases. 

i. Multiple Categories of Coverage 

Offered on an Exchange 

Section 36B(b)(3)(B)(ii) identifies only 

self-only and family as the categories of 

coverage for the benchmark plan. 

However, qualified health plans may 

offer other categories of coverage based 

on family composition, such as children 

only, two adults, or one adult plus 

children. See proposed 45 CFR 

156.255(b). Thus, the proposed 

regulations define family coverage as 

any health insurance that covers more 

than one individual. 

Under the proposed regulations, the 

‘‘applicable’’ benchmark plan for a 

taxpayer is determined by finding the 

second lowest cost plan at the silver 

level that would cover those family 

members actually enrolled in a qualified 

health plan, not eligible for minimum 

essential coverage other than coverage 

in the individual market, not 

incarcerated, and lawfully present in the 

United States (the coverage family). 

Thus, the applicable benchmark plan is 

the self-only category of coverage for a 

taxpayer who files as single with no 

dependents, a taxpayer who purchases 


Emcdonald on DSK2BSOYB1PROD with PROPOSALS
Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 50937 

self-only coverage, and a taxpayer 

whose family includes only one 

individual who is not eligible for 

minimum essential coverage or one 

lawfully present individual (thus 

excluding from the credit computation 

the portion of the premium attributable 

to an individual not lawfully present, as 

required by section 36B(e)(1)(A)). If an 

Exchange offers more categories of 

coverage than self-only and family, the 

applicable benchmark plan is the 

coverage category that applies to the 

members of the taxpayer’s coverage 

family. 

ii. Families Who Purchase More Than 

One Qualified Health Plan 

Section 36B determines family size by 

reference to individuals for whom the 

taxpayer claims a personal exemption, 

and family coverage under some 

qualified health plans may not extend to 

certain tax dependents (for example, a 

niece). We note that the Department of 

Health and Human Services has 

requested comments in its proposed 

regulations on Exchanges on whether 

qualified health plans offered on an 

Exchange should be required to cover 

all members of the family if they live in 

the same Exchange service area. 

Pending the issuance of additional 

guidance on this issue by Health and 

Human Services, the proposed 

regulations provide that, if the 

applicable benchmark plan does not 

cover a taxpayer’s full family, the 

applicable benchmark plan premium for 

these families is the sum of the 

premiums for the benchmark plans that 

cover the taxpayer’s family (for 

example, for an uncle and two adult 

dependent nieces, a self-only 

benchmark plan for the uncle and a twoadult or family plan for the nieces). The 

applicable benchmark plan is similarly 

modified for taxpayers with family 

members residing in different rating 

areas (also known as Exchange service 

areas, see proposed 45 CFR155.20). 

However, the IRS and Treasury 

Department are considering other 

approaches for determining the 

applicable benchmark plan in these 

cases. For example, the applicable 

benchmark plan for these families could 

be the benchmark plan that would apply 

to the family composition (such as one 

adult plus children) if one plan covered 

all members of the taxpayer’s family. 

Alternatively, the applicable benchmark 

plan premium could be the lesser of (1) 

the premium for a combination of plans 

that cover the taxpayer’s entire family, 

or (2) the premium for a single plan that 

covers the taxpayer’s entire family and 

is more expensive than the second 

lowest cost silver plan. Comments are 

requested on these and other possible 

approaches. 

iii. One Qualified Health Plan Covering 

More Than One Family 

If a single qualified health plan covers 

more than one taxpayer’s family (for 

example a plan that covers adult 

children under age 26 who are not tax 

dependents), the allowable section 36B 

credit is computed for each applicable 

taxpayer covered by the plan. An 

individual applicable percentage is 

determined for each taxpayer based on 

the taxpayer’s household income and 

family size, and the separate applicable 

benchmark plan. The premiums for the 

qualified health plan the taxpayers 

purchase are allocated to each taxpayer 

in proportion to the premiums for each 

taxpayer’s benchmark plan to determine 

whether the premiums paid are less 

than the benchmark premium minus the 

taxpayer’s applicable percentage of 

household income. 

iv. Applicable Benchmark Plan That 

Terminates or Closes to Enrollment 

A qualified health plan that is the 

second lowest cost silver plan for a 

particular category of coverage, or the 

lowest cost silver plan in that category, 

may close to enrollment or terminate 

during the taxable year. The proposed 

regulations clarify that an applicable 

benchmark plan is a plan offered 

through the Exchange when a taxpayer 

or family member enrolls in a qualified 

health plan. Unless the taxpayer or a 

family member is enrolled in the 

applicable benchmark plan, a plan does 

not cease to be the applicable 

benchmark plan solely because the plan 

or the lowest cost silver plan terminates 

or closes to further enrollment during 

the taxable year. 

c. Pediatric Dental Coverage 

Section 36B(b)(3)(E) provides that, for 

purposes of determining the amount of 

any monthly premium, if an individual 

enrolls in both a qualified health plan 

and a plan providing dental coverage as 

described in section 1311(d)(2)(B)(ii) of 

the Affordable Care Act (42 U.S.C. 

13031(d)(2)(B)(ii)), the portion of the 

premium for the dental plan that is 

properly allocable to pediatric dental 

benefits that are essential health benefits 

is treated as a premium payable for the 

individual’s qualified health plan. Thus, 

the portion of the premium for the 

separate pediatric dental coverage is 

added to the premium for the 

benchmark plan in computing the 

credit. Comments are requested on 

methods of determining the amount of 

the premium properly allocable to 

pediatric dental benefits. 

3. Reconciling the Credit and Advance 

Credit Payments 

The proposed regulations describe the 

requirements for reconciling advance 

payments of the credit with the actual 

credit amount and determining the 

amount of any resulting additional 

credit or additional income tax liability. 

The proposed regulations explain that 

the credit is computed by using the 

household income and family size for 

the taxable year, but premium assistance 

amounts for different coverage months 

may be based on different applicable 

benchmark plans if, for example, the 

taxpayer’s family composition changes 

during the taxable year. 

a. Changes in Filing Status 

Section 36B(g)(2) directs the Secretary 

to provide regulations specifying how to 

reconcile advance payments with the 

actual credit when the taxpayer’s filing 

status on the return claiming the credit 

differs from the filing status used to 

determine advance payments of the 

credit. Filing status may be any of the 

following: single, married filing jointly, 

married filing separately, head of 

household, or surviving spouse. 

i. Computing the Credit When 

Taxpayer’s Marital Status Changes 

The proposed regulations provide 

that, for a taxpayer who has a change in 

marital status during the taxable year, 

the credit generally is computed 

according to the same rules that apply 

to other taxpayers, using the applicable 

benchmark plan or plans that apply to 

the taxpayer’s marital status as of the 

first day of each month. However, the 

proposed regulations include special 

rules for computing the credit for 

taxpayers who divorce during the 

taxable year. Comments are requested 

on special rules for taxpayers who 

marry during the taxable year and for 

married taxpayers who face challenges 

in being able to file a joint return. 

ii. Taxpayers Who Divorce During the 

Taxable Year 

The proposed regulations provide 

that, for purposes of reconciliation, 

taxpayers who for some months during 

a taxable year were married (within the 

meaning of section 7703) and were 

covered by the same qualified health 

plan but are no longer married on the 

last day of the taxable year, may agree 

to allocate between themselves, in the 

same proportion, the premiums for the 

benchmark plan, premiums paid and 

advance credit payments made during 

the marriage. If the taxpayers do not 

agree on an allocation, the taxpayers 

must allocate 50 percent of these 

amounts to each taxpayer. If only one of 


Emcdonald on DSK2BSOYB1PROD with PROPOSALS
50938 Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 

the formerly married taxpayers was 

enrolled in the plan, 100 percent of the 

benchmark premiums, premiums for the 

plan that taxpayer purchases, and 

advance payments are allocated to that 

taxpayer. 

iii. Taxpayers Who Marry During the 

Taxable Year 

For individuals who marry during a 

taxable year and receive advance credit 

payments during the time before they 

are married, the general rules for credit 

computation and reconciliation could 

lead to the individuals facing additional 

tax upon reconciliation, even if the 

Exchange accurately determines each 

individual’s separate income for the 

year at the time of enrollment. This may 

occur, for example, in situations in 

which the combination of two 

individuals’ household incomes and 

families results in the combined family 

having a higher FPL percentage than 

either of the component families would 

have had if the individuals had not 

married, and therefore having a higher 

applicable percentage or being ineligible 

for a credit. Comments are requested on 

rules providing relief to certain 

individuals who would owe additional 

tax because they marry during a taxable 

year when one or both individuals 

receive advance credit payments prior 

to marriage. Comments are requested on 

how the premium assistance credit 

amount should be computed in this 

circumstance, including how household 

income (which is required to be 

determined on an annual basis) and 

dependents for the taxable year would 

be taken into account in the credit 

computation. 

iv. Married Taxpayers Filing Separately 

Married taxpayers who file their 

returns as married filing separately are 

not applicable taxpayers and generally 

are ineligible for the premium tax credit 

for any month during the taxable year. 

The proposed regulations provide that 

taxpayers who receive advance credit 

payments and file their tax returns as 

married filing separately must allocate 

50 percent of any advance credit 

payments to each spouse for purposes of 

determining their excess advance 

payment amounts as part of the 

reconciliation process. Although the 

taxpayers owe additional tax for the 

entire amount of the advance credit 

payments, the section 36B(f)(2)(B) 

repayment limitation applies to each 

taxpayer whose household income is 

below 400 percent of the federal poverty 

line based on the household income and 

family size reported on the return. 

Some taxpayers who are married at 

the time they enroll in a qualified health 

plan and begin to receive advance credit 

payments may not be able to file a joint 

return for the coverage year. For 

example, in situations involving 

domestic abuse, when a divorce is 

pending but not yet final, or when one 

spouse is incarcerated, filing a joint 

return may not be possible or prudent. 

Comments are requested on rules to 

provide relief for those married 

taxpayers who have received advance 

credit payments but face challenges in 

being able to file a joint return. 

Comments are requested in particular 

on whether rules should take into 

account whether (1) The spouses have 

filed jointly for the preceding taxable 

year, (2) the spouses attested to an 

expectation to file jointly for purposes 

of receiving the advance credit 

payments, and (3) the spouses should be 

allowed relief of this type for more than 

one year. 

Comments are requested on other 

rules for reconciling the credit with 

advance payments for taxpayers whose 

filing status changes during the taxable 

year. 

b. Requirement To File a Return 

The proposed regulations require 

every taxpayer receiving advance credit 

payments to file an income tax return on 

or before the fifteenth day of the fourth 

month following the close of the taxable 

year. The requirement to file a return 

applies whether or not a taxpayer is 

otherwise required to file a return under 

section 6012 or claims a premium tax 

credit for the taxable year. Under 

section 6081, the Commissioner may 

grant a reasonable extension of time for 

filing any income tax return. 

Effective/Applicability Date 

These regulations are proposed to 

apply for taxable years ending after 

December 31, 2013. 

Special Analyses 

It has been determined that this notice 

of proposed rulemaking is not a 

significant regulatory action as defined 

in Executive Order 12866, as 

supplemented by Executive Order 

13563. Therefore, a regulatory 

assessment is not required. 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, and, because the regulations 

do not impose a collection of 

information requirement on small 

entities, the Regulatory Flexibility Act 

(5 U.S.C. chapter 6) does not apply. 

