Source: https://regulations.justia.com/regulations/fedreg/2015/12/18/2015-31866.html
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Minimum Value of Eligible Employer-Sponsored Plans and Other Rules Regarding the Health Insurance Premium Tax Credit, 78971-78977 [2015-31866] :: Internal Revenue Service :: Department Of Treasury :: Regulation Tracker :: Justia
Justia Regulation Tracker Department Of Treasury Internal Revenue Service Minimum Value of Eligible Employer-Sponsored Plans and Other Rules Regarding the Health Insurance Premium Tax Credit, 78971-78977 [2015-31866]
Minimum Value of Eligible Employer-Sponsored Plans and Other Rules Regarding the Health Insurance Premium Tax Credit, 78971-78977 [2015-31866]
Download as PDF Federal Register / Vol. 80, No. 243 / Friday, December 18, 2015 / Rules and Regulations Withdrawal of approval is effective December 31, 2015. Administration, 7519 Standish Pl., Rockville, MD 20855, 240–402–5761, sujaya.dessai@fda.hhs.gov. DATES: FOR FURTHER INFORMATION CONTACT: Zoetis Inc., 333 Portage St., Kalamazoo, MI Sujaya Dessai, Center for Veterinary Medicine (HFV–212), Food and Drug SUPPLEMENTARY INFORMATION: 49007 has requested that FDA withdraw approval of the following NADAs that provide for the use of nitarsone in medicated feed for chickens and turkeys because the products are no longer manufactured or marketed: 21 CFR Section File No. Product name 007–616 ............ 141–088 ............ 141–132 ............ HISTOSTAT 50 (nitarsone) Type A Medicated Article ........................................................................................ HISTOSTAT 50 (nitarsone)/BMD (bacitracin methylene disalicylate) .................................................................. HISTOSTAT 50/ALBAC (bacitracin zinc) ............................................................................................................. Therefore, under authority delegated to the Commissioner of Food and Drugs and redelegated to the Center for Veterinary Medicine, and in accordance with 21 CFR 514.116 Notice of withdrawal of approval of application, notice is given that approval of NADAs 007–616, 141–088, and 141–132, and all supplements and amendments thereto, is hereby withdrawn, effective December 31, 2015. Elsewhere in this issue of the Federal Register, FDA is amending the animal drug regulations to reflect the voluntary withdrawal of approval of these applications. Dated: December 11, 2015. Bernadette Dunham, Director, Center for Veterinary Medicine. [FR Doc. 2015–31828 Filed 12–17–15; 8:45 am] BILLING CODE 4164–01–P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [TD 9745] RIN 1545–BL43 Minimum Value of Eligible EmployerSponsored Plans and Other Rules Regarding the Health Insurance Premium Tax Credit Internal Revenue Service (IRS), Treasury. ACTION: Final regulations. AGENCY: This document contains final regulations on 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, asabaliauskas on DSK5VPTVN1PROD with RULES SUMMARY: VerDate Sep<11>2014 17:22 Dec 17, 2015 Jkt 238001 2011. These final regulations affect individuals who enroll in qualified health plans through Affordable Insurance Exchanges (Exchanges, sometimes called Marketplaces) and claim the health insurance premium tax credit, and Exchanges that make qualified health plans available to individuals and employers. DATES: Effective Date: These regulations are effective on December 18, 2015. Applicability Dates: For dates of applicability, see §§ 1.36B–1(o) and 1.36B–6(g). FOR FURTHER INFORMATION CONTACT: For general questions on the premium tax credit, Shareen Pflanz, (202) 317–4718; for minimum value, Andrew Braden, (202) 317–7006 (not toll-free numbers). SUPPLEMENTARY INFORMATION: Background This document contains final regulations amending the Income Tax Regulations (26 CFR part 1) under section 36B of the Internal Revenue Code (Code) relating to the health insurance premium tax credit. Section 36B was enacted by 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). Final regulations under section 36B (TD 9590) were published on May 23, 2012 (77 FR 30377) (2012 section 36B final regulations). On May 3, 2013, a notice of proposed rulemaking (REG– 125398–12) was published in the Federal Register (78 FR 25909). Written comments responding to the proposed regulations were received. The comments have been considered in connection with these final regulations and are available for public inspection at www.regulations.gov or on request. No public hearing was requested or held. After consideration of all the comments, the proposed regulations are adopted, in part, as amended by this Treasury decision. Some rules proposed under REG–125398–12 on the minimum PO 00000 Frm 00013 Fmt 4700 Sfmt 4700 78971 558.369 558.369 558.369 value of eligible employer-sponsored plans have been reserved and will be finalized separately under REG– 119850–15. Two paragraphs on minimum value have been re-proposed, see REG–143800–14 (80 FR 52678) (2015 proposed minimum value regulations), are finalized in part, and will be finalized in part under REG– 143800–14. Explanation of Revisions and Summary of Comments 1. Definition of Modified Adjusted Gross Income Section 36B(d)(2) provides that a taxpayer’s household income includes the modified adjusted gross income of the taxpayer and the members of the taxpayer’s tax family who are required to file an income tax return. The 2012 section 36B final regulations provide that, in computing household income, whether a family member must file a tax return is determined without regard to section 1(g)(7). Under section 1(g)(7), a parent may elect to include a child’s gross income in the parent’s gross income if certain requirements are met. The proposed regulations removed ‘‘without regard to section 1(g)(7)’’ from the 2012 section 36B final regulations because that language implied that the child’s gross income is included in both the parent’s adjusted gross income and the child’s adjusted gross income in determining household income. Thus, the proposed regulations clarified that when a parent makes an election under section 1(g)(7), household income includes the child’s gross income included on the parent’s return only. These final regulations adopt that rule without change and clarify that the modified adjusted gross income of a parent who makes the section 1(g)(7) election includes the child’s modified adjusted gross income. Thus, the parent’s modified adjusted gross income includes not only the child’s gross income but also the child’s tax-exempt interest and nontaxable Social Security income, which are excluded from gross E:\FR\FM\18DER1.SGM 18DER1 78972 Federal Register / Vol. 80, No. 243 / Friday, December 18, 2015 / Rules and Regulations income but included in modified adjusted gross income in computing household income. (A parent may not make a section 1(g)(7) election if the child has income excluded under section 911, the third type of nontaxable income included in modified adjusted gross income.) asabaliauskas on DSK5VPTVN1PROD with RULES 2. Wellness Program Incentives Under section 36B(c)(2)(C)(i) and § 1.36B–2(c)(3)(v), an eligible employersponsored plan is affordable for an employee and related individuals only if the portion of the annual premium the employee must pay for self-only coverage does not exceed the required contribution percentage of the taxpayer’s household income. Under section 36B(c)(2)(C)(ii), an eligible employer-sponsored plan provides minimum value only if the plan’s share of the total allowed cost of benefits is at least 60 percent and, under the 2015 proposed minimum value regulations, the plan provides substantial coverage of inpatient hospital services and physician services. The proposed regulations provide that, for an employee eligible to participate in a wellness program, the affordability and minimum value of eligible employer-sponsored coverage are determined by assuming that each employee fails to satisfy the requirements of a wellness program, except the requirements of a nondiscriminatory wellness program related to tobacco use. Thus, the affordability and minimum value of a plan that charges a higher initial premium or higher cost-sharing for tobacco users are determined based on the premium or cost-sharing that is charged to non-tobacco users or to tobacco users who complete the related wellness program, such as attending smoking cessation classes. Identical rules, addressing only an employee’s required contribution for purposes of determining affordability, were proposed in regulations under section 5000A (REG–141036–13, 79 FR 4302, January 27, 2014) (section 5000A proposed regulations). The preamble to regulations finalizing the section 5000A proposed regulations (TD 9705, 79 FR 70464, November 26, 2014) (section 5000A final regulations) discusses the comments received on the proposed regulations under section 36B, except comments discussed in the next paragraph, and additional comments received on the section 5000A proposed regulations (79 FR 70466). Comments discussed in the preamble to the section 5000A proposed regulations are not discussed again in this preamble. VerDate Sep<11>2014 17:22 Dec 17, 2015 Jkt 238001 Because the standard for affordability for individuals eligible for coverage by reason of a relationship to an employee (related individuals) under section 5000A is different than the standard under section 36B, the section 5000A final regulations do not address certain comments on the treatment of wellness program incentives in determining affordability for related individuals. These commenters requested that wellness incentives related to tobacco use be treated as unearned for related individuals. The commenters expressed concern that treating wellness incentives related to tobacco use as earned in all cases unfairly penalizes related individuals for an employee’s tobacco use. However, section 36B(c)(2)(C) provides that the affordability of coverage for related individuals under section 36B is based on the cost of self-only coverage. Accordingly, the final regulations do not adopt this comment. Thus, after considering all the comments, these final regulations, like the section 5000A final regulations, retain the rules in the proposed regulations that wellness incentives unrelated to tobacco use are treated as unearned and wellness incentives related to tobacco use are treated as earned in determining affordability. For purposes of both the section 5000A final regulations and these final regulations, nondiscriminatory wellness programs include both participatory and healthcontingent wellness programs. Both the section 5000A final regulations and these final regulations also clarify that (1) a wellness incentive that includes any component unrelated to tobacco use is treated as unearned (however, as stated in the preamble to the section 5000A final regulations, if there is an incentive for completing a program unrelated to tobacco use and a separate incentive for completing a program related to tobacco use, then the incentive related to tobacco use may be treated as earned), and (2) the term wellness program incentives has the same meaning as the term reward in regulations issued by the Departments of Health and Human Services (HHS) and Labor as well as the Treasury Department, see § 54.9802–1(f), 29 CFR 2590.702(f), and 45 CFR 146.121(f). These final regulations also apply the rules described in this section of the preamble for purposes of determining minimum value. 