Pursuant to section 7805(f) of the Code, 

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 Public Hearing 

Before these proposed regulations are 

adopted as final regulations, 

consideration will be given to any 

written comments (either electronic or a 

signed paper original and eight (8) 

copies) that are submitted timely to the 

IRS. The IRS and Treasury Department 

request comments on the clarity of the 

proposed rules and how they can be 

made easier to understand. All 

comments will be available for public 

inspection and copying. 

A public hearing has been scheduled 

for November 17, 2011, at 10 a.m., in the 

auditorium, Internal Revenue Building, 

1111 Constitution Avenue, NW., 

Washington, DC. Due to building 

security procedures, visitors must enter 

at the Constitution Avenue entrance. All 

visitors must present photo 

identification to enter the building. 

Because of access restrictions, visitors 

will not be admitted beyond the 

immediate entrance more than 30 

minutes before the hearing starts. For 

information about having your name 

placed on the building access list to 

attend the hearing, see the FOR FURTHER

INFORMATION CONTACT section of this 

preamble. 

The rules of 26 CFR 601.601(a)(3) 

apply to the hearing. Persons who wish 

to present oral comments at the hearing 

must submit written comments 

(electronic or a signed paper original 

and eight (8) copies) and an outline of 

topics to be discussed and the time 

devoted to each topic by November 10, 

2011. A period of 10 minutes will be 

allotted to each person for making 

comments. 

An agenda showing the scheduling of 

the speakers will be prepared after the 

deadline for receiving outlines has 

passed. Copies of the agenda will be 

available free of charge at the hearing. 

Drafting Information 

The principal authors of these 

proposed regulations are Shareen S. 

Pflanz, Frank W. Dunham III, and 

Stephen J. Toomey of the Office of 

Associate Chief Counsel (Income Tax 

and Accounting). However, other 

personnel from the IRS and the Treasury 

Department participated in the 

development of the regulations. 

List of Subjects in 26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 


Emcdonald on DSK2BSOYB1PROD with PROPOSALS
Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 50939 

Proposed Amendments to the 

Regulations 

Accordingly, 26 CFR part 1 is 

proposed to be amended as follows: 

PART 1—INCOME TAXES 

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 * * * 

Section 1.36B–4 also issued under 26 

U.S.C. 36B(g). 

Par. 2. Sections 1.36B–0, 1.36B–1, 

1.36B–2, 1.36B–3, 1.36B–4, and 1.36B– 

5 are added to read as follows: 

§ 1.36B–0 Table of contents. 

This section lists the captions 

contained in §§ 1.36B–1 through 1.36B– 

5. 

§ 1.36B–1 Premium tax credit definitions. 

(a) In general. 

(b) Affordable Care Act. 

(c) Qualified health plan. 

(d) Family and family size. 

(e) Household income. 

(1) In general. 

(2) Modified adjusted gross income. 

(f) Dependent. 

(g) Lawfully present. 

(h) Federal poverty line. 

(i) Reserved. 

(j) Advance credit payment. 

(k) Exchange. 

(l) Self-only coverage. 

(m) Family coverage. 

(n) Rating area. 

(o) Effective/applicability date. 

§ 1.36B–2 Eligibility for premium tax 

credit. 

(a) In general. 

(b) Applicable taxpayer. 

(1) In general. 

(2) Married taxpayers must file joint 

return. 

(3) Dependents. 

(4) Individuals not lawfully present or 

incarcerated. 

(5) Individuals lawfully present. 

(6) Special rule for taxpayers with 

household income below 100 percent of 

the federal poverty line for the taxable 

year. 

(7) Computation of premium 

assistance amounts for taxpayers with 

household income below 100 percent of 

the federal poverty line. 

(c) Minimum essential coverage. 

(1) In general. 

(2) Government-sponsored minimum 

essential coverage. 

(i) In general. 

(ii) Special rule for coverage under the 

veteran’s health care program under 

chapter 17 or 18 of Title 38, U.S.C. 

(iii) Time of eligibility. 

(A) In general. 

(B) Retroactive effect of eligibility 

determination. 

(iv) Determination of Medicaid or 

Children’s Health Insurance Program 

(CHIP) ineligibility. 

(v) Examples. 

(3) Employer-sponsored minimum 

essential coverage. 

(i) In general. 

(ii) Plan year. 

(iii) Eligibility for coverage months 

during a plan year. 

(A) In general. 

(B) Example. 

(iv) Special rule for continuation 

coverage. 

(v) Affordable coverage. 

(A) In general. 

(1) Affordability. 

(2) Employee safe harbor. 

(B) Required contribution percentage. 

(C) Examples. 

(vi) Minimum value. 

(vii) Enrollment in eligible employersponsored plan. 

(A) In general. 

(B) Example. 

§ 1.36B–3 Computing the premium 

assistance credit amount. 

(a) In general. 

(b) Definitions. 

(c) Coverage month. 

(1) In general. 

(2) Premiums paid for the taxpayer. 

(3) Examples. 

(d) Premium assistance amount. 

(e) Adjusted monthly premium. 

(f) Applicable benchmark plan. 

(1) In general. 

(2) Family coverage. 

(3) Second lowest cost silver plan not 

covering the taxpayer’s family. 

(4) Benchmark plan terminates or 

closes to enrollment. 

(5) Examples. 

(g) Applicable percentage. 

(1) In general. 

(2) Applicable percentage table. 

(3) Examples. 

(h) Plan covering more than one 

family. 

(1) In general. 

(2) Example. 

(i) Reserved. 

(j) Additional benefits. 

(1) In general. 

(2) Method of allocation. 

(k) Pediatric dental coverage. 

(1) In general. 

(2) Method of allocation. 

(l) Families including individuals not 

lawfully present. 

(1) In general. 

(2) Revised household income 

computation. 

(i) Statutory method. 

(ii) Comparable method. 

§ 1.36B–4 Reconciling the premium tax 

credit with advance credit payments. 

(a) Reconciliation. 

(1) In general. 

(2) Credit computation. 

(3) Limitation on additional tax. 

(i) In general. 

(ii) Additional tax limitation table. 

(4) Examples. 

(b) Changes in filing status. 

(1) In general. 

(2) Taxpayers not married to each 

other at the end of the taxable year. 

(3) Married taxpayers filing separate 

returns. 

(4) Examples. 

§ 1.36B–5 Information reporting by 

Exchanges. 

(a) Information required to be 

reported. 

(b) Time and manner of reporting. 

§ 1.36B–1 Premium tax credit definitions. 

(a) In general. Section 36B allows a 

refundable premium tax credit for 

taxable years ending after December 31, 

2013. The definitions in this section 

apply to this section and §§ 1.36B–2 

through 1.36B–5. 

(b) Affordable Care Act. The term 

Affordable Care Act refers to the Patient 

Protection and Affordable Care Act, 

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)), as 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)). 

(c) Qualified health plan. The term 

qualified health plan has the same 

meaning as in section 1301(a) of the 

Affordable Care Act (42 U.S.C. 18021(a)) 

but does not include a catastrophic plan 

described in section 1302(e) of the 

Affordable Care Act (42 U.S.C. 

18022(e)). 

(d) Family and family size. A 

taxpayer’s family means the individuals 

for whom a taxpayer properly claims a 

deduction for a personal exemption 

under section 151 for the taxable year. 

Family size means the number of 

individuals in the family. Family and 

family size include an individual who is 

exempt from the requirement to 

maintain minimum essential coverage 

under section 5000A. 


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50940 Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 

(e) Household income—(1) In general. 

Household income means the sum of— 

(i) A taxpayer’s modified adjusted 

gross income; plus 

(ii) The aggregate modified adjusted 

gross income of all other individuals 

who— 

(A) Are included in the taxpayer’s 

family under paragraph (d) of this 

section; and 

(B) Are required to file an income tax 

return for the taxable year (determined 

without regard to the exception under 

section (1)(g)(7) to the requirement to 

file a return). 

(2) Modified adjusted gross income. 

Modified adjusted gross income means 

adjusted gross income (within the 

meaning of section 62) increased by 

amounts excluded from gross income 

under section 911 and tax-exempt 

interest the taxpayer receives or accrues 

during the taxable year. 

(f) Dependent. Dependent has the 

same meaning as in section 152. 

(g) Lawfully present. Lawfully present 

has the same meaning as in 45 CFR 

152.2. 

(h) Federal poverty line. The federal 

poverty line means the most recently 

published poverty guidelines (updated 

periodically in the Federal Register by 

the Secretary of Health and Human 

Services under the authority of 42 

U.S.C. 9902(2)) as of the first day of the 

regular enrollment period for coverage 

by a qualified health plan offered 

through an Exchange for a calendar 

year. Thus, the federal poverty line for 

computing the premium tax credit for a 

taxable year is the federal poverty line 

in effect on the first day of the initial or 

annual open enrollment period 

preceding that taxable year. See 45 CFR 

155.410. 

(i) [Reserved] 

(j) Advance credit payment. Advance 

credit payment means an advance 

payment of the premium tax credit as 

provided in section 1412 of the 

Affordable Care Act (42 U.S.C. 18082). 

(k) Exchange. Exchange has the same 

meaning as in 45 CFR 155.20. 

(l) Self-only coverage. Self-only 

coverage means health insurance that 

covers one individual. 

(m) Family coverage. Family coverage 

means health insurance that covers 

more than one individual. 

(n) Rating area. Rating area means an 

Exchange service area, as described in 

45 CFR 155.20. 

(o) Effective/applicability date. This 

section and §§ 1.36B–2 through 1.36B– 

5 apply for taxable years ending after 

December 31, 2013. 

§ 1.36B–2 Eligibility for premium tax 

credit. 

(a) In general. An applicable taxpayer 

(within the meaning of paragraph (b) of 

this section) is allowed a premium 

assistance amount only for any month 

that the applicable taxpayer, or the 

applicable taxpayer’s spouse or 

dependent— 

(1) Is enrolled in one or more 

qualified health plans through an 

Exchange; and 

(2) Is not eligible for minimum 

essential coverage (within the meaning 

of paragraph (c) of this section) other 

than coverage described in section 

5000A(f)(1)(C) (relating to coverage in 

the individual market). 

(b) Applicable taxpayer—(1) In 

general. Except as otherwise provided 

in this paragraph (b), an applicable 

taxpayer is a taxpayer whose household 

income is at least 100 percent but not 

more than 400 percent of the federal 

poverty line for the taxpayer’s family 

size for the taxable year. 

(2) Married taxpayers must file joint 

return. A taxpayer who is married 

(within the meaning of section 7703) at 

the close of the taxable year is an 

applicable taxpayer only if the taxpayer 

and the taxpayer’s spouse file a joint 

return for the taxable year. 

(3) Dependents. An individual is not 

an applicable taxpayer if another 

taxpayer may claim a deduction under 

section 151 for the individual for a 

taxable year beginning in the calendar 

year in which the individual’s taxable 

year begins. 

(4) Individuals not lawfully present or 

incarcerated. An individual who is not 

lawfully present in the United States or 

is incarcerated (other than incarceration 

pending disposition of charges) may not 

be covered by a qualified health plan 

through an Exchange. However, the 

individual may be an applicable 

taxpayer if a family member is eligible 

to enroll in a qualified health plan. See 

sections 1312(f)(1)(B) and 1312(f)(3) of 

the Affordable Care Act (42 U.S.C. 

18032(f)(1)(B) and (f)(3)) and § 1.36B– 

3(b)(2). 

(5) Individuals lawfully present. If a 

taxpayer’s household income is less 

than 100 percent of the federal poverty 

line for the taxpayer’s family size and 

the taxpayer or a member of the 

taxpayer’s family is an alien lawfully 

present in the United States, the 

taxpayer is treated as an applicable 

taxpayer if— 

(i) The taxpayer or family member is 

not eligible for the Medicaid program; 

and 

(ii) The taxpayer would be an 

applicable taxpayer if the taxpayer’s 

household income for the taxable year 

was between 100 and 400 percent of the 

federal poverty line for the taxpayer’s 

family size. 

(6) Special rule for taxpayers with 

household income below 100 percent of 

the federal poverty line for the taxable 

year. 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 if— 

(i) The taxpayer or a family member 

enrolls in a qualified health plan 

through an Exchange; 

(ii) An Exchange estimates at the time 

of enrollment that the taxpayer’s 

household income will be between 100 

and 400 percent of the federal poverty 

line for the taxable year; 

(iii) Advance credit payments are 

authorized and paid for one or more 

months during the taxable year; and 

(iv) The taxpayer would be an 

applicable taxpayer if the taxpayer’s 

household income for the taxable year 

was between 100 and 400 percent of the 

federal poverty line for the taxpayer’s 

family size. 

(7) Computation of premium 

assistance amounts for taxpayers with 

household income below 100 percent of 

the federal poverty line. If a taxpayer is 

treated as an applicable taxpayer under 

paragraph (b)(5) or (b)(6) of this section, 

the taxpayer’s actual household income 

for the taxable year is used to compute 

the premium assistance amounts under 

§ 1.36B–3(d). 

(c) Minimum essential coverage—(1) 

In general. Minimum essential coverage 

is defined in section 5000A(f) and 

regulations issued under that section. 

As described in section 5000A(f), 

government-sponsored programs, 

eligible employer-sponsored plans, 

grandfathered health plans, and certain 

other health benefits coverage are 

minimum essential coverage. 

(2) Government-sponsored minimum 

essential coverage—(i) In general. 

Except as provided in paragraph 

(c)(2)(ii) of this section, for purposes of 

section 36B, an individual is eligible for 

government-sponsored minimum 

essential coverage if the individual 

meets the criteria for coverage under a 

government-sponsored program 

described in section 5000A(f)(1)(A). The 

Commissioner may define eligibility for 

specific government-sponsored 

programs further in published guidance 

of general applicability, see 

§ 601.601(d)(2) of this chapter. 

(ii) Special rule for coverage under the 

veteran’s health care program under 

chapter 17 or 18 of Title 38, U.S.C. An 

individual is eligible for minimum 


Emcdonald on DSK2BSOYB1PROD with PROPOSALS
Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 50941 

essential coverage under the veteran’s 

health care program authorized under 

chapter 17 or 18 of Title 38, U.S.C., only 

if the individual is enrolled in a 

veteran’s health care program identified 

as minimum essential coverage in 

regulations issued under section 5000A. 

(iii) Time of eligibility—(A) In general. 

An individual generally is treated as 

eligible for a government-sponsored 

program on the first day of the first full 

month in which the individual may 

receive benefits under the program. 

However, an individual who fails to 

complete the requirements necessary to 

receive benefits available under a 

government-sponsored program (other 

than a veteran’s health care program) 

reasonably promptly is treated as 

eligible for government-sponsored 

minimum essential coverage as of the 

first day of the second calendar month 

following the event that establishes 

eligibility under paragraph (c)(2)(i) of 

this section. 

(B) Retroactive effect of eligibility 

determination. If an individual 

receiving advance credit payments is 

determined to be eligible for 

government-sponsored minimum 

essential coverage that is effective 

retroactively (such as Medicaid), the 

individual is treated as eligible for 

minimum essential coverage under that 

program no earlier than the first day of 

the first calendar month beginning after 

the approval. 

(iv) Determination of Medicaid or 

Children’s Health Insurance Program 

(CHIP) ineligibility. 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 an Exchange determines that the 

individual is not eligible for the 

program when the individual enrolls in 

the qualified health plan. 

(v) Examples. The following examples 

illustrate the provisions of this 

paragraph (c)(2). 

Example 1. Delay in coverage effectiveness. 

On April 10, Taxpayer D applies for coverage 

under a government-sponsored health care 

program. D’s application is approved on July 

12 but her coverage is not effective until 

September 1. Under paragraph (c)(2)(iii)(A) of 

this section, D is eligible for governmentsponsored minimum essential coverage on 

September 1. 

Example 2. Time of eligibility. Taxpayer E 

turns 65 on June 3 and becomes eligible for 

Medicare. Under section 5000A(f)(1)(A), 

Medicare is minimum essential coverage. 

However, E must enroll in Medicare to 

receive benefits. E enrolls in Medicare on 

June 11 and may receive benefits 

immediately. Under paragraph (c)(2)(iii)(A) 

of this section, E is eligible for governmentsponsored minimum essential coverage on 

July 1, the first day of the first full month that 

E may receive benefits under the program. 

Example 3. Time of eligibility, individual 

fails to complete necessary requirements. The 

facts are the same as in Example 2, except 

that E fails to enroll in the Medicare 

coverage. E is treated as eligible for 

government-sponsored minimum essential 

coverage under paragraph (c)(2)(iii)(A) of this 

section as of August 1, the first day of the 

second month following the event that 

establishes eligibility (E turning 65). 

Example 4. Retroactive effect of eligibility. 

On April 10, 2015, Taxpayer G applies for 

coverage under the Medicaid program. G’s 

application is approved on May 15, 2015, 

and her Medicaid coverage is effective as of 

April 1, 2015. Under paragraph (c)(2)(iii)(B) 

of this section, G is eligible for governmentsponsored minimum essential coverage on 

June 1, 2015, the first day of the first calendar 

month after approval. 

Example 5. Determination of Medicaid 

ineligibility. In November 2014, Taxpayer H 

applies to the Exchange to enroll in a 

qualified health plan and for advance credit 

payments for 2015. The Exchange estimates 

that H’s household income will be 140 

percent of the federal poverty line for H’s 

family size and determines that H is not 

eligible for Medicaid. The Exchange 

authorizes advance credit payments for H for 

2015. H experiences a loss of household 

income in June 2015 but does not return to 

the Exchange in 2015 to apply for Medicaid 

benefits or report his change in income. H’s 

household income for 2015 is 130 percent of 

the federal poverty line (within the Medicaid 

income threshold). Under paragraph (c)(2)(iv) 

of this section, H is treated as not eligible for 

Medicaid for 2015. 

Example 6. Mid-year Medicaid eligibility 

redetermination. The facts are the same as in 

Example 5, except that H returns to the 

Exchange in July 2015 and the Exchange 

determines H is eligible for Medicaid. The 

Exchange discontinues H’s advance credit 

payments effective August 1. Under 

paragraphs (c)(2)(iii)(B) and (c)(2)(iv) of this 

section, H is treated as not eligible for 

Medicaid for the coverage months when H is 

covered by a qualified health plan. H is 

eligible for government-sponsored minimum 

essential coverage for the coverage months 

after H is approved for Medicaid, August 

through December 2015. 

(3) Employer-sponsored minimum 

essential coverage—(i) In general. For 

purposes of section 36B, an employee 

who may enroll in an eligible employersponsored plan (as defined in section 

5000A(f)(2)) 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. 

Government-sponsored programs 

described in section 5000A(f)(1)(A) are 

not eligible employer-sponsored plans. 

(ii) Plan year. For purposes of this 

paragraph (c)(3), a plan year is 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). 

(iii) Eligibility for coverage months 

during a plan year—(A) In general. An 

employee or related individual may be 

eligible for minimum essential coverage 

under an eligible employer-sponsored 

plan for a coverage 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. 

(B) Example. The following example 

illustrates the provisions of this 

paragraph (c)(3)(iii). 

Example. (i) Taxpayer B is an employee 

of Employer X. X offers its employees a 

health insurance plan that has a plan year 

(within the meaning of paragraph (c)(3)(ii) of 

this section) from October 1 through 

September 30. Employees may enroll during 

an open season from August 1 to September 

15. B does not enroll in X’s plan for the plan 

year October 1, 2014, to September 30, 2015. 

In November 2014 B enrolls in a qualified 

health plan through an Exchange for calendar 

year 2015. 

(ii) B could have enrolled in X’s plan 

during the August 1 to September 15 

enrollment period. Therefore, unless X’s plan 

is not affordable for B or does not provide 

minimum value, B is eligible for minimum 

essential coverage for the months that B is 

enrolled in the qualified health plan during 

X’s plan year (January through September 

2015). 

(iv) Special rule for continuation 

coverage. An individual who may enroll 

in continuation coverage required under 

federal law or a state law that provides 

comparable continuation coverage is 

eligible for minimum essential coverage 

only if the individual enrolls in the 

coverage. 

(v) Affordable coverage—(A) In 

general—(1) Affordability. Except as 

provided in paragraph (c)(3)(v)(A)(2) of 

this section, an eligible employersponsored plan is affordable for an 

employee or a related individual if the 

portion of the annual premium the 

employee must pay, whether by salary 

reduction or otherwise (required 

contribution), for self-only coverage for 

the taxable year does not exceed the 

required contribution percentage (as 

defined in paragraph (c)(3)(v)(B) of this 

section) of the applicable taxpayer’s 

household income for the taxable year. 

(2) Employee safe harbor. An 

employer-sponsored plan is treated as 

not affordable for an employee or a 

related individual for a plan year if, 

when the employee or a related 

individual enrolls in a qualified health 

plan for a period coinciding with the 

plan year (in whole or in part), an 

Exchange determines that the eligible 


Emcdonald on DSK2BSOYB1PROD with PROPOSALS
50942 Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 

employer-sponsored plan is not 

affordable. 

(B) Required contribution percentage. 

The required contribution percentage is 

9.5 percent. The percentage may be 

adjusted in published guidance of 

general applicability, see § 601.601(d)(2) 

of this chapter, for taxable years 

beginning after December 31, 2014, to 

reflect rates of premium growth relative 

to growth in income and, for taxable 

years beginning after December 31, 

2018, to reflect rates of premium growth 

relative to growth in the consumer price 

index. 

(C) Examples. The following 

examples illustrate the provisions of 

this paragraph (c)(3)(v). Unless stated 

otherwise, in each example the taxpayer 

is single and has no dependents, the 

employer’s plan is an eligible employersponsored plan and provides minimum 

value, the employee is not eligible for 

other minimum essential coverage, and 

the taxpayer, related individual, and 

employer-sponsored plan have a 

calendar taxable year. 

Example 1. Basic determination of 

affordability. In 2014 Taxpayer C has 

household income of $47,000. C is an 

employee of Employer X, which offers its 

employees a health insurance plan that 

requires C to contribute $3,450 for self-only 

coverage for 2014 (7.3 percent of C’s 

household income). Because C’s required 

contribution for self-only coverage does not 

exceed 9.5 percent of household income, 

under paragraph (c)(3)(v)(A)(1) of this 

section, X’s plan is affordable for C, and C 

is eligible for minimum essential coverage for 

all months in 2014. 