3. Employer Contributions to Health Reimbursement Arrangements (HRA) The proposed regulations provide that amounts newly made available in the current plan year under an HRA that is PO 00000 Frm 00014 Fmt 4700 Sfmt 4700 integrated with eligible employersponsored coverage and that an employee may use to pay premiums are counted toward the employee’s required contribution for purposes of determining affordability. Amounts newly made available in the current plan year under an HRA that is integrated with eligible employersponsored coverage and that an employee may use only to reduce costsharing for medical expenses covered by the primary plan count toward a plan’s minimum value percentage. The comments on the proposed regulations are discussed in the section 5000A final regulations. After considering all the comments, both the section 5000A final regulations and these final regulations (1) crossreference Notice 2013–54 (2013–40 IRB 287, see § 601.601(d)) for guidance on the requirements for an HRA to be integrated with eligible employersponsored coverage, (2) clarify that amounts newly made available under an HRA reduce an employee’s required contribution (or, for purposes of section 36B, count towards providing minimum value) if the HRA would have been integrated with eligible employersponsored coverage had the employee enrolled in the primary plan, (3) clarify that an HRA is taken into account in determining affordability (and minimum value for purposes of section 36B) only if the HRA and the primary eligible employer-sponsored coverage are offered by the same employer, (4) clarify that HRA contributions are taken into account for affordability and not minimum value if an employee may use the HRA contributions to pay premiums for the primary plan only or to pay costsharing or benefits not covered by the primary plan in addition to premiums, and (5) clarify that employer contributions to an HRA reduce an employee’s required contribution (or count towards providing minimum value for section 36B purposes) only to the extent the amount of the annual contribution is required under the terms of the plan or is otherwise determinable within a reasonable time before the employee must decide whether to enroll. For more information on how contributions to an HRA are taken into account for purposes of section 4980H(b) and related reporting under section 6056, see Notice 2015–87, 2015– 52 IRB, released simultaneously with these final regulations. Additional regulations will finalize other rules on minimum value in the proposed regulations. E:\FR\FM\18DER1.SGM 18DER1 Federal Register / Vol. 80, No. 243 / Friday, December 18, 2015 / Rules and Regulations 4. Employer Contributions to Cafeteria Plans (Flex Contributions) The preamble to the section 5000A proposed regulations requested comments on how employer contributions under a section 125 cafeteria plan (flex contributions) that employees may not opt to receive as a taxable benefit should be taken into account in determining an employee’s required contribution for purposes of the affordability of coverage. The section 5000A final regulations discussed the comments received and adopted the rule that an employee’s required contribution is reduced by employer contributions under a section 125 cafeteria plan that (1) may not be taken as a taxable benefit, (2) may be used to pay for minimum essential coverage, and (3) may be used only to pay for medical care within the meaning of section 213. These final regulations adopt this rule for purposes of determining affordability under section 36B. For more information on the effect of flex contributions and other similar arrangements on affordability for purposes of sections 36B, 5000A, and related consequences under section 4980H, see Notice 2015–87, released simultaneously with these final regulations. asabaliauskas on DSK5VPTVN1PROD with RULES 5. Post-Employment Coverage Section 1.36B–2(c)(3)(iv) provides that 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 for months that the individual is enrolled in the coverage. The proposed regulations provide that this rule applies only to former employees and extend the rule to retiree coverage. Accordingly, an individual who may enroll in retiree coverage is eligible for minimum essential coverage only for the months the individual is enrolled in the coverage. Commenters opined that the continuation and retiree coverage rules should apply to individuals eligible for the coverage by reason of a relationship to an employee, for example, the spouse of a retired employee. In response to these comments, the final regulations clarify that an individual who may enroll in continuation coverage or retiree coverage because of a relationship to a former employee is eligible for the coverage only for the months the individual is enrolled in the coverage. Commenters suggested that the rule for continuation coverage should apply VerDate Sep<11>2014 17:22 Dec 17, 2015 Jkt 238001 to current employees eligible for continuation coverage as a result of reduced hours. The final regulations do not adopt this suggestion. Eligible employer-sponsored coverage for current employees does not present the same administrability issues as for former employees. Current employees with continuation coverage should be subject to the same general rules on eligibility for employer-sponsored coverage as other current employees. Although employees may be subject to a higher required contribution for continuation coverage than is required for other eligible employer-sponsored coverage, for purposes of the premium tax credit, employees are eligible for eligible employer-sponsored coverage only if the coverage is both affordable and provides minimum value. Thus, current employees offered continuation coverage, like other current employees, may be eligible for the premium tax credit if the coverage offered either is not affordable or does not provide minimum value. 6. Newborns, Adopted Children, and Other Individuals Enrolled Midmonth Regulations at 45 CFR 155.420(d)(2)(i) require issuers to provide coverage to a newborn child enrolled in a qualified health plan effective on the date of birth. Under section 36B(c)(2)(A)(i) and § 1.36B–3(c)(1)(i), a month is a coverage month for an individual only if the individual is enrolled in a qualified health plan through an Exchange as of the first day of the month. Under § 1.36B–3(d), the monthly premium assistance amount is determined, in part, by the adjusted monthly premium for the applicable second lowest cost silver (benchmark) plan (benchmark plan premium). The proposed regulations provide that a child enrolled in a qualified health plan in the month of the child’s birth, adoption, or placement with the taxpayer for adoption or in foster care (birth month) is treated as enrolled as of the first day of the month. Some commenters interpreted the coverage month rule for newborns as requiring that issuers must provide coverage for a newborn as of the first day of the month. Other commenters noted that applying a new adjusted monthly premium as of the first of the month, thus increasing the premium assistance amount for the month, is inconsistent with HHS regulations that provide that the amount of advance credit payments (which approximates the premium assistance amount) does not change until the first day of the month following the birth month. PO 00000 Frm 00015 Fmt 4700 Sfmt 4700 78973 No changes are made to the final regulations to reflect these comments. The rules treat certain individuals as enrolled as of the first day of the month for purposes of the premium tax credit to conform with the general rules for coverage months but do not require issuers to enroll the individuals as of the first day of the month. Furthermore, HHS regulations published on July 15, 2013 (78 FR 42321) removed the rule providing that advance credit payments do not change until the month following a birth or other event for which a midmonth enrollment is allowed. Under 45 CFR 155.420(b)(2)(i), Exchanges must ensure that a taxpayer eligible to enroll an individual in coverage may choose for the individual’s coverage to be effective as of the individual’s date of birth, adoption, or placement for adoption or in foster care or as of the first day of the following month. Similarly, for individual’s placed with a taxpayer by court order, 45 CFR 155.420(b)(2)(v) provides that Exchanges must allow the individual’s coverage to be effective as of the date the court order is effective. Accordingly, the final regulations provide that an individual is treated as enrolled as of the first day of the month of birth, adoption, or placement in adoption or foster care if the individual’s enrollment is effective as of the date of birth, adoption, or placement for adoption or in foster care, or on the effective date of a court order. The final regulations use the term individual instead of child to align with HHS regulations relating to midmonth enrollments. The proposed regulations provide that the adjusted monthly premium is determined as if all members of the coverage family for that month were enrolled in a qualified health plan for the entire month. The intent of this rule was to specify that the adjusted monthly premium is determined as of the first day of a coverage month and is not prorated for midmonth changes in enrollment or eligibility for other minimum essential coverage. Accordingly, an individual who enrolls midmonth but who is treated as enrolled as of the first day of the month is a member of the coverage family (if all other requirements are met) in determining the adjusted monthly premium for that month. For other coverage family changes, the adjusted monthly premium does not change until the following month. The final regulations clarify these rules by providing that the term coverage family means the members of a taxpayer’s family for whom a month is a coverage month (which requires being enrolled E:\FR\FM\18DER1.SGM 18DER1 78974 Federal Register / Vol. 80, No. 243 / Friday, December 18, 2015 / Rules and Regulations comment on its impact on small business. No comments were received. on the first day of the month) and that the adjusted monthly premium is determined as of the first day of a coverage month. 