Example 2. Basic determination of 

affordability for a related individual. The 

facts are the same as in Example 1, except 

that C is married to J and X’s plan requires 

C to contribute $5,300 for coverage for C and 

J for 2014 (11.3 percent of C’s household 

income). Because C’s required contribution 

for self-only coverage ($3,450) does not 

exceed 9.5 percent of household income, 

under paragraph (c)(3)(v)(A)(1) of this 

section, X’s plan is affordable for C and J, and 

C and J are eligible for minimum essential 

coverage for all months in 2014. 

Example 3. Determination of 

unaffordability at enrollment. (i) Taxpayer D 

is an employee of Employer X. In November 

2013 the Exchange in D’s rating area projects 

that D’s 2014 household income will be 

$37,000. It also verifies that D’s required 

contribution for self-only coverage under X’s 

health insurance plan will be $3,700 (10 

percent of household income). Consequently, 

the Exchange determines that X’s plan is 

unaffordable. D enrolls in a qualified health 

plan and not in X’s plan. In December 2014, 

X pays D a $2,500 bonus. Thus, D’s actual 

2014 household income is $39,500 and D’s 

required contribution for coverage under X’s 

plan is 9.4 percent of household income. 

(ii) Based on D’s actual 2014 household 

income, D’s required contribution does not 

exceed 9.5 percent of household income and 

X’s health plan is affordable for D. However, 

when D enrolled in a qualified health plan 

for 2014, the Exchange determined that X’s 

plan was not affordable for D for 2014. 

Consequently, under paragraph (c)(3)(v)(A)(2) 

of this section, X’s plan is treated as not 

affordable for D and D is treated as not 

eligible for minimum essential coverage for 

2014. 

Example 4. Determination of 

unaffordability for plan year. The facts are 

the same as in Example 3, except that X’s 

employee health insurance plan year is 

September 1 to August 31. The Exchange in 

D’s rating area determines in August 2014 

that X’s plan is unaffordable for D based on 

D’s projected household income for 2014. D 

enrolls in a qualified health plan as of 

September 1, 2014. Under paragraph 

(c)(3)(v)(A)(2) of this section, X’s plan is 

treated as not affordable for D and D is 

treated as not eligible for minimum essential 

coverage under X’s plan for the coverage 

months September to December 2014 and 

January through August 2015. 

Example 5. Determination of 

unaffordability for part of plan year. (i) 

Taxpayer E is an employee of Employer X 

beginning in May 2015. X’s employee health 

insurance plan year is September 1 to August 

31. E’s required contribution for self-only 

coverage for May through August is $150 per 

month ($1,800 for the full plan year). The 

Exchange in E’s rating area determines E’s 

household income for purposes of eligibility 

for advance credit payments as $18,000. E’s 

actual household income for the 2015 taxable 

year is $20,000. 

(ii) Whether coverage under X’s plan is 

affordable for E is determined for the 

remainder of X’s plan year (May through 

August). E’s required contribution for a full 

plan year ($1,800) exceeds 9.5 percent of E’s 

household income (1,800/18,000 = 10 

percent). Therefore, the Exchange determines 

that X’s coverage is unaffordable for May 

through August. Although E’s actual 

household income for 2015 is $20,000 (and 

E’s required contribution of $1,800 does not 

exceed 9.5 percent of E’s household income), 

under paragraph (c)(3)(v)(A)(2) of this 

section, X’s plan is treated as unaffordable for 

E for the part of the plan year May through 

August 2015. Consequently, E is not eligible 

for minimum essential coverage under X’s 

plan for the period May through August 

2015. 

Example 6. Affordability determined for 

part of a taxable year (part-year period). (i) 

Taxpayer F is an employee of Employer X. 

X’s employee health insurance plan year is 

September 1 to August 31. F’s required 

contribution for self-only coverage for the 

period September 2014 through August 2015 

is $150 per month or $1,800 for the plan year. 

F does not ask the Exchange in his rating area 

to determine whether X’s coverage is 

affordable for F. F does not enroll in X’s plan 

during X’s open season but enrolls in a 

qualified health plan for September through 

December 2014. F’s household income in 

2014 is $18,000. 

(ii) Because F is a calendar year taxpayer 

and Employer X’s plan is not a calendar year 

plan, F must determine the affordability of 

X’s coverage for the part-year period in 2014 

(September–December). F determines the 

affordability of X’s plan for the September 

through December 2014 period by comparing 

the annual premiums ($1,800) to F’s 2014 

household income. F’s required contribution 

of $1,800 is 10 percent of F’s 2014 household 

income. Because F’s required contribution 

exceeds 9.5 percent of F’s 2014 household 

income, X’s plan is not affordable for F for 

the part-year period September through 

December 2014 and F is not eligible for 

minimum essential coverage under X’s plan 

for that period. 

(iii) F enrolls in Exchange coverage for 

2015 and does not ask the Exchange to 

determine whether X’s coverage is affordable. 

F’s 2015 household income is $20,000. 

(iv) F must determine if X’s plan is 

affordable for the part-year period January 

2015 through August 2015. F’s annual 

required contribution ($1,800) is 9 percent of 

F’s 2015 household income. Because F’s 

required contribution does not exceed 9.5 

percent of F’s 2015 household income, X’s 

plan is affordable for F for the part-year 

period January through August 2015 and F is 

eligible for minimum essential coverage for 

that period. 

Example 7. Coverage unaffordable at year 

end. Taxpayer G is employed by Employer X. 

In November 2014 the Exchange in G’s rating 

area determines that G is eligible for 

affordable employer-sponsored coverage for 

2015. G nonetheless enrolls in a qualified 

health plan for 2015 but does not receive 

advance credit payments. G’s 2015 

household income is less than expected and 

G’s required contribution for employersponsored coverage for 2015 exceeds 9.5 

percent of G’s actual 2015 household income. 

Under paragraph (c)(3)(v)(A)(1) of this 

section, G is not eligible for minimum 

essential coverage for 2015 and, if otherwise 

eligible, G may claim a premium tax credit. 

(vi) Minimum value. An eligible 

employer-sponsored plan provides 

minimum value only if the plan’s share 

of the total allowed costs of benefits 

provided under the plan (as determined 

under regulations issued by the 

Secretary of Health and Human Services 

under section 1302(d)(2) of the 

Affordable Care Act (42 U.S.C. 

18022(d)(2))) is at least 60 percent. 

(vii) Enrollment in eligible employersponsored plan—(A) In general. The 

requirements of affordability and 

minimum value do not apply if an 

individual enrolls in an eligible 

employer-sponsored plan. 

(B) Example. The following example 

illustrates the provisions of this 

paragraph (c)(3)(vii). 

Example. Taxpayer H is employed by 

Employer X in 2014. H’s required 

contribution for employer coverage exceeds 

9.5 percent of H’s 2014 household income. H 

enrolls in X’s plan for 2014. Under paragraph 

(c)(3)(vii) of this section, H is eligible for 

minimum essential coverage for 2014 

because H is enrolled in an eligible 

employer-sponsored plan for 2014. 


Emcdonald on DSK2BSOYB1PROD with PROPOSALS
Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 50943 

§ 1.36B–3 Computing the premium 

assistance credit amount. 

(a) In general. A taxpayer’s premium 

assistance credit amount for a taxable 

year is the sum of the premium 

assistance amounts determined under 

paragraph (d) of this section for all 

coverage months for individuals in the 

taxpayer’s family. 

(b) Definitions. For purposes of this 

section— 

(1) The cost of a qualified health plan 

is the premium the plan charges; and 

(2) The term coverage family refers to 

members of the taxpayer’s family who 

are not eligible for minimum essential 

coverage (other than coverage in the 

individual market), are lawfully present 

in the United States, and are not 

incarcerated (except pending 

disposition of charges). 

(c) Coverage month—(1) In general. A 

month is a coverage month for an 

individual if, as of the first day of the 

month— 

(i) The individual is covered by a 

qualified health plan enrolled in 

through an Exchange; 

(ii) The individual’s premiums for 

coverage under the plan are paid by the 

taxpayer or by an advance credit 

payment; and 

(iii) The individual is not eligible for 

minimum essential coverage (within the 

meaning of § 1.36B–2(c)) other than 

coverage described in section 

5000A(f)(1)(C) (relating to coverage in 

the individual market). 

(2) Premiums paid for the taxpayer. 

Premiums another person pays for 

coverage of the taxpayer, taxpayer’s 

spouse, or dependent are treated as paid 

by the taxpayer. 

(3) Examples. The following examples 

illustrate the provisions of this 

paragraph (c). In each example, unless 

stated otherwise, the individuals are not 

eligible for minimum essential coverage 

other than coverage in the individual 

market and the taxpayer is an applicable 

taxpayer. 

Example 1. (i) Taxpayer M is single with 

no dependents. In December 2013 M enrolls 

in a qualified health plan for 2014 and the 

Exchange approves advance credit payments. 

On May 15, 2014, M enlists in the U.S. Army 

and is eligible immediately for governmentsponsored minimum essential coverage. 

(ii) Under paragraph (c)(1) of this section, 

January through May 2014 are coverage 

months for M. June through December 2014 

are not coverage months because M is eligible 

for minimum essential coverage for those 

months. Thus, under paragraph (a) of this 

section, M’s premium assistance credit 

amount for 2014 is the sum of the premium 

assistance amounts for the months January 

through May. 

Example 2. (i) Taxpayer N has one 

dependent, S. S is eligible for governmentsponsored minimum essential coverage. N is 

not eligible for minimum essential coverage. 

N enrolls in a qualified health plan for 2014 

and the Exchange approves advance credit 

payments. On August 1, 2014, S loses 

eligibility for minimum essential coverage. N 

cancels the qualified health plan that covers 

only N and enrolls in a qualified health plan 

that covers N and S for August through 

December 2014. 

(ii) Under paragraph (c)(1) of this section, 

January through December of 2014 are 

coverage months for N and August through 

December are coverage months for N and S. 

N’s premium assistance credit amount for 

2014 is the sum of the premium assistance 

amounts for these coverage months. 

Example 3. (i) O and P are the divorced 

parents of T. Under the divorce agreement 

between O and P, T resides with P and P 

claims T as a dependent. However, O must 

pay premiums for health insurance for T. P 

enrolls T in a qualified health plan for 2014. 

O pays the premiums to the insurance 

company. 

(ii) Because P claims T as a dependent, P 

(and not O) may claim a premium tax credit 

for coverage for T. See § 1.36B–2(a). Under 

paragraph (c)(2) of this section, the premiums 

that O pays for coverage for T are treated as 

paid by P. Thus, the months when T is 

covered by a qualified health plan are 

coverage months under paragraph (c)(1) of 

this section in computing P’s premium tax 

credit under paragraph (a) of this section. 

(d) Premium assistance amount. 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 in 

which a taxpayer or a member of the 

taxpayer’s family enrolls; or 

(2) The excess of the adjusted 

monthly premium for the applicable 

benchmark plan over 1⁄12 of the product 

of a taxpayer’s household income and 

the applicable percentage for the taxable 

year. 

(e) Adjusted monthly premium. The 

adjusted monthly premium is the 

premium an insurer would charge for 

the applicable benchmark plan to cover 

all members of the taxpayer’s coverage 

family, adjusted only for the age of each 

member of the coverage family as 

allowed under section 2701 of the 

Public Health Service Act (42 U.S.C. 

300gg). 

(f) Applicable benchmark plan—(1) In 

general. Except as otherwise provided 

in this paragraph (f), the applicable 

benchmark plan for a 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 at the time a 

taxpayer or family member enrolls in a 

qualified health plan through the 

Exchange in 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. If an Exchange 

offers categories of family coverage (for 

example, two adults, one adult with 

children, two or more adults with 

children, or children only), the 

applicable benchmark plan for family 

coverage is the coverage category that 

applies to the members of the taxpayer’s 

coverage family who enroll in a 

qualified health plan (such as a plan 

covering two adults if the members of 

taxpayer’s coverage family are two 

adults). 

(3) Second lowest cost silver plan not 

covering the taxpayer’s family. If the 

applicable benchmark plan determined 

under paragraphs (f)(1) and (f)(2) of this 

section does not cover all members of a 

taxpayer’s coverage family (for example, 

because family members reside in 

different rating areas), the premium for 

the applicable benchmark plan is the 

sum of the premiums for the applicable 

benchmark plans determined under 

paragraphs (f)(1) and (f)(2) of this 

section that cover the components of the 

taxpayer’s coverage family. 

(4) Benchmark plan terminates or 

closes to enrollment. A qualified health 

plan that is the applicable benchmark 

plan under this paragraph (f) 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. 

(5) Examples. The following examples 

illustrate the rules of this paragraph (f). 

In each example, unless otherwise 

stated, the taxpayer is eligible to receive 

a premium tax credit. 

Example 1. Single taxpayer with no 

dependents. Taxpayer V is single and resides 

with his 24-year-old daughter but may not 

claim her as a dependent. Taxpayer V 

purchases family coverage for himself and 

his daughter. The exchange in V’s rating area 

offers only self-only and family coverage 

categories. Under paragraph (f)(1)(i)(A) of this 

section, V’s applicable benchmark plan is the 

second lowest cost silver self-only plan. But 

see paragraph (h) of this section for 

computing the credit when multiple 

taxpayers are covered by one qualified health 

plan. 

Example 2. Single taxpayer with one 

dependent, two coverage categories. The facts 

are the same as in Example 1, except that V 


Emcdonald on DSK2BSOYB1PROD with PROPOSALS
50944 Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 

also resides with his teenage son and claims 

him as a dependent. V purchases family 

coverage for himself, his son, and his 

daughter. Under paragraph (f)(1)(ii) of this 

section, V’s applicable benchmark plan is the 

second lowest cost silver family plan. 

Example 3. Single taxpayer with one 

dependent, multiple coverage categories. The 

facts are the same as in Example 2, except 

that the Exchange where V resides offers a 

category of coverage for one adult and 

children. Under paragraphs (f)(1)(ii) and (f)(2) 

of this section, V’s applicable benchmark 

plan is the second lowest cost silver plan for 

one adult plus children. 

Example 4. Single taxpayer with one 

dependent, multiple coverage categories. The 

facts are the same as in Example 2, except 

that the Exchange where V resides offers a 

category of coverage for one adult and one 

child in addition to coverage for one adult 

and children. Under paragraphs (f)(1)(ii) and 

(f)(2) of this section, V’s applicable 

benchmark plan is the second lowest cost 

silver plan for one adult and one child. 

Example 5. Applicable benchmark plan 

unrelated to coverage purchased. Taxpayers 

W and X, who are married, reside with X’s 

two teenage daughters, whom they claim as 

dependents. The Exchange where W and X 

reside offers a category of coverage for one 

adult plus children. W and X purchase selfonly coverage for W and one adult plus 

children coverage for X and X’s daughters. 

Under paragraph (f)(1)(ii) of this section, W’s 

and X’s applicable benchmark plan is the 

second lowest cost silver family plan. 

Example 6. Minimum essential coverage 

for some coverage months. Taxpayer Y 

claims his daughter as a dependent. Y and 

his daughter enroll in a qualified health plan 

for 2014. The exchange in Y’s rating area 

offers only self-only and family coverage 

categories. Y, but not his daughter, is eligible 

for government-sponsored minimum 

essential coverage for September to December 

2014. Thus, under paragraph (c)(1)(iii) of this 

section, January through December are 

coverage months for Y’s daughter and 

January through August are coverage months 

for Y. 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, Y’s applicable 

benchmark plan for January through August 

is the second lowest cost silver family plan 

under paragraph (f)(1)(ii) of this section. 

Under paragraph (f)(1)(i)(C) of this section, 

Y’s applicable benchmark plan for September 

through December is the second lowest cost 

silver self-only plan. 

Example 7. Family member eligible for 

minimum essential coverage for the taxable 

year. The facts are the same as in Example 

6, except that Y is not eligible for 

government-sponsored minimum essential 

coverage for any months and Y’s daughter is 

eligible for government-sponsored minimum 

essential coverage for the entire year. Under 

paragraph (f)(1)(i)(C) of this section, Y’s 

applicable benchmark plan is the second 

lowest cost silver self-only plan. 

Example 8. Family required to buy 

multiple plans to obtain coverage. (i) 

Taxpayers X and Z are married and live in 

different Exchange rating areas. X and Z have 

one child, M, whom they claim as a 

dependent and who resides with X. X and M 

enroll in a qualified health plan covering one 

adult plus children through the Exchange in 

X’s rating area, and Z enrolls in a qualified 

health plan providing self-only coverage 

through the Exchange in Z’s rating area. 

(ii) Under paragraph (f)(3) of this section, 

the premium for the applicable benchmark 

plan for computing X’s and Z’s premium 

assistance credit amount is the sum of the 

premium for the second lowest cost silver 

one adult plus children plan offered through 

the Exchange in X’s rating area and the 

premium for the second lowest cost silver 

self-only plan offered through the Exchange 

in Z’s rating area. 

Example 9. Benchmark plan closes to new 

enrollees during the year. Taxpayers X, Y, 

and Z each have coverage families consisting 

of two adults. In the rating area where X, Y, 

and Z reside, Plan 2 is the second lowest cost 

silver plan and Plan 3 is the third lowest cost 

silver plan covering two adults offered 

through the Exchange. The X and Y families 

each enroll in a qualified health plan that is 

not the applicable benchmark plan in 

November during the regular 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 Z family enrolls in a qualified 

health plan in July. Under paragraphs (f)(1), 

(f)(2), and (f)(4) of this section, the applicable 

benchmark plan is Plan 2 for X and Y for all 

coverage months during the year. The 

applicable benchmark plan for Z is Plan 3, 

because Plan 2 is not offered through the 

Exchange when the Z family enrolls. 

Example 10. Benchmark plan terminates 

for all enrollees during the year. The facts are 

the same as in Example 9, except that Plan 

2 terminates for all enrollees on June 30. 

Under paragraphs (f)(1), (f)(2), and (f)(4) of 

this section, Plan 2 is the applicable 

benchmark plan for X and Y for all coverage 

months during the year and Plan 3 is the 

applicable benchmark plan for Z. 

(g) Applicable percentage—(1) In 

general. The applicable percentage 

multiplied by a taxpayer’s household 

income determines the taxpayer’s 

required share of premiums for the 

benchmark plan. This amount is 

subtracted from the adjusted monthly 

premium for the applicable benchmark 

plan when computing the premium 

assistance amount. The applicable 

percentage is computed by first 

determining the percentage that the 

taxpayer’s household income bears to 

the federal poverty line for the 

taxpayer’s family size. The resulting 

federal poverty line percentage is then 

compared to the income categories 

described in the table in paragraph (g)(2) 

of this section (or successor tables). An 

applicable percentage within an income 

category increases on a sliding scale in 

a linear manner and is rounded to the 

nearest one-hundredth of one percent. 

The applicable percentages in the table 

may be adjusted in published guidance 

of general applicability, see 

§ 601.601(d)(2) of this chapter, for 

taxable years beginning after December 

31, 2014, to reflect rates of premium 

growth relative to growth in income 

and, for taxable years beginning after 

December 31, 2018, to reflect rates of 

premium growth relative to growth in 

the consumer price index. 

(2) Applicable percentage table. 

Household income percentage of federal poverty line Initial percentage Final percentage 

Less than 133% ....................................................................................................................................... 2 .0 2 .0 

At least 133% but less than 150% .......................................................................................................... 3 .0 4 .0 

At least 150% but less than 200% .......................................................................................................... 4 .0 6 .3 

At least 200% but less than 250% .......................................................................................................... 6 .3 8 .05 

At least 250% but less than 300% .......................................................................................................... 8 .05 9 .5 

At least 300% but less than 400% .......................................................................................................... 9 .5 9 .5 

(3) Examples. The following examples 

illustrate the rules of this paragraph (g). 

Example 1. A’s household income is 275 

percent of the federal poverty line for A’s 

family size for that taxable year. In the table 

in paragraph (g)(2) of this section, the initial 

percentage for a taxpayer with household 

income of 250 to 300 percent of the federal 

poverty line is 8.05 and the final percentage 

is 9.5. A’s federal poverty line percentage of 

275 percent is halfway between 250 percent 

and 300 percent. Thus, rounded to the 

nearest one-hundredth of one percent, A’s 

applicable percentage is 8.78, which is 

halfway between the initial percentage of 

8.05 and the final percentage of 9.5. 

Example 2. (i) B’s household income is 210 

percent of the federal poverty line for B’s 

family size. In the table in paragraph (g)(2) 

of this section, the initial percentage for a 

taxpayer with household income of 200 to 

250 percent of the federal poverty line is 6.3 

and the final percentage is 8.05. B’s 

applicable percentage is 6.65, computed as 

follows: 


Emcdonald on DSK2BSOYB1PROD with PROPOSALS
Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 50945 

(ii) Determine the excess of B’s FPL 

percentage (210) over the initial 

household income percentage in B’s 

range (200), which is 10. Determine the 

difference between the initial household 

income percentage in the taxpayer’s 

range (200) and the ending household 

income percentage in the taxpayer’s 

range (250), which is 50. Divide the first 

amount by the second amount: 

210 ¥ 200 = 10 

250 ¥ 200 = 50 

10/50 = .20. 

(iii) Compute the difference between 

the initial premium percentage (6.3) and 

the second premium percentage (8.05) 

in the taxpayer’s range; 8.05 ¥ 6.3 = 

1.75. 

(iv) Multiply the amount in the first 

calculation (.20) by the amount in the 

second calculation (1.75) and add the 

product (.35) to the initial premium 

percentage in B’s range (6.3), resulting 

in B’s applicable percentage of 6.65: 

.20 × 1.75 = .35 

6.3 + .35 = 6.65. 

(h) Plan covering more than one 

family—(1) In general. If a single 

qualified health plan covers more than 

one family, each applicable taxpayer 

covered by the plan may claim a 

premium tax credit, if otherwise 

allowable. Each taxpayer computes the 

credit using that taxpayer’s applicable 

percentage, household income, and the 

benchmark plan that applies to the 

taxpayer under paragraph (f) of this 

section. In determining whether the 

amount computed under paragraph 

(d)(1) of this section (the premiums for 

the qualified health plan in which the 

taxpayer enrolls) is less than the amount 

computed under paragraph (d)(2) of this 

section (the benchmark plan premium 

minus the product of household income 

and the applicable percentage), the 

premiums paid are allocated to each 

taxpayer in proportion to the premiums 

for each taxpayer’s benchmark plan. 