7. Partial Months of Coverage The proposed regulations provide that the premium assistance amount for a coverage month is prorated by the number of days of coverage when a qualified health plan is terminated before the last day of a month and the issuer reduces or refunds a portion of the monthly premium. The proposed rule for computing a prorated premium assistance amount has proven to be complex and may be difficult to administer. Accordingly, the final regulations provide that the premium assistance amount for a termination month is the lesser of (1) the enrollment premiums charged (reduced by any amounts that were refunded) and (2) the difference between the benchmark plan premium and contribution amount for the full month. The final regulations clarify that this computation also applies to a month an individual is enrolled in coverage effective on the date of the individual’s birth, adoption, or placement for adoption or in foster care, or on the effective date of a court order. The Treasury Department and the IRS anticipate publishing rules requiring Exchanges to report under section 36B(f)(3) for partial months of coverage the amount of enrollment premiums charged and advance credit payments made for the days of coverage and the benchmark plan premium for a full month of coverage. asabaliauskas on DSK5VPTVN1PROD with RULES Effective/Applicability Date These final regulations apply to taxable years ending after December 31, 2013. Special Analyses Certain IRS regulations, including this one, are exempt from the requirements of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory impact assessment is not required. Section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and, because the regulations do not impose a collection of information requirement on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking that preceded these final regulations was submitted to the Chief Counsel for Advocacy of the Small Business Administration for VerDate Sep<11>2014 17:22 Dec 17, 2015 Jkt 238001 Drafting Information The principal authors of these final regulations are Andrew Braden, Arvind Ravichandran, and Stephen J. Toomey of the Office of Associate Chief Counsel (Income Tax and Accounting). However, other personnel from the IRS and the Treasury Department participated in their development. List of Subjects in 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. Adoption of Amendments to the Regulations Accordingly, 26 CFR part 1 is amended as follows: PART 1—INCOME TAXES Paragraph 1. The authority citation for part 1 continues to read in part as follows: ■ Authority: 26 U.S.C. 7805 * * * Par. 2. Section 1.36B–0 is amended by: ■ 1. Revising the introductory text. ■ 2. Revising the entries for §§ 1.36B– 2(c)(3)(iv) and 1.36B–2(c)(3)(v)(A)(4). ■ 2. Adding entries for §§ 1.36B– 2(c)(3)(v)(A)(5) and (6). ■ 3. Revising the entries for §§ 1.36B– 3(c)(2) and (3). ■ 4. Adding entries for §§ 1.36B–3(c)(4), 1.36B–3(d)(1) and (2), 1.36B–3(d)(2)(i) and (ii) and 1.36B–6. The revisions and additions read as follows: ■ § 1.36B–0 Table of contents. Eligibility for premium tax * * * * * (c) * * * (3) * * * (iv) Post-employment coverage. (v) * * * (A) * * * (4) Wellness program incentives. (5) Employer contributions to health reimbursement arrangements. (6) Employer contributions to cafeteria plans. * * * * * § 1.36B–3 Computing the premium assistance credit amount. * * * * * (c) * * * (2) Certain individuals enrolled during a month. PO 00000 Frm 00016 Fmt 4700 Sfmt 4700 § 1.36B–6 Minimum value. (a) In general. (b) MV standard population. (c) MV percentage. (1) In general. (2) Wellness program incentives. (i) In general. (ii) Example. (3) Employer contributions to health savings accounts. (4) Employer contributions to health reimbursement arrangements. (5) Expected spending adjustments for health savings accounts and health reimbursement arrangements. (d) Methods for determining MV. (e) Scope of essential health benefits and adjustment for benefits not included in MV Calculator. (f) Actuarial certification. (1) In general. (2) Membership in American Academy of Actuaries. (3) Actuarial analysis. (4) Use of MV Calculator. (g) Effective/applicability date. (1) In general. (2) Exception. ■ Par. 3. Section 1.36B–1 is amended by revising paragraphs (e)(1)(i), (e)(1)(ii)(B), and (n) to read as follows: § 1.36B–1 Premium tax credit definitions. * This section lists the captions contained in §§ 1.36B–1 through 1.36B– 6. * * * * * § 1.36B–2 credit. (3) Premiums paid for a taxpayer. (4) Examples. (d) * * * (1) In general. (2) Partial month of coverage. (i) In general. (ii) Examples. * * * * * * * * * (e) * * * (1) * * * (i) A taxpayer’s modified adjusted gross income (including the modified adjusted gross income of a child for whom an election under section 1(g)(7) is made for the taxable year); (ii) * * * (B) Are required to file a return of tax imposed by section 1 for the taxable year. * * * * * (n) Rating area. The term rating area has the same meaning as used in section 2701(a)(2) of the Public Health Service Act (42 U.S.C. 300gg(a)(2)) and 45 CFR 147.102(b). * * * * * ■ Par. 4. Section 1.36B–2 is amended by: ■ 1. Revising paragraphs (c)(3)(iv) and (c)(3)(v)(A)(4). ■ 2. Adding paragraphs (c)(3)(v)(A)(5) and (6) and (c)(3)(v)(D), Example 9. ■ 3. Revising paragraph (c)(3)(vi). E:\FR\FM\18DER1.SGM 18DER1 Federal Register / Vol. 80, No. 243 / Friday, December 18, 2015 / Rules and Regulations The revisions and additions read as follows: § 1.36B–2 credit. Eligibility for premium tax asabaliauskas on DSK5VPTVN1PROD with RULES * * * * * (c) * * * (3) * * * (iv) Post-employment coverage. A former employee (including a retiree), or an individual related (within the meaning of paragraph (c)(3)(i) of this section) to a former employee, who may enroll in eligible employer-sponsored coverage or in continuation coverage required under Federal law or a State law that provides comparable continuation coverage is eligible for minimum essential coverage under this coverage only for months that the former employee or related individual is enrolled in the coverage. (v) * * * (A) * * * (4) Wellness program incentives. Nondiscriminatory wellness program incentives offered by an eligible employer-sponsored plan that affect premiums are treated as earned in determining an employee’s required contribution for purposes of affordability of an eligible employersponsored plan to the extent the incentives relate exclusively to tobacco use. Wellness program incentives that do not relate to tobacco use or that include a component unrelated to tobacco use are treated as not earned for this purpose. For purposes of this section, the term wellness program incentive has the same meaning as the term reward in § 54.9802–1(f)(1)(i) of this chapter. (5) Employer contributions to health reimbursement arrangements. Amounts newly made available for the current plan year under a health reimbursement arrangement that an employee may use to pay premiums, or may use to pay cost-sharing or benefits not covered by the primary plan in addition to premiums, reduce the employee’s required contribution if the health reimbursement arrangement would be integrated, as that term is used in Notice 2013–54 (2013–40 IRB 287) (see § 601.601(d) of this chapter), with an eligible employer-sponsored plan for an employee enrolled in the plan. The eligible employer-sponsored plan and the health reimbursement arrangement must be offered by the same employer. Employer contributions to a health reimbursement arrangement reduce an employee’s required contribution only to the extent the amount of the annual contribution is required under the terms of the plan or otherwise determinable within a reasonable time before the VerDate Sep<11>2014 17:22 Dec 17, 2015 Jkt 238001 employee must decide whether to enroll in the eligible employer-sponsored plan. (6) Employer contributions to cafeteria plans. Amounts made available for the current plan year under a cafeteria plan, within the meaning of section 125, reduce an employee’s or a related individual’s required contribution if— (i) The employee may not opt to receive the amount as a taxable benefit; (ii) The employee may use the amount to pay for minimum essential coverage; and (iii) The employee may use the amount exclusively to pay for medical care, within the meaning of section 213. * * * * * (D) * * * Example 9. Wellness program incentives. (i) Employer X offers an eligible employersponsored plan with a nondiscriminatory wellness program that reduces premiums by $300 for employees who do not use tobacco products or who complete a smoking cessation course. Premiums are reduced by $200 if an employee completes cholesterol screening within the first six months of the plan year. Employee B does not use tobacco and the cost of his premiums is $3,700. Employee C uses tobacco and the cost of her premiums is $4,000. (ii) Under paragraph (c)(3)(v)(A)(4) of this section, only the incentives related to tobacco use are counted toward the premium amount used to determine the affordability of X’s plan. C is treated as having earned the $300 incentive for attending a smoking cessation course regardless of whether C actually attends the course. Thus, the required contribution for determining affordability for both Employee B and Employee C is $3,700. The $200 incentive for completing cholesterol screening is treated as not earned and does not reduce their required contribution. (vi) Minimum value. See § 1.36B–6 for rules for determining whether an eligible employer-sponsored plan provides minimum value. * * * * * ■ Par. 5. Section 1.36B–3 is amended by: ■ 1. Revising paragraph (b)(2). ■ 2. Redesignating paragraphs (c)(2) and (3) as paragraphs (c)(3) and (4) and adding paragraph (c)(2). ■ 3. Revising paragraph (d). ■ 4. Adding a sentence to the end of paragraph (e). ■ 5. Revising paragraphs (f)(4), (g)(2), and (j)(1) and (3). ■ 6. Removing the language ‘‘(d)(1)’’ everywhere it appears in paragraphs (h), (j), and (k), and adding the language ‘‘(d)(1)(i)’’ in its place and removing the language ‘‘(d)(2)’’ everywhere it appears in paragraphs (h) and (j) and adding the language ‘‘(d)(1)(ii)’’ in its place. The revisions and additions read as follows: PO 00000 Frm 00017 Fmt 4700 Sfmt 4700 78975 § 1.36B–3 Computing the premium assistance credit amount. * * * * * (b) * * * (2) The term coverage family means, in each month, the members of a taxpayer’s family for whom the month is a coverage month. (c) * * * (2) Certain individuals enrolled during a month. If an individual enrolls in a qualified health plan and the enrollment is effective on the date of the individual’s birth, adoption, or placement for adoption or in foster care, or on the effective date of a court order, the individual is treated as enrolled as of the first day of that month for purposes of this paragraph (c). * * * * * (d) Premium assistance amount—(1) In general. Except as provided in paragraph (d)(2) of this section, the premium assistance amount for a coverage month is the lesser of— (i) 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 (enrollment premiums); or (ii) The excess of the adjusted monthly premium for the applicable benchmark plan (benchmark plan premium) over 1/12 of the product of a taxpayer’s household income and the applicable percentage for the taxable year (the taxpayer’s contribution amount). (2) Partial month of coverage—(i) In general. If a qualified health plan is terminated before the last day of a month or an individual is enrolled in coverage effective on the date of the individual’s birth, adoption, or placement for adoption or in foster care, or on the effective date of a court order, the premium assistance amount for the month is the lesser of— (A) The enrollment premiums for the month (not including any amounts that were refunded); or (B) The excess of the benchmark plan premium for a full month of coverage over the full contribution amount for the month. (ii) Examples. The following examples illustrate the rules of this paragraph (d)(2). Example 1. (i) Taxpayer R is single and has no dependents. R enrolls in a qualified health plan with a monthly premium of $450. The difference between R’s benchmark plan premium and contribution amount for the month is $420. R’s premium assistance amount for a coverage month with a full month of coverage is $420 (the lesser of $450 and $420). (ii) The issuer of R’s qualified health plan is notified that R died on September 20. The E:\FR\FM\18DER1.SGM 18DER1 78976 Federal Register / Vol. 80, No. 243 / Friday, December 18, 2015 / Rules and Regulations issuer terminates coverage as of that date and refunds the remaining portion of the September enrollment premiums ($150) for R’s coverage. (iii) Under this paragraph (d)(2), R’s premium assistance amount for September is the lesser of the enrollment premiums for the month ($300 ($450—$150)) or the difference between the benchmark plan premium for a full month of coverage and the full contribution amount for the month ($420). R’s premium assistance amount for September is $300, the lesser of $420 and $300. Example 2. The facts are the same as in Example 1 of this paragraph (d)(2)(ii), except that the qualified health plan issuer does not refund any enrollment premiums for September. Under this paragraph (d)(2), R’s premium assistance amount for September is $420, the lesser of $450 and $420. Example 3. The facts are the same as in Example 1 of this paragraph (d)(2)(ii), except that the difference between R’s benchmark plan premium and contribution amount for a month is $275. Accordingly, R’s premium assistance amount for a coverage month with a full month of coverage is $275 (the lesser of $450 and $275). Under this paragraph (d)(2), R’s premium assistance amount for September remains $275, the lesser of $300 and $275. (e) * * * The adjusted monthly premium for a coverage month is determined as of the first day of the month. (f) * * * (4) Family members residing at different locations. The benchmark plan premium determined under paragraphs (f)(1) and (2) of this section for family members who live in different States and enroll in separate qualified health plans is the sum of the premiums for the applicable benchmark plans for each group of family members living in the same State. * * * * * (g) * * * (2) Applicable percentage table. Initial percentage Household income percentage of Federal poverty line Less than 133% ....................................................................................................................................................... At least 133% but less than 150% .......................................................................................................................... At least 150% but less than 200% .......................................................................................................................... At least 200% but less than 250% .......................................................................................................................... At least 250% but less than 300% .......................................................................................................................... At least 300% but not more than 400% .................................................................................................................. * * * * (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)(i) or (ii) of this section. Premiums are allocated to additional benefits before determining the applicable benchmark plan under paragraph (f) of this section. * * * * * (3) Examples. The following examples illustrate the rules of this paragraph (j): asabaliauskas on DSK5VPTVN1PROD with RULES * Example 1. (i) Taxpayer B enrolls in a qualified health plan that provides benefits in addition to essential health benefits (additional benefits). The monthly premiums for the plan in which B enrolls are $370, of which $35 is allocable to additional benefits. B’s benchmark plan premium (determined after allocating premiums to additional benefits for all silver level plans) is $440, of which $40 is allocable to additional benefits. B’s monthly contribution amount, which is the product of B’s household income and the applicable percentage, is $60. (ii) Under this paragraph (j), B’s enrollment premiums and the benchmark plan premium are reduced by the portion of the premium that is allocable to the additional benefits provided under that plan. Therefore, B’s monthly enrollment premiums are reduced to $335 ($370 ¥ $35) and B’s benchmark plan premium is reduced to $400 ($440 ¥ $40). B’s premium assistance amount for a VerDate Sep<11>2014 17:22 Dec 17, 2015 Jkt 238001 coverage month is $335, the lesser of $335 (B’s enrollment premiums, reduced by the portion of the premium allocable to additional benefits) and $340 (B’s benchmark plan premium, reduced by the portion of the premium allocable to additional benefits ($400), minus B’s $60 contribution amount). Example 2. The facts are the same as in Example 1 of this paragraph (j)(3), except that the plan in which B enrolls provides no benefits in addition to the essential health benefits required to be provided by the plan. Thus, under paragraph (j) of this section, B’s benchmark plan premium ($440) is reduced by the portion of the premium allocable to additional benefits provided under that plan ($40). B’s enrollment premiums ($370) are not reduced under this paragraph (j). B’s premium assistance amount for a coverage month is $340, the lesser of $370 (B’s enrollment premiums) and $340 (B’s benchmark plan premium, reduced by the portion of the premium allocable to additional benefits ($400), minus B’s $60 contribution amount). * * * * * Par. 6. Section 1.36B–6 is added to read as follows: ■ § 1.36B–6 Minimum value. (a) In general. An eligible employersponsored plan provides minimum value (MV) only if— (1) The plan’s share of the total allowed costs of benefits provided to an employee (the MV percentage) is at least 60 percent; and (2) [Reserved] (b) MV standard population. [Reserved] (c) MV percentage—(1) In general. [Reserved] (2) Wellness program incentives—(i) In general. Nondiscriminatory wellness PO 00000 Frm 00018 Fmt 4700 Sfmt 4700 2.0 3.0 4.0 6.3 8.05 9.5 Final percentage 2.0 4.0 6.3 8.05 9.5 9.5 program incentives offered by an eligible employer-sponsored plan that affect deductibles, copayments, or other cost-sharing are treated as earned in determining the plan’s MV percentage if the incentives relate exclusively to tobacco use. Wellness program incentives that do not relate to tobacco use or that include a component unrelated to tobacco use are treated as not earned for this purpose. For purposes of this section, the term wellness program incentive has the same meaning as the term reward in § 54.9802–1(f)(1)(i) of