(2) Example. The following example 

illustrates the rules of this paragraph 

(h). 

Example. (i) Taxpayers A and B enroll in 

a single qualified health plan. B is A’s 25- 

year-old child who is not A’s dependent. B 

has no dependents. The plan covers A, B, 

and A’s two children who are A’s 

dependents. The premium for the plan in 

which A and B enroll is $15,000. The 

premium for the second lowest cost silver 

family plan is $12,000 and the premium for 

the second lowest cost silver self-only plan 

is $6,000. A and B are applicable taxpayers 

and otherwise eligible to claim the premium 

tax credit. 

(ii) Under paragraph (h)(1) of this section, 

both A and B may claim premium tax credits. 

A computes her credit using her household 

income, a family size of three, and a 

benchmark plan premium of $12,000. B 

computes his credit using his household 

income, a family size of one, and a 

benchmark plan premium of $6,000. 

(iii) In determining whether the amount in 

paragraph (d)(1) of this section (the 

premiums for the qualified health plan A and 

B purchase) is less than the amount in 

paragraph (d)(2) of this section (the 

benchmark plan premium minus the product 

of household income and the applicable 

percentage), the $15,000 premiums paid are 

allocated to A and B in proportion to the 

premiums for their applicable benchmark 

plans. Thus, the portion of the premium 

allocated to A is $10,000 ($15,000 × $12,000/ 

$18,000) and the portion allocated to B is 

$5,000 ($15,000 × $6,000/$18,000). 

(i) [Reserved] 

(j) Additional benefits—(1) In general. 

If a qualified health plan offers benefits 

in addition to the essential health 

benefits a qualified health plan must 

provide under section 1302 of the 

Affordable Care Act (42 U.S.C. 18022), 

or a State requires a qualified health 

plan to cover benefits in addition to 

these essential health benefits, the 

portion of the premium for the plan 

properly allocable to the additional 

benefits is excluded from the monthly 

premiums under paragraph (d)(1) or 

(d)(2) of this section. 

(2) Method of allocation. The portion 

of the premium properly allocable to 

additional benefits is determined under 

regulations issued by the Secretary of 

Health and Human Services. See section 

36B(b)(3)(D). 

(k) Pediatric dental coverage—(1) In 

general. For purposes of determining 

the amount of the monthly premium a 

taxpayer pays for coverage under 

paragraph (d)(1) of this section, if an 

individual enrolls in both a qualified 

health plan and a plan described in 

section 1311(d)(2)(B)(ii) of the 

Affordable Care Act (42 U.S.C. 

13031(d)(2)(B)(ii)) (Affordable Care Act 

dental plan), the portion of the premium 

for the Affordable Care Act dental plan 

that is properly allocable to pediatric 

dental benefits that are essential benefits 

required to be provided by a qualified 

health plan is treated as a premium 

payable for the individual’s qualified 

health plan. 

(2) Method of allocation. [Reserved] 

(l) Families including individuals not 

lawfully present—(1) In general. If one 

or more individuals for whom a 

taxpayer is allowed a deduction under 

section 151 are not lawfully present 

(within the meaning of § 1.36B–1(g)), 

the percentage a taxpayer’s household 

income bears to the federal poverty line 

for the taxpayer’s family size for 

purposes of determining the applicable 

percentage under paragraph (g) of this 

section is determined by excluding 

individuals who are not lawfully 

present from family size and by 

determining household income in 

accordance with paragraph (l)(2) of this 

section. 

(2) Revised household income 

computation—(i) Statutory method. For 

purposes of paragraph (l)(1) of this 

section, household income is equal to 

the product of the taxpayer’s household 

income (determined without regard to 

this paragraph (l)(2)) and a fraction— 

(A) The numerator of which is the 

federal poverty line for the taxpayer’s 

family size determined by excluding 

individuals who are not lawfully 

present; and 

(B) The denominator of which is the 

federal poverty line for the taxpayer’s 

family size determined by including 

individuals who are not lawfully 

present. 

(ii) Comparable method. [Reserved] 

§ 1.36B–4 Reconciling the premium tax 

credit with advance credit payments. 

(a) Reconciliation—(1) In general. The 

amount of credit allowed under section 

36B and this section is reconciled with 

advance credit payments on a taxpayer’s 

income tax return for a taxable year. A 

taxpayer whose premium tax credit for 

the taxable year exceeds the taxpayer’s 

advance credit payments may receive 

the excess as an income tax refund. A 

taxpayer whose advance credit 

payments for the taxable year exceed the 

taxpayer’s premium tax credit owes the 

excess as an additional income tax 

liability. 

(2) Credit computation. The premium 

assistance credit amount is computed 

on the taxpayer’s return using the 

taxpayer’s household income and family 

size for the taxable year. Thus, the 

taxpayer’s contribution amount 

(household income for the taxable year 

times the applicable percentage) is 

determined using the taxpayer’s 

household income and family size at the 

end of the taxable year. If the applicable 

benchmark plan changes during the 

taxable year, the taxpayer may be 

required to use a different applicable 

benchmark plan to determine the 

premium assistance amounts for the 

coverage months. 

(3) Limitation on additional tax—(i) 

In general. The additional tax imposed 

under paragraph (a)(1) of this section on 

a taxpayer whose household income is 

less than 400 percent of the federal 

poverty line is limited to the amounts 

provided in the table in paragraph 

(a)(3)(ii) of this section (or successor 

tables). For taxable years beginning after 

December 31, 2014, the limitation 

amounts may be adjusted in published 

guidance of general applicability, see 


Emcdonald on DSK2BSOYB1PROD with PROPOSALS
50946 Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 

§ 601.601(d)(2) of this chapter, to reflect 

changes in the consumer price index. 

(ii) Additional tax limitation table. 

Household income percentage of federal poverty line 

Limitation amount 

for taxpayers 

whose tax is 

determined under 

section 1(c) 

Limitation amount 

for all other 

taxpayers 

Less than 200% ....................................................................................................................................... $300 $600 

At least 200% but less than 300% .......................................................................................................... 750 1,500 

At least 300% but less than 400% .......................................................................................................... 1,250 2,500 

(4) Examples. The rules of this 

paragraph (a) are illustrated by the 

following examples. Unless otherwise 

stated, in each example the taxpayer is 

allowed a premium tax credit, has a 

calendar taxable year, and files an 

income tax return for the taxable year. 

Example 1. Household income increases. 

(i) Taxpayer A is single and has no 

dependents. The Exchange in A’s rating area 

projects A’s 2014 household income to be 

$27,225 (250 percent of the federal poverty 

line for a family of one, applicable percentage 

8.05). A enrolls in a qualified health plan. 

The annual premium for the applicable 

benchmark plan is $5,200. A’s advance credit 

payments are $3,008 (benchmark plan 

premium of $5,200 less contribution amount 

of $2,192 (projected household income of 

$27,225 × .0805) = $3,008). 

(ii) A’s household income for 2014 is 

$32,800, which is 301 percent of the federal 

poverty line for a family of one (applicable 

percentage 9.5). Consequently, A’s premium 

tax credit for 2014 is $2,084 (benchmark plan 

premium of $5,200 less contribution amount 

of $3,116 (household income of $32,800 × 

.095). Because A’s advance credit payments 

for 2014 are $3,008 and A’s 2014 credit is 

$2,084, A has excess advance payments of 

$924. Under paragraph (a)(1) of this section, 

A’s tax liability for 2014 is increased by $924. 

Example 2. Household income decreases. 

The facts are the same as in Example 1, 

except that A’s actual household income for 

2014 is $21,780 (200 percent of the federal 

poverty line for a family of one, applicable 

percentage 6.3). Consequently, A’s premium 

tax credit for 2014 is $3,828 ($5,200 

benchmark plan premium less contribution 

amount of $1,372 (household income of 

$21,780 × .063)). Because A’s advance credit 

payments for 2014 are $3,008, A is allowed 

an additional credit of $820 ($3,828 less 

$3,008). 

Example 3. Family size decreases. 

(i) Taxpayers B and C are married and have 

two children (ages 17 and 20) whom they 

claim as their dependents in 2013. The 

Exchange in their rating area projects their 

2014 household income to be $61,460 (275 

percent of the federal poverty line for a 

family of four, applicable percentage 8.78). B 

and C enroll in a qualified health plan for 

2014 that covers the four family members. 

The annual premium for the applicable 

benchmark plan is $14,100. B and C’s 

advance credit payments for 2014 are $8,704 

(benchmark plan premium of $14,100 less 

contribution amount of $5,396 (projected 

household income of $61,460 × .0878)). 

(ii) In 2014 B and C do not claim their 20- 

year old child as their dependent. 

Consequently, B and C’s family size for 2014 

is three and their household income is 332 

percent of the federal poverty line for a 

family of three (applicable percentage 9.5). 

Their premium tax credit for 2014 is $8,261 

($14,100 benchmark plan premium less 

$5,839 contribution amount (household 

income of $61,460 × .095)). Because B and 

C’s advance credit payments for 2014 are 

$8,704 and their 2014 credit is $8,261, B and 

C have excess advance payments of $443. 

Under paragraph (a)(1) of this section, B and 

C’s tax liability for 2014 is increased by $443. 

Because B and C’s household income is 

below 400 percent of the federal poverty line, 

if B and C’s excess advance payments 

exceeded $2,500, under the limitation of 

paragraph (a)(3) of this section, B and C’s 

additional tax liability would be limited to 

that amount. 

Example 4. Repayment limitation does not 

apply. (i) Taxpayer D is single and has no 

dependents. The Exchange in D’s rating area 

approves advance credit payments for D 

based on 2014 household income of $38,115 

(350 percent of the federal poverty line for a 

family of one, applicable percentage 9.5). D 

enrolls in a qualified health plan. The annual 

premium for the applicable benchmark plan 

is $5,200. D’s advance credit payments are 

$1,579 (benchmark plan premium of $5,200 

less contribution amount of $3,621 (projected 

household income of $38,115 × .095) = 

$3,621). 

(ii) D’s actual household income for 2014 

is $43,778, which is 402 percent of the 

federal poverty line for a family of one. D is 

not an applicable taxpayer and may not claim 

a premium tax credit. Additionally, the 

repayment limitation of paragraph (a)(3) of 

this section does not apply. Consequently, D 

has excess advance payments of $1,579 (the 

total amount of the advance credit payments 

in 2014). Under paragraph (a)(1) of this 

section, D’s tax liability for 2014 is increased 

by $1,579. 

Example 5. Coverage for less than a full 

taxable year. (i) Taxpayer F is single and has 

no dependents. In November 2013 the 

Exchange in F’s rating area projects F’s 2014 

household income to be $27,225 (250 percent 

of the federal poverty line for a family of one, 

applicable percentage 8.05). F enrolls in a 

qualified health plan. The annual premium 

for the applicable benchmark plan is $5,200. 

F’s monthly advance credit payment is $251 

(benchmark plan premium of $5,200 less 

contribution amount of $2,192 (projected 

household income of $27,225 × .0805) = 

$3,008; $3,008/12 = $251). 