this chapter. (ii) Example. The following example illustrates the rules of this paragraph (c)(2): Example. (i) Employer X offers an eligible employer-sponsored plan that reduces the deductible by $300 for employees who do not use tobacco products or who complete a smoking cessation course. The deductible is reduced by $200 if an employee completes cholesterol screening within the first six months of the plan year. Employee B does not use tobacco and his deductible is $3,700. Employee C uses tobacco and her deductible is $4,000. (ii) Under paragraph (c)(2)(i) of this section, only the incentives related to tobacco use are considered in determining the plan’s MV percentage. C is treated as having earned the $300 incentive for attending a smoking cessation course regardless of whether C actually attends the course. Thus, the deductible for determining for the MV percentage for both Employees B and C is $3,700. The $200 incentive for completing cholesterol screening is disregarded. (3) Employer contributions to health savings accounts. Employer E:\FR\FM\18DER1.SGM 18DER1 Federal Register / Vol. 80, No. 243 / Friday, December 18, 2015 / Rules and Regulations asabaliauskas on DSK5VPTVN1PROD with RULES contributions for the current plan year to health savings accounts that are offered with an eligible employersponsored plan are taken into account for that plan year towards the plan’s MV percentage. (4) Employer contributions to health reimbursement arrangements. Amounts newly made available for the current plan year under a health reimbursement arrangement that would be integrated within the meaning of Notice 2013–54 (2013–40 IRB 287), see § 601.601(d) of this chapter, with an eligible employersponsored plan for an employee enrolled in the plan are taken into account for that plan year towards the plan’s MV percentage if the amounts may be used to reduce only cost-sharing for covered medical expenses. A health reimbursement arrangement counts toward a plan’s MV percentage only if the health reimbursement arrangement and the eligible employer-sponsored plan are offered by the same employer. Employer contributions to a health reimbursement arrangement count for a plan year towards the plan’s MV percentage only to the extent the amount of the annual contribution is required under the terms of the plan or otherwise determinable within a reasonable time before the employee must decide whether to enroll in the eligible employer-sponsored plan. (5) Expected spending adjustments for health savings accounts and health reimbursement arrangements. [Reserved] (d) Methods for determining MV. [Reserved] (e) Scope of essential health benefits and adjustment for benefits not included in MV Calculator. [Reserved] (f) Actuarial certification. [Reserved] (1) In general. [Reserved] (2) Membership in American Academy of Actuaries. [Reserved] (3) Actuarial analysis. [Reserved] (4) Use of MV Calculator. [Reserved] (g) Effective/applicability date—in general. (1) Except as provided in paragraph (g)(2) of this section, this section applies for taxable years ending after December 31, 2013. (2) Exception. [Reserved] ■ Par. 7. Section 1.6011–8 is amended by revising paragraph (a) 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 for whom advance payments of the premium tax credit under section 36B are made in a taxable year must file an income tax return for that taxable year VerDate Sep<11>2014 17:22 Dec 17, 2015 Jkt 238001 on or before the due date for the return (including extensions of time for filing). * * * * * John Dalrymple, Deputy Commissioner for Services and Enforcement. Approved: December 11, 2015 Mark J. Mazur, Assistant Secretary of the Treasury (Tax Policy). [FR Doc. 2015–31866 Filed 12–16–15; 4:15 pm] BILLING CODE 4830–01–P DEPARTMENT OF LABOR Occupational Safety and Health Administration 29 CFR Parts 1902, 1903, 1904, 1952, 1953, 1954, 1955, and 1956 [Docket No. OSHA–2014–0009] RIN 1218–AC76 Streamlining of Provisions on State Plans for Occupational Safety and Health Occupational Safety and Health Administration (OSHA), Department of Labor. ACTION: Final rule; confirmation of effective date; approval of collections of information under the Paperwork Reduction Act of 1995. AGENCY: On August 18, 2015 OSHA published in the Federal Register a direct final rule that streamlined provisions on State Plans. OSHA stated in that document that it would withdraw the companion proposed rule and confirm the effective date of the final rule if the Agency received no significant adverse comments on the direct final rule or the proposal. Since OSHA received no comments on the direct final rule or the proposal, the Agency now confirms that the direct final rule became effective as a final rule on October 19, 2015. The proposed rule and the direct final rule also requested comments on the collections of information contained in State Plan regulations under the Paperwork Reduction Act of 1995. The Office of Management and Budget (OMB) approved those collections of information. SUMMARY: The effective date for the direct final rule that published on August 18, 2015 (80 FR49897) is confirmed as October 19, 2015. ADDRESSES: Electronic copies of this Federal Register notice are available at http://www.regulations.gov. This DATES: PO 00000 Frm 00019 Fmt 4700 Sfmt 4700 78977 Federal Register notice, as well as news releases and other relevant information, also are available at OSHA’s Web page at http://www.osha.gov. For press inquiries: Francis Meilinger, Director, OSHA Office of Communications, Room N–3647, U.S. Department of Labor, 200 Constitution Avenue NW., Washington, DC 20210; telephone: (202) 693–1999; email: meilinger.francis2@dol.gov. For general and technical information: Douglas J. Kalinowski, Director, OSHA Directorate of Cooperative and State Programs, Room N–3700, U.S. Department of Labor, 200 Constitution Avenue NW., Washington, DC 20210; telephone: (202) 693–2200; email: kalinowski.doug@dol.gov. FOR FURTHER INFORMATION CONTACT: SUPPLEMENTARY INFORMATION: Confirmation of the effective date: On August 18, 2015, OSHA published a direct final rule in the Federal Register amending OSHA regulations to remove the detailed descriptions of State Plan coverage, purely historical data, and other unnecessarily codified information. In addition, this document moved most of the general provisions of subpart A of part 1952 into part 1902, where the general regulations on State Plan criteria are found. It also amended several other OSHA regulations to delete references to part 1952, which will no longer apply. A companion proposed rule was also published on that date. In the direct final rule, OSHA stated that it would publish a Federal Register document confirming the effective date of the direct final rule and withdraw the proposed rule if it received no significant adverse comments on the direct final rule or the proposal. OSHA received no comments on the direct final rule or the proposed rule. Accordingly, OSHA is confirming the effective date of the direct final rule and the proposed rule is withdrawn. Approval of collections of information: The proposed rule and the direct final rule also contained a request for comments on an Information Collection Request under the Paperwork Reduction Act of 1995 (PRA), which covers all collections of information in OSHA State Plan regulations. OMB received no comments. OMB has approved the revised collections of information and is retaining OMB control number 1218–0247 for these requirements. The expiration date for the approval is April 30, 2016. E:\FR\FM\18DER1.SGM 18DER1
[Pages 78971-78977]
[FR Doc No: 2015-31866]
SUMMARY: This document contains final regulations on the health
Defense and Full-Year Continuing Appropriations Act, 2011. These final
regulations affect individuals who enroll in qualified health plans
through Affordable Insurance Exchanges (Exchanges, sometimes called
Marketplaces) and claim the health insurance premium tax credit, and
Exchanges that make qualified health plans available to individuals and
DATES: Effective Date: These regulations are effective on December 18,
1.36B-1(o) and 1.36B-6(g).
FOR FURTHER INFORMATION CONTACT: For general questions on the premium
tax credit, Shareen Pflanz, (202) 317-4718; for minimum value, Andrew
Braden, (202) 317-7006 (not toll-free numbers).
This document contains final regulations amending the Income Tax
Regulations (26 CFR part 1) under section 36B of the Internal Revenue
Code (Code) relating to the health insurance premium tax credit.
Section 36B was enacted by 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). Final regulations
under section 36B (TD 9590) were published on May 23, 2012 (77 FR
30377) (2012 section 36B final regulations). On May 3, 2013, a notice
of proposed rulemaking (REG-125398-12) was published in the Federal
Register (78 FR 25909). Written comments responding to the proposed
regulations were received. The comments have been considered in
connection with these final regulations and are available for public
inspection at www.regulations.gov or on request. No public hearing was
requested or held. After consideration of all the comments, the
proposed regulations are adopted, in part, as amended by this Treasury
decision. Some rules proposed under REG-125398-12 on the minimum value
of eligible employer-sponsored plans have been reserved and will be
finalized separately under REG-119850-15. Two paragraphs on minimum
value have been re-proposed, see REG-143800-14 (80 FR 52678) (2015
proposed minimum value regulations), are finalized in part, and will be
finalized in part under REG-143800-14.
Section 36B(d)(2) provides that a taxpayer's household income
includes the modified adjusted gross income of the taxpayer and the
members of the taxpayer's tax family who are required to file an income
tax return. The 2012 section 36B final regulations provide that, in
computing household income, whether a family member must file a tax
return is determined without regard to section 1(g)(7). Under section
1(g)(7), a parent may elect to include a child's gross income in the
parent's gross income if certain requirements are met.
The proposed regulations removed ``without regard to section
1(g)(7)'' from the 2012 section 36B final regulations because that
language implied that the child's gross income is included in both the
parent's adjusted gross income and the child's adjusted gross income in
determining household income. Thus, the proposed regulations clarified
that when a parent makes an election under section 1(g)(7), household
income includes the child's gross income included on the parent's
return only. These final regulations adopt that rule without change and
clarify that the modified adjusted gross income of a parent who makes
the section 1(g)(7) election includes the child's modified adjusted
gross income. Thus, the parent's modified adjusted gross income
includes not only the child's gross income but also the child's tax-
exempt interest and nontaxable Social Security income, which are
excluded from gross
income but included in modified adjusted gross income in computing
household income. (A parent may not make a section 1(g)(7) election if
the child has income excluded under section 911, the third type of
nontaxable income included in modified adjusted gross income.)
Under section 36B(c)(2)(C)(i) and Sec.  1.36B-2(c)(3)(v), an
eligible employer-sponsored plan is affordable for an employee and
related individuals only if the portion of the annual premium the
employee must pay for self-only coverage does not exceed the required
contribution percentage of the taxpayer's household income. Under
section 36B(c)(2)(C)(ii), an eligible employer-sponsored plan provides
minimum value only if the plan's share of the total allowed cost of
benefits is at least 60 percent and, under the 2015 proposed minimum
value regulations, the plan provides substantial coverage of inpatient
hospital services and physician services.
The proposed regulations provide that, for an employee eligible to
participate in a wellness program, the affordability and minimum value
of eligible employer-sponsored coverage are determined by assuming that
each employee fails to satisfy the requirements of a wellness program,
except the requirements of a nondiscriminatory wellness program related
to tobacco use. Thus, the affordability and minimum value of a plan
that charges a higher initial premium or higher cost-sharing for
tobacco users are determined based on the premium or cost-sharing that
is charged to non-tobacco users or to tobacco users who complete the
related wellness program, such as attending smoking cessation classes.
Identical rules, addressing only an employee's required
contribution for purposes of determining affordability, were proposed
in regulations under section 5000A (REG-141036-13, 79 FR 4302, January
27, 2014) (section 5000A proposed regulations). The preamble to
regulations finalizing the section 5000A proposed regulations (TD 9705,
79 FR 70464, November 26, 2014) (section 5000A final regulations)
discusses the comments received on the proposed regulations under
section 36B, except comments discussed in the next paragraph, and
additional comments received on the section 5000A proposed regulations
(79 FR 70466). Comments discussed in the preamble to the section 5000A
proposed regulations are not discussed again in this preamble.
Because the standard for affordability for individuals eligible for
coverage by reason of a relationship to an employee (related
individuals) under section 5000A is different than the standard under
section 36B, the section 5000A final regulations do not address certain
comments on the treatment of wellness program incentives in determining
affordability for related individuals. These commenters requested that
wellness incentives related to tobacco use be treated as unearned for
related individuals. The commenters expressed concern that treating
wellness incentives related to tobacco use as earned in all cases
unfairly penalizes related individuals for an employee's tobacco use.
However, section 36B(c)(2)(C) provides that the affordability of
coverage for related individuals under section 36B is based on the cost
of self-only coverage. Accordingly, the final regulations do not adopt
Thus, after considering all the comments, these final regulations,
like the section 5000A final regulations, retain the rules in the
proposed regulations that wellness incentives unrelated to tobacco use
are treated as unearned and wellness incentives related to tobacco use
are treated as earned in determining affordability. For purposes of
both the section 5000A final regulations and these final regulations,
nondiscriminatory wellness programs include both participatory and
health-contingent wellness programs. Both the section 5000A final
regulations and these final regulations also clarify that (1) a
wellness incentive that includes any component unrelated to tobacco use
is treated as unearned (however, as stated in the preamble to the
section 5000A final regulations, if there is an incentive for
completing a program unrelated to tobacco use and a separate incentive
for completing a program related to tobacco use, then the incentive
related to tobacco use may be treated as earned), and (2) the term
wellness program incentives has the same meaning as the term reward in
regulations issued by the Departments of Health and Human Services
(HHS) and Labor as well as the Treasury Department, see Sec.  54.9802-
1(f), 29 CFR 2590.702(f), and 45 CFR 146.121(f). These final
regulations also apply the rules described in this section of the
preamble for purposes of determining minimum value.
The proposed regulations provide that amounts newly made available
in the current plan year under an HRA that is integrated with eligible
employer-sponsored coverage and that an employee may use to pay
premiums are counted toward the employee's required contribution for
purposes of determining affordability. Amounts newly made available in
the current plan year under an HRA that is integrated with eligible
employer-sponsored coverage and that an employee may use only to reduce
cost-sharing for medical expenses covered by the primary plan count
toward a plan's minimum value percentage.
The comments on the proposed regulations are discussed in the
section 5000A final regulations. After considering all the comments,
both the section 5000A final regulations and these final regulations
(1) cross-reference Notice 2013-54 (2013-40 IRB 287, see Sec.
601.601(d)) for guidance on the requirements for an HRA to be
integrated with eligible employer-sponsored coverage, (2) clarify that
amounts newly made available under an HRA reduce an employee's required
contribution (or, for purposes of section 36B, count towards providing
minimum value) if the HRA would have been integrated with eligible
employer-sponsored coverage had the employee enrolled in the primary
plan, (3) clarify that an HRA is taken into account in determining
affordability (and minimum value for purposes of section 36B) only if
the HRA and the primary eligible employer-sponsored coverage are
offered by the same employer, (4) clarify that HRA contributions are
taken into account for affordability and not minimum value if an
employee may use the HRA contributions to pay premiums for the primary
plan only or to pay cost-sharing or benefits not covered by the primary
plan in addition to premiums, and (5) clarify that employer
contributions to an HRA reduce an employee's required contribution (or
count towards providing minimum value for section 36B purposes) only to
the extent the amount of the annual contribution is required under the
terms of the plan or is otherwise determinable within a reasonable time
before the employee must decide whether to enroll. For more information
on how contributions to an HRA are taken into account for purposes of
section 4980H(b) and related reporting under section 6056, see Notice
2015-87, 2015-52 IRB, released simultaneously with these final
Additional regulations will finalize other rules on minimum value
in the proposed regulations.
The preamble to the section 5000A proposed regulations requested
comments on how employer contributions under a section 125 cafeteria
plan (flex contributions) that employees may not opt to receive as a
taxable benefit should be taken into account in determining an
employee's required contribution for purposes of the affordability of
coverage. The section 5000A final regulations discussed the comments
received and adopted the rule that an employee's required contribution
is reduced by employer contributions under a section 125 cafeteria plan
that (1) may not be taken as a taxable benefit, (2) may be used to pay
for minimum essential coverage, and (3) may be used only to pay for
medical care within the meaning of section 213. These final regulations
adopt this rule for purposes of determining affordability under section
For more information on the effect of flex contributions and other
similar arrangements on affordability for purposes of sections 36B,
5000A, and related consequences under section 4980H, see Notice 2015-
87, released simultaneously with these final regulations.
Section 1.36B-2(c)(3)(iv) provides that 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 for months that the individual is
enrolled in the coverage. The proposed regulations provide that this
rule applies only to former employees and extend the rule to retiree
coverage. Accordingly, an individual who may enroll in retiree coverage
is eligible for minimum essential coverage only for the months the
individual is enrolled in the coverage.
Commenters opined that the continuation and retiree coverage rules
should apply to individuals eligible for the coverage by reason of a
relationship to an employee, for example, the spouse of a retired
employee. In response to these comments, the final regulations clarify
that an individual who may enroll in continuation coverage or retiree
coverage because of a relationship to a former employee is eligible for
the coverage only for the months the individual is enrolled in the
Commenters suggested that the rule for continuation coverage should
apply to current employees eligible for continuation coverage as a
result of reduced hours. The final regulations do not adopt this
suggestion. Eligible employer-sponsored coverage for current employees
does not present the same administrability issues as for former
employees. Current employees with continuation coverage should be
subject to the same general rules on eligibility for employer-sponsored
coverage as other current employees. Although employees may be subject
to a higher required contribution for continuation coverage than is
required for other eligible employer-sponsored coverage, for purposes
of the premium tax credit, employees are eligible for eligible
employer-sponsored coverage only if the coverage is both affordable and
provides minimum value. Thus, current employees offered continuation
coverage, like other current employees, may be eligible for the premium
tax credit if the coverage offered either is not affordable or does not
Regulations at 45 CFR 155.420(d)(2)(i) require issuers to provide
coverage to a newborn child enrolled in a qualified health plan
effective on the date of birth. Under section 36B(c)(2)(A)(i) and Sec.