(ii) F begins a new job in August 2014 and 

is eligible for employer-sponsored minimum 

essential coverage for the period September 

through December 2014. F discontinues her 

Exchange coverage effective November 1, 

2014. F’s household income for 2014 is 

$28,000 (257 percent of the federal poverty 

line for a family size of one, applicable 

percentage 8.25). 

(iii) Under § 1.36B–3(a), F’s premium 

assistance credit amount is the sum of the 

premium assistance amounts for the coverage 

months. Under § 1.36B–3(c)(1)(iii), a month 

in which an individual is eligible for 

minimum essential coverage other than 

coverage in the individual market is not a 

coverage month. Because F is eligible for 

employer-sponsored minimum essential 

coverage as of September 1, only the months 

January through August of 2014 are coverage 

months. 

(iv) If F had 12 coverage months in 2014, 

F’s premium tax credit would be $2,890 

(benchmark plan premium of $5,200 less 

contribution amount of $2,310 (household 

income of $28,000 × .0825)). Because F has 

only eight coverage months in 2014, F’s 

credit is $1,927 ($2,890/12 × 8). Because F 

does not discontinue her Exchange coverage 

until November 1, 2014, F’s advance credit 

payments for 2014 are $2,510 ($251 × 10). 

Consequently, F has excess advance 

payments of $583 ($2,510 less $1,927) and 

F’s tax liability for 2014 is increased by $583 

under paragraph (a)(1) of this section. 

Example 6. Changes in coverage months 

and applicable benchmark plan. (i) Taxpayer 

E claims one dependent, F. E is eligible for 

government-sponsored minimum essential 

coverage. E enrolls F in a qualified health 

plan for 2014. The Exchange in E’s rating 

area projects E’s 2014 household income to 

be $29,420 (200 percent of the federal 

poverty line for a family of two, applicable 

percentage 6.3). The annual premium for E’s 

applicable benchmark plan is $5,200. E’s 

monthly advance credit payment is $279 

(benchmark plan premium of $5,200 less 

contribution amount of $1,853 (projected 

household income of $29,420 × .063) = 

$3,347; $3,347/12 = $279). 

(ii) On August 1, 2014, E loses her 

eligibility for government-sponsored 

minimum essential coverage. E cancels the 

qualified health plan that covers F and 

enrolls in a qualified health plan that covers 

E and F for August through December 2014. 

The annual premium for the applicable 

benchmark plan is $10,000. The Exchange 

computes E’s monthly advance credit 

payments for the period September through 

December as $679 (benchmark plan premium 


Emcdonald on DSK2BSOYB1PROD with PROPOSALS
Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 50947 

of $10,000 less contribution amount of 

$1,853 (projected household income of 

$29,420 × .063) = $8,147; $8,147/12 = $679). 

E’s household income for 2014 is $28,000 

(190 percent of the federal poverty line, 

applicable percentage 5.84). 

(iii) Under § 1.36B–3(c)(1), January through 

July of 2014 are coverage months for F and 

August through December are coverage 

months for E and F. Under paragraph (a)(2) 

of this section, E must compute her premium 

tax credit using the premium for the 

applicable benchmark plan for each coverage 

month. E’s premium assistance credit amount 

for 2014 is the sum of the premium 

assistance amounts for all coverage months. 

E reconciles her premium tax credit with 

advance credit payments as follows: 

Advance credit payments (Jan. 

to July) .................................... $1,953 

Advance credit payments (Aug. 

to Dec.) ................................... 3,395 

Total advance credit payments ............................... 5,348 

Benchmark plan premium (Jan. 

to July) .................................... 3,033 

Benchmark plan premium 

(Aug. to Dec.) ......................... 4,167 

Total benchmark plan premium ............................... 7,200 

Contribution amount (taxable 

year household income × applicable percentage) ............... 1,635 

Credit (total benchmark plan 

premium less required contribution, assuming not more 

than premium paid) ............... 5,565 

(iv) E’s advance credit payments for 2014 

are $5,348. E’s premium tax credit is $5,565. 

Thus, E is allowed an additional credit of 

$217. 

Example 7. Part-year coverage and changes 

in coverage months and applicable 

benchmark plan. (i) The facts are the same 

as in Example 7, except that both E and F are 

eligible for government-sponsored minimum 

essential coverage for January and February 

2014, and E enrolls F in a qualified health 

plan beginning in March 2014. 

(ii) E reconciles her premium tax credit 

with advance credit payments as follows: 

Advance credit payments 

(March to July) ....................... $1,395 

Advance credit payments (Aug. 

to Dec.) ................................... 3,395 

Total advance credit payments ............................... 4,790 

Benchmark plan premium 

(March to July) ....................... 2,167 

Benchmark plan premium 

(Aug. to Dec.) ......................... 4,166 

Total benchmark plan premium ............................... 6,333 

Contribution amount for 10 

coverage months (taxable 

year household income × applicable percentage × 10/12) 1,363 

Credit (total benchmark plan 

premium less required contribution, assuming not more 

than premium paid) ............... 4,970 

(iii) E’s advance credit payments for 2014 

are $4,790. E’s premium tax credit is $4,970. 

Thus, E is allowed an additional credit of 

$180. 

(b) Changes in filing status—(1) In 

general. A taxpayer whose marital status 

changes during the taxable year 

computes the premium tax credit by 

using the applicable benchmark plan or 

plans for the taxpayer’s marital status as 

of the first day of each coverage month. 

The taxpayer’s contribution amount 

(household income for the taxable year 

times the applicable percentage) is 

determined using the taxpayer’s 

household income and family size at the 

end of the taxable year. 

(2) Taxpayers not married to each 

other at the end of the taxable year. 

Taxpayers who are married (within the 

meaning of section 7703) to each other 

during a taxable year but are not 

married to each other on the last day of 

the taxable year, and who are enrolled 

in the same qualified health plan at any 

time during the taxable year, must 

allocate the premium for the applicable 

benchmark plan, the premium for the 

plan in which the taxpayers enroll, and 

the advance credit payments for the 

period the taxpayers are married during 

the taxable year. The taxpayers may 

allocate these items to each former 

spouse in any proportion but must 

allocate all items in the same 

proportion. If the taxpayers cannot agree 

on an allocation, 50 percent of the 

premium for the applicable benchmark 

plan, the premiums for the plan in 

which the taxpayers enroll, and the 

advance credit payments for the period 

are allocated to each taxpayer. If a plan 

covers only one of these taxpayers for 

any period during a taxable year, the 

amounts for that period are allocated 

entirely to that taxpayer. 

(3) Married taxpayers filing separate 

tax returns. The premium tax credit is 

allowed to married taxpayers only if 

they file joint returns. See § 1.36B– 

2(b)(2). Married taxpayers who receive 

advance credit payments and file their 

income tax returns as married filing 

separately have received excess advance 

payments. The taxpayers must allocate 

the advance credit payments to each 

taxpayer equally for purposes of 

determining their excess advance 

payment amounts under paragraph 

(a)(1) of this section. The repayment 

limitation described in paragraph (a)(3) 

of this section applies to each taxpayer 

based on the household income and 

family size reported on that taxpayer’s 

return. 

(4) Examples. The following examples 

illustrate the provisions of this 

paragraph (b). In each example, unless 

otherwise indicated, each taxpayer uses 

a calendar taxable year and no 

individuals are eligible for minimum 

essential coverage other than coverage 

in the individual market. 

Example 1. Taxpayers marry during the 

taxable year. (i) P is a single taxpayer with 

no dependents. In 2013 the Exchange in the 

rating area where P resides determines that 

P’s 2014 household income will be $40,000 

(367 percent of the federal poverty line, 

applicable percentage 9.5). P enrolls in a 

qualified health plan. The premium for the 

applicable benchmark plan is $5,200. The 

Exchange approves advance credit payments 

of $117 per month, computed as follows: 

$5,200 benchmark plan premium minus 

contribution amount of $3,800 ($40,000 × 

.095) equals $1,400 (total advance credit); 

$1,400/12 = $117. 

(ii) Q is a single taxpayer with two 

dependents. In 2013 the Exchange in the 

rating area where Q resides determines that 

Q’s 2014 household income will be $35,000 

(189 percent of the federal poverty line, 

applicable percentage 5.79). Q enrolls in a 

qualified health plan. The premium for the 

applicable benchmark plan is $14,100. The 

Exchange approves advance credit payments 

of $1,006 per month, computed as follows: 

$14,100 benchmark plan premium minus 

contribution amount of $2,027 ($35,000 × 

.0579) equals $12,073 (total advance credit); 

$12,073/12 = $1,006. 

(iii) P and Q marry on June 17, 2014, and 

enroll in one qualified health plan covering 

four family members, beginning July 1, 2014. 

The premium for the applicable benchmark 

plan is $14,100. Based on household income 

of $75,000 and a family size of four (336 

percent of the federal poverty line, applicable 

percentage 9.5), the Exchange approves 

advance credit payments of $581 per month, 

computed as follows: $14,100 benchmark 

plan premium minus contribution amount of 

$7,125 ($75,000 × .095) equals $6,975 (total 

advance credit); $6,975/12 = $581. 

(iv) P and Q file a joint return for 2014 and 

report $75,000 in household income and a 

family size of four. Under paragraph (b)(1) of 

this section, P and Q compute their credit at 

reconciliation using the premiums for the 

applicable benchmark plans that apply for 

the months married and the months not 

married, and their contribution amount based 

on their federal poverty line percentage at the 

end of the taxable year. P and Q reconcile 

their premium tax credit with advance credit 

payments as follows: 

Advance payments for P (Jan. 

to June) ................................... $700 

Advance payments for Q (Jan. 

to June) ................................... 6,036 

Advance payments for P and Q 

(July to Dec.) .......................... 3,486 

Total advance payments .... 10,222 

Benchmark plan premium for P 

(Jan. to June) ........................... 2,600 

Benchmark plan premium for Q 

(Jan. to June) ........................... 7,050 


Emcdonald on DSK2BSOYB1PROD with PROPOSALS
50948 Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 

Benchmark plan premium for P 

and Q (July to Dec.) ............... 7,050 

Total benchmark plan premium ............................... 16,700 

Contribution amount (taxable 

year household income × applicable percentage) ............... 7,125 

Credit (total benchmark plan 

premium less required contribution, assuming not more 

than premium paid) ............... 9,575 

Additional tax ............................ 647 

(v) P’s and Q’s tax liability for 2014 is 

increased by $647 under paragraph (a)(1) of 

this section. 

Example 2. Taxpayers divorce during the 

taxable year, 50 percent allocation. (i) 

Taxpayers R and S are married and have two 

dependents. In 2013 the Exchange in the 

rating area where the family resides 

determines that their 2014 household income 

will be $76,000 (340 percent of the federal 

poverty line for a family of 4, applicable 

percentage 9.5). R and S enroll in a qualified 

health plan for 2014. The premium for the 

applicable benchmark plan is $14,100. The 

Exchange approves advance credit payments 

of $573 per month, computed as follows: 

$14,100 benchmark plan premium minus R 

and S’s contribution amount of $7,220 

($76,000 × .095) equals $6,880 (total advance 

credit); $6,880/12 = $573. 