1.36B-3(c)(1)(i), a month is a coverage month for an individual only if
the individual is enrolled in a qualified health plan through an
Exchange as of the first day of the month. Under Sec.  1.36B-3(d), the
monthly premium assistance amount is determined, in part, by the
adjusted monthly premium for the applicable second lowest cost silver
(benchmark) plan (benchmark plan premium). The proposed regulations
provide that a child enrolled in a qualified health plan in the month
of the child's birth, adoption, or placement with the taxpayer for
adoption or in foster care (birth month) is treated as enrolled as of
Some commenters interpreted the coverage month rule for newborns as
requiring that issuers must provide coverage for a newborn as of the
Other commenters noted that applying a new adjusted monthly premium
as of the first of the month, thus increasing the premium assistance
amount for the month, is inconsistent with HHS regulations that provide
that the amount of advance credit payments (which approximates the
premium assistance amount) does not change until the first day of the
month following the birth month.
No changes are made to the final regulations to reflect these
comments. The rules treat certain individuals as enrolled as of the
first day of the month for purposes of the premium tax credit to
conform with the general rules for coverage months but do not require
issuers to enroll the individuals as of the first day of the month.
Furthermore, HHS regulations published on July 15, 2013 (78 FR 42321)
removed the rule providing that advance credit payments do not change
until the month following a birth or other event for which a midmonth
Under 45 CFR 155.420(b)(2)(i), Exchanges must ensure that a
taxpayer eligible to enroll an individual in coverage may choose for
the individual's coverage to be effective as of the individual's date
of birth, adoption, or placement for adoption or in foster care or as
of the first day of the following month. Similarly, for individual's
placed with a taxpayer by court order, 45 CFR 155.420(b)(2)(v) provides
that Exchanges must allow the individual's coverage to be effective as
of the date the court order is effective. Accordingly, the final
regulations provide that an individual is treated as enrolled as of the
first day of the month of birth, adoption, or placement in adoption or
foster care if the individual's enrollment is effective as of the date
of birth, adoption, or placement for adoption or in foster care, or on
the effective date of a court order. The final regulations use the term
individual instead of child to align with HHS regulations relating to
midmonth enrollments.
The proposed regulations provide that the adjusted monthly premium
is determined as if all members of the coverage family for that month
were enrolled in a qualified health plan for the entire month. The
intent of this rule was to specify that the adjusted monthly premium is
determined as of the first day of a coverage month and is not prorated
for midmonth changes in enrollment or eligibility for other minimum
essential coverage. Accordingly, an individual who enrolls midmonth but
who is treated as enrolled as of the first day of the month is a member
of the coverage family (if all other requirements are met) in
determining the adjusted monthly premium for that month. For other
coverage family changes, the adjusted monthly premium does not change
until the following month. The final regulations clarify these rules by
providing that the term coverage family means the members of a
taxpayer's family for whom a month is a coverage month (which requires
on the first day of the month) and that the adjusted monthly premium is
determined as of the first day of a coverage month.
The proposed regulations provide that the premium assistance amount
for a coverage month is prorated by the number of days of coverage when
a qualified health plan is terminated before the last day of a month
and the issuer reduces or refunds a portion of the monthly premium.
The proposed rule for computing a prorated premium assistance
amount has proven to be complex and may be difficult to administer.
Accordingly, the final regulations provide that the premium assistance
amount for a termination month is the lesser of (1) the enrollment
premiums charged (reduced by any amounts that were refunded) and (2)
the difference between the benchmark plan premium and contribution
amount for the full month. The final regulations clarify that this
computation also applies to a month an individual is enrolled in
coverage effective on the date of the individual's birth, adoption, or
placement for adoption or in foster care, or on the effective date of a
court order. The Treasury Department and the IRS anticipate publishing
rules requiring Exchanges to report under section 36B(f)(3) for partial
months of coverage the amount of enrollment premiums charged and
advance credit payments made for the days of coverage and the benchmark
plan premium for a full month of coverage.
These final regulations apply to taxable years ending after
not required. Section 553(b) of the Administrative Procedure Act (5
U.S.C. chapter 5) does not apply to these regulations, and, because the
regulations do not impose a collection of information requirement on
small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6)
Code, the notice of proposed rulemaking that preceded these final
regulations was submitted to the Chief Counsel for Advocacy of the
business. No comments were received.
The principal authors of these final regulations are Andrew Braden,
Arvind Ravichandran, and Stephen J. Toomey of the Office of Associate
Chief Counsel (Income Tax and Accounting). However, other personnel
from the IRS and the Treasury Department participated in their
2. Revising the entries for Sec. Sec.  1.36B-2(c)(3)(iv) and 1.36B-
2(c)(3)(v)(A)(4).
2. Adding entries for Sec. Sec.  1.36B-2(c)(3)(v)(A)(5) and (6).
3. Revising the entries for Sec. Sec.  1.36B-3(c)(2) and (3).
4. Adding entries for Sec. Sec.  1.36B-3(c)(4), 1.36B-3(d)(1) and (2),
1.36B-3(d)(2)(i) and (ii) and 1.36B-6.
Sec.  1.36B-0  Table of contents.
This section lists the captions contained in Sec. Sec.  1.36B-1
through 1.36B-6.
Sec.  1.36B-2  Eligibility for premium tax credit.
Sec.  1.36B-6  Minimum value.
(5) Expected spending adjustments for health savings accounts and
(e) Scope of essential health benefits and adjustment for benefits
not included in MV Calculator.
Par. 3. Section 1.36B-1 is amended by revising paragraphs (e)(1)(i),
(e)(1)(ii)(B), and (n) to read as follows:
Sec.  1.36B-1  Premium tax credit definitions.
(i) A taxpayer's modified adjusted gross income (including the
modified adjusted gross income of a child for whom an election under
section 1(g)(7) is made for the taxable year);
(B) Are required to file a return of tax imposed by section 1 for
(n) Rating area. The term rating area has the same meaning as used
in section 2701(a)(2) of the Public Health Service Act (42 U.S.C.
300gg(a)(2)) and 45 CFR 147.102(b).
1. Revising paragraphs (c)(3)(iv) and (c)(3)(v)(A)(4).
2. Adding paragraphs (c)(3)(v)(A)(5) and (6) and (c)(3)(v)(D), Example
3. Revising paragraph (c)(3)(vi).
(iv) Post-employment coverage. A former employee (including a
retiree), or an individual related (within the meaning of paragraph
(c)(3)(i) of this section) to a former employee, who may enroll in
eligible employer-sponsored coverage or in continuation coverage
required under Federal law or a State law that provides comparable
continuation coverage is eligible for minimum essential coverage under
this coverage only for months that the former employee or related
(4) Wellness program incentives. Nondiscriminatory wellness program
incentives offered by an eligible employer-sponsored plan that affect
premiums are treated as earned in determining an employee's required
contribution for purposes of affordability of an eligible employer-
sponsored plan to the extent the incentives relate exclusively to
tobacco use. Wellness program incentives that do not relate to tobacco
use or that include a component unrelated to tobacco use are treated as
not earned for this purpose. For purposes of this section, the term
wellness program incentive has the same meaning as the term reward in
Sec.  54.9802-1(f)(1)(i) of this chapter.
Amounts newly made available for the current plan year under a health
reimbursement arrangement that an employee may use to pay premiums, or
may use to pay cost-sharing or benefits not covered by the primary plan
in addition to premiums, reduce the employee's required contribution if
the health reimbursement arrangement would be integrated, as that term
is used in Notice 2013-54 (2013-40 IRB 287) (see Sec.  601.601(d) of
this chapter), with an eligible employer-sponsored plan for an employee
enrolled in the plan. The eligible employer-sponsored plan and the
health reimbursement arrangement must be offered by the same employer.
Employer contributions to a health reimbursement arrangement reduce an
employee's required contribution only to the extent the amount of the
annual contribution is required under the terms of the plan or
otherwise determinable within a reasonable time before the employee
must decide whether to enroll in the eligible employer-sponsored plan.
(6) Employer contributions to cafeteria plans. Amounts made
available for the current plan year under a cafeteria plan, within the
meaning of section 125, reduce an employee's or a related individual's
required contribution if--
(i) The employee may not opt to receive the amount as a taxable
(ii) The employee may use the amount to pay for minimum essential
(iii) The employee may use the amount exclusively to pay for
medical care, within the meaning of section 213.
Example 9. Wellness program incentives. (i) Employer X offers an
eligible employer-sponsored plan with a nondiscriminatory wellness
program that reduces premiums by $300 for employees who do not use
tobacco products or who complete a smoking cessation course.
Premiums are reduced by $200 if an employee completes cholesterol
screening within the first six months of the plan year. Employee B
does not use tobacco and the cost of his premiums is $3,700.
Employee C uses tobacco and the cost of her premiums is $4,000.
(ii) Under paragraph (c)(3)(v)(A)(4) of this section, only the
incentives related to tobacco use are counted toward the premium
amount used to determine the affordability of X's plan. C is treated
as having earned the $300 incentive for attending a smoking
cessation course regardless of whether C actually attends the
course. Thus, the required contribution for determining
affordability for both Employee B and Employee C is $3,700. The $200
incentive for completing cholesterol screening is treated as not
earned and does not reduce their required contribution.
(vi) Minimum value. See Sec.  1.36B-6 for rules for determining
whether an eligible employer-sponsored plan provides minimum value.
2. Redesignating paragraphs (c)(2) and (3) as paragraphs (c)(3) and (4)
and adding paragraph (c)(2).
6. Removing the language ``(d)(1)'' everywhere it appears in paragraphs
(h), (j), and (k), and adding the language ``(d)(1)(i)'' in its place
and removing the language ``(d)(2)'' everywhere it appears in
paragraphs (h) and (j) and adding the language ``(d)(1)(ii)'' in its
(2) The term coverage family means, in each month, the members of a
taxpayer's family for whom the month is a coverage month.
(2) Certain individuals enrolled during a month. If an individual
enrolls in a qualified health plan and the enrollment is effective on
the date of the individual's birth, adoption, or placement for adoption
or in foster care, or on the effective date of a court order, the
individual is treated as enrolled as of the first day of that month for
purposes of this paragraph (c).
(d) Premium assistance amount--(1) In general. Except as provided
in paragraph (d)(2) of this section, the premium assistance amount for
a coverage month is the lesser of--
(i) 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
(enrollment premiums); or
(ii) The excess of the adjusted monthly premium for the applicable
benchmark plan (benchmark plan premium) over 1/12 of the product of a
taxpayer's household income and the applicable percentage for the
taxable year (the taxpayer's contribution amount).
(2) Partial month of coverage--(i) In general. If a qualified
health plan is terminated before the last day of a month or an
individual is enrolled in coverage effective on the date of the
individual's birth, adoption, or placement for adoption or in foster
care, or on the effective date of a court order, the premium assistance
amount for the month is the lesser of--
(A) The enrollment premiums for the month (not including any
amounts that were refunded); or
(B) The excess of the benchmark plan premium for a full month of
coverage over the full contribution amount for the month.
(ii) Examples. The following examples illustrate the rules of this
Example 1.  (i) Taxpayer R is single and has no dependents. R
enrolls in a qualified health plan with a monthly premium of $450.
The difference between R's benchmark plan premium and contribution
amount for the month is $420. R's premium assistance amount for a
coverage month with a full month of coverage is $420 (the lesser of
$450 and $420).
(ii) The issuer of R's qualified health plan is notified that R
died on September 20. The
issuer terminates coverage as of that date and refunds the remaining
portion of the September enrollment premiums ($150) for R's
(iii) Under this paragraph (d)(2), R's premium assistance amount
for September is the lesser of the enrollment premiums for the month
($300 ($450--$150)) or the difference between the benchmark plan
premium for a full month of coverage and the full contribution
amount for the month ($420). R's premium assistance amount for
September is $300, the lesser of $420 and $300.
Example 2.  The facts are the same as in Example 1 of this
paragraph (d)(2)(ii), except that the qualified health plan issuer
does not refund any enrollment premiums for September. Under this
paragraph (d)(2), R's premium assistance amount for September is
$420, the lesser of $450 and $420.
Example 3.  The facts are the same as in Example 1 of this
paragraph (d)(2)(ii), except that the difference between R's
benchmark plan premium and contribution amount for a month is $275.
Accordingly, R's premium assistance amount for a coverage month with
a full month of coverage is $275 (the lesser of $450 and $275).
Under this paragraph (d)(2), R's premium assistance amount for
September remains $275, the lesser of $300 and $275.
(e) * * * The adjusted monthly premium for a coverage month is
determined as of the first day of the month.
(4) Family members residing at different locations. The benchmark
plan premium determined under paragraphs (f)(1) and (2) of this section
for family members who live in different States and enroll in separate
qualified health plans is the sum of the premiums for the applicable
benchmark plans for each group of family members living in the same
Household income percentage of Federal       Initial          Final
poverty line                  percentage      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 not more than 400%....             9.5             9.5
(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)(i) or (ii) of this section. Premiums are allocated to
additional benefits before determining the applicable benchmark plan
under paragraph (f) of this section.
paragraph (j):
Example 1.  (i) Taxpayer B enrolls in a qualified health plan
that provides benefits in addition to essential health benefits
(additional benefits). The monthly premiums for the plan in which B
enrolls are $370, of which $35 is allocable to additional benefits.
B's benchmark plan premium (determined after allocating premiums to
additional benefits for all silver level plans) is $440, of which
$40 is allocable to additional benefits. B's monthly contribution
amount, which is the product of B's household income and the
applicable percentage, is $60.
(ii) Under this paragraph (j), B's enrollment premiums and the
benchmark plan premium are reduced by the portion of the premium
that is allocable to the additional benefits provided under that
plan. Therefore, B's monthly enrollment premiums are reduced to $335
($370 - $35) and B's benchmark plan premium is reduced to $400 ($440
- $40). B's premium assistance amount for a coverage month is $335,
the lesser of $335 (B's enrollment premiums, reduced by the portion
of the premium allocable to additional benefits) and $340 (B's
benchmark plan premium, reduced by the portion of the premium
allocable to additional benefits ($400), minus B's $60 contribution
paragraph (j)(3), except that the plan in which B enrolls provides
no benefits in addition to the essential health benefits required to
be provided by the plan. Thus, under paragraph (j) of this section,
B's benchmark plan premium ($440) is reduced by the portion of the
premium allocable to additional benefits provided under that plan
($40). B's enrollment premiums ($370) are not reduced under this
paragraph (j). B's premium assistance amount for a coverage month is
$340, the lesser of $370 (B's enrollment premiums) and $340 (B's
(a) In general. An eligible employer-sponsored plan provides
minimum value (MV) only if--
(1) The plan's share of the total allowed costs of benefits
provided to an employee (the MV percentage) is at least 60 percent; and
(c) MV percentage--(1) In general. [Reserved]
(2) Wellness program incentives--(i) In general. Nondiscriminatory
wellness program incentives offered by an eligible employer-sponsored
plan that affect deductibles, copayments, or other cost-sharing are
treated as earned in determining the plan's MV percentage if the
incentives relate exclusively to tobacco use. Wellness program
incentives that do not relate to tobacco use or that include a
component unrelated to tobacco use are treated as not earned for this
purpose. For purposes of this section, the term wellness program
incentive has the same meaning as the term reward in Sec.  54.9802-
1(f)(1)(i) of this chapter.
(ii) Example. The following example illustrates the rules of this
paragraph (c)(2):
Example.  (i) Employer X offers an eligible employer-sponsored
plan that reduces the deductible by $300 for employees who do not
use tobacco products or who complete a smoking cessation course. The
deductible is reduced by $200 if an employee completes cholesterol
does not use tobacco and his deductible is $3,700. Employee C uses
tobacco and her deductible is $4,000.
(ii) Under paragraph (c)(2)(i) of this section, only the
incentives related to tobacco use are considered in determining the
plan's MV percentage. C is treated as having earned the $300
incentive for attending a smoking cessation course regardless of
whether C actually attends the course. Thus, the deductible for
determining for the MV percentage for both Employees B and C is
$3,700. The $200 incentive for completing cholesterol screening is
(3) Employer contributions to health savings accounts. Employer
contributions for the current plan year to health savings accounts that
are offered with an eligible employer-sponsored plan are taken into
account for that plan year towards the plan's MV percentage.
reimbursement arrangement that would be integrated within the meaning
of Notice 2013-54 (2013-40 IRB 287), see Sec.  601.601(d) of this
chapter, with an eligible employer-sponsored plan for an employee
enrolled in the plan are taken into account for that plan year towards
the plan's MV percentage if the amounts may be used to reduce only
cost-sharing for covered medical expenses. A health reimbursement
arrangement counts toward a plan's MV percentage only if the health
reimbursement arrangement and the eligible employer-sponsored plan are
offered by the same employer. Employer contributions to a health
reimbursement arrangement count for a plan year towards the plan's MV
percentage only to the extent the amount of the annual contribution is
required under the terms of the plan or otherwise determinable within a
reasonable time before the employee must decide whether to enroll in
the eligible employer-sponsored plan.
health reimbursement arrangements. [Reserved]
not included in MV Calculator. [Reserved]
(g) Effective/applicability date--in general. (1) Except as
provided in paragraph (g)(2) of this section, this section applies for
taxable years ending after December 31, 2013.
Par. 7. Section 1.6011-8 is amended by revising paragraph (a) to read
Sec.  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 for whom advance payments of
the premium tax credit under section 36B are made in a taxable year
must file an income tax return for that taxable year on or before the
due date for the return (including extensions of time for filing).