(ii) R and S divorce on June 17, 2014, and 

obtain separate qualified health plans 

beginning July 1, 2014. R enrolls based on 

household income of $60,000 and a family 

size of three (324 percent of the federal 

poverty line, applicable percentage 9.5). The 

premium for the applicable benchmark plan 

is $14,100. The Exchange approves advance 

credit payments of $700 per month, 

computed as follows: $14,100 benchmark 

plan premium minus R’s contribution 

amount of $5,700 ($60,000 × .095) equals 

$8,400 (total advance credit); $8,400/12 = 

$700. 

(iii) S enrolls based on household income 

of $16,000 and a family size of one (147 

percent of the federal poverty line, applicable 

percentage 3.82). The premium for the 

applicable benchmark plan is $5,200. The 

Exchange approves advance credit payments 

of $382 per month, computed as follows: 

$5,200 benchmark plan premium minus S’s 

contribution amount of $611 ($16,000 × 

.0382) equals $4,589 (total advance credit); 

$4,589/12 = $382. R and S do not agree on 

an allocation of the premium for the 

applicable benchmark plan, the premiums for 

the plan in which they enroll, and the 

advance credit payments for the period they 

were married in the taxable year. 

(iv) Under paragraph (b)(1) of this section, 

R and S each compute their credit at 

reconciliation using the premiums for the 

applicable benchmark plans that apply to 

them for the months married and the months 

not married, and contribution amount based 

on their federal poverty line percentages at 

the end of the taxable year. Under paragraph 

(b)(2) of this section, because R and S do not 

agree on an allocation, R and S must equally 

allocate the benchmark plan premium 

($7,050) and the advance credit payments 

($3,440) for the six-month period January 

through June 2014 when they are married 

and enrolled in the same qualified health 

plan. Thus, R and S each are allocated $3,525 

of the benchmark plan premium ($7,050/2) 

and $1,720 of the advance credit payments 

($3,440/2) for January through June. 

(v) R reports on his 2014 tax return $60,000 

in household income and family size of 

three. S reports on her 2014 tax return 

$16,000 in household income and family size 

of one. R and S reconcile their premium tax 

credit with advance credit payments as 

follows: 

R S 

Allocated advance payments (Jan. to June) ........................................................................................................... $1,720 $1,720 

Actual advance payments (July to Dec.) ............................................................................................................... 4,200 2,292 

Total advance payments ................................................................................................................................. 5,920 4,012 

Allocated benchmark plan premium (Jan. to June) .............................................................................................. 3,525 3,525 

Actual benchmark plan premium (July to Dec.) ................................................................................................... 7,050 2,600 

Total benchmark plan premium ..................................................................................................................... 10,575 6,125 

Contribution amount (taxable year household income × applicable percentage) .............................................. 5,700 611 

Credit (total benchmark plan premium less required contribution, assuming not more than premium paid) 4,875 5,514 

Additional credit .................................................................................................................................................... ........................ 1,502 

Additional tax ......................................................................................................................................................... 1,045 ........................

(vi) Under paragraph (a)(1) of this section, 

on their tax returns R’s tax liability is 

increased by $1,045 and S is allowed $1,502 

as additional credit. 

Example 3. Taxpayers divorce during the 

taxable year, allocation in proportion to 

household income. (i) The facts are the same 

as in Example 2, except that R and S decide 

to allocate the benchmark plan premium 

($7,050) and the advance credit payments 

($3,440) for January through June 2014 in 

proportion to their household incomes (79 

percent and 21 percent). Thus, R is allocated 

$5,570 of the benchmark plan premiums 

($7,050 × .79) and $2,718 of the advance 

credit payments ($3,440 × .79), and S is 

allocated $1,480 of the benchmark plan 

premiums ($7,050 × .21) and $722 of the 

advance credit payments ($3,440 × .21). R 

and S reconcile their premium tax credit 

with advance credit payments as follows: 

R S 

Allocated advance payments (Jan. to June) ........................................................................................................... $2,718 $722 

Actual advance payments (July to Dec.) ............................................................................................................... 4,200 2,292 

Total advance payments ................................................................................................................................. 6,918 3,014 

Allocated benchmark plan premium (Jan. to June) .............................................................................................. 5,570 1,480 

Actual benchmark plan premium (July to Dec.) ................................................................................................... 7,050 2,600 

Total benchmark plan premium ..................................................................................................................... 12,620 4,080 

Contribution amount (taxable year household income × applicable percentage) .............................................. 5,700 611 

Credit (total benchmark plan premium less required contribution, assuming not more than premium paid) 6,920 3,469 

Additional credit .................................................................................................................................................... 2 455 


Emcdonald on DSK2BSOYB1PROD with PROPOSALS
Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 50949 

(ii) Under paragraph (a)(1) of this section, 

on their tax returns R is allowed an 

additional credit of $2 and S is allowed an 

additional credit of $455. 

Example 4. Married taxpayers filing 

separate tax returns. (i) Taxpayers T and U 

are married and have two dependents. In 

2013, the Exchange in the rating area where 

the family resides determines that their 2014 

household income will be $76,000 (340 

percent of the federal poverty line for a 

family of 4, applicable percentage 9.5). T and 

U enroll in a qualified health plan for 2014. 

The premium for the applicable benchmark 

plan is $14,100. The Exchange approves 

advance credit payments of $573 per month, 

computed as follows: $14,100 benchmark 

plan premium minus T and U’s contribution 

amount of $7,220 ($76,000 × .095) equals 

$6,880 (total advance credit); $6,880/12 = 

$573. 

(ii) T and U file income tax returns for 

2014 using a married filing separately filing 

status. T reports household income of 

$60,000 and a family size of three (324 

percent of the federal poverty line). U reports 

household income of $16,000 and a family 

size of one (147 percent of the federal poverty 

line). 

(iii) Because T and U are married but do 

not file a joint return for 2014, T and U are 

not applicable taxpayers and are not allowed 

a premium tax credit for 2014. See § 1.36B– 

2(b)(2). Under paragraph (b)(3) of this 

section, half of the advance credit payments 

($6,880/2 = $3,440) is allocated to T and half 

is allocated to U for purposes of determining 

their excess advance payments. The 

repayment limitation described in paragraph 

(a)(3) of this section applies to T and U based 

on the household income and family size 

reported on each return. Consequently, T’s 

tax liability for 2014 is increased by $2,500 

and U’s tax liability for 2014 is increased by 

$600. 

§ 1.36B–5 Information reporting by 

Exchanges. 

(a) Information required to be 

reported. An Exchange must report to 

the IRS and a taxpayer the following 

information for a qualified health plan 

the taxpayer enrolls in through the 

Exchange— 

(1) The premium and category of 

coverage (such as self-only) for the 

applicable benchmark plans used to 

compute advance credit payments and 

the period coverage was in effect; 

(2) The total premium for the coverage 

without reduction for advance credit 

payments or cost sharing; 

(3) The aggregate amounts of any 

advance credit payments or cost sharing 

reductions; 

(4) The name, address and taxpayer 

identification number (TIN) of the 

primary insured and the name and TIN 

of each other individual covered under 

the policy; 

(5) All information provided to the 

Exchange at enrollment or during the 

taxable year, including any change in 

circumstances, necessary to determine 

eligibility for and the amount of the 

premium tax credit; 

(6) All information necessary to 

determine whether a taxpayer has 

received excess advance payments; and 

(7) Any other information required in 

published guidance of general 

applicability, see § 601.601(d)(2) of this 

chapter. 

(b) Time and manner of reporting. 

The Commissioner may provide rules in 

published guidance of general 

applicability, see § 601.601(d)(2) of this 

chapter, for the time and manner of 

reporting under this section. 

Par. 3. Section 1.6011–8 is added to 

read as follows: 

§ 1.6011–8 Requirement of income tax 

return for taxpayers who claim the premium 

tax credit under section 36B. 

(a) Requirement of return. A taxpayer 

who receives advance payments of the 

premium tax credit under section 36B 

must file an income tax return for that 

taxable year on or before the fifteenth 

day of the fourth month following the 

close of the taxable year. 

(b) Effective/applicability date. This 

section applies for taxable years ending 

after December 31, 2013. 

Par. 4. In § 1.6012–1, paragraph 

(a)(2)(viii) is added to read as follows: 

§ 1.6012–1 Individuals required to make 

returns of income. 

(a) * * * 

(2) * * * 

(viii) For rules relating to returns 

required of taxpayers who receive 

advance payments of the premium tax 

credit under section 36B, see § 1.6011– 

8(a). 

* * * * * 

Steven T. Miller, 

Deputy Commissioner for Services and 

Enforcement. 

[FR Doc. 2011–20728 Filed 8–12–11; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 31 

[REG–151687–10] 

RIN 1545–BJ98 

Withholding on Payments by 

Government Entities to Persons 

Providing Property or Services; 

Hearing 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Notice of public hearing on 

proposed rulemaking. 

SUMMARY: This document provides 

notice of public hearing on proposed 

regulations relating to withholding by 

government entities on payments to 

persons providing property or services. 

DATES: The public hearing is being held 

on Monday, September 12, 2011, at 

10 a.m. The IRS must receive outlines 

of the topics to be discussed at the 

public hearing by Friday, September 2, 

2011. 

ADDRESSES: The public hearing is being 

held in the IRS Auditorium, Internal 

Revenue Service Building, 1111 

Constitution Avenue, NW., Washington, 

DC 20224. Send Submissions to 

CC:PA:LPD:PR (REG–151687–10), Room 

5205, Internal Revenue Service, P.O. 

Box 7604, Ben Franklin Station, 

Washington, DC 20044. Submissions 

may be hand-delivered Monday through 

Friday to CC:PA:LPD:PR (REG–151687– 

10), Couriers Desk, Internal Revenue 

Service, 1111 Constitution Avenue, 

NW., Washington, DC or sent 

electronically via the Federal 

erulemaking Portal at http:// 

www.regulations.gov (REG–151687–10). 

FOR FURTHER INFORMATION CONTACT: 

Concerning the regulations, A.G. Kelley, 

(202) 622–6040; concerning submissions 

of comments, the hearing and/or to be 

placed on the building access list to 

attend the hearing Funmi Taylor at (202) 

622–7180 (not toll-free numbers). 

SUPPLEMENTARY INFORMATION: The 

subject of the public hearing is the 

notice of proposed rulemaking (REG– 

151687–10), that was published in the 

Federal Register on Monday, May 9, 

2011 (76 FR 26678). 

The rules of 26 CFR 601.601(a)(3) 

apply to the hearing. Persons who wish 

to present oral comments at the hearing 

that submitted written comments by 

August 8, 2011, must submit an outline 

of the topics to be addressed and the 

amount of time to be denoted to each 

topic (Signed original and eight copies). 

A period of 10 minutes is allotted to 

each person for presenting oral 

comments. After the deadline for 

receiving outlines has passed, the IRS 

will prepare an agenda containing the 

schedule of speakers. Copies of the 

agenda will be made available, free of 

charge, at the hearing or in the Freedom 

of Information Reading Room (FOIA RR) 

(Room 1621) which is located at the 

11th and Pennsylvania Avenue, NW., 

entrance, 1111 Constitution Avenue, 

NW., Washington, DC. 

Because of access restrictions, the IRS 

will not admit visitors beyond the 

immediate entrance area more than 30 


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