[Federal Register Volume 77, Number 100 (Wednesday, May 23, 2012)]
[Rules and Regulations]
[Pages 30377-30400]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-12421]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 602

[TD 9590]
RIN 1545-BJ82


Health Insurance Premium Tax Credit

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final regulations relating to the 
health insurance premium tax credit enacted by the Patient Protection 
and Affordable Care Act and the Health Care and Education 
Reconciliation Act of 2010, 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, the Department 
of Defense and Full-Year Continuing Appropriations Act, 2011, and the 
3% Withholding Repeal and Job Creation Act. These final regulations 
provide guidance to individuals who enroll in qualified health plans 
through Affordable Insurance Exchanges (Exchanges) and claim the 
premium tax credit, and to Exchanges that make qualified health plans 
available to individuals and employers.

DATES: Effective Date: These regulations are effective on May 23, 2012.
    Comment date: Comments will be accepted until August 21, 2012.
    Applicability Date: For date of applicability, see Sec.  1.36B-
1(o).

ADDRESSES: Comments should be submitted to Internal Revenue Service, 
CC:PA:LPD:PR (REG-131491-10), Room 5203, P.O. Box 7604, Ben Franklin 
Station, Washington, DC 20044, or electronically to www.regulations.gov 
(IRS REG-131491-10). Alternatively, comments may be hand delivered 
between the hours of 8 a.m. and 4 p.m. Monday to Friday to CC:PA:LPD:PR 
(REG-131491-10), Courier's Desk, Internal Revenue Service, 1111 
Constitution Avenue NW., Washington, DC. All comments will be available 
for public inspection and copying.

FOR FURTHER INFORMATION CONTACT: Shareen S. Pflanz, (202) 622-4920, or 
Andrew S. Braden, (202) 622-4960 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collection of information contained in these regulations has 
been reviewed and approved by the Office of Management and Budget in 
accordance with the Paperwork and Reduction Act (44 U.S.C. 3507(d)) 
under control number 1545-2232.
    The collection of information in these final regulations is in 
Sec.  1.36B-5. The information will help the IRS 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). An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless the 
collection of information displays a valid control number assigned by 
the Office of Management and Budget.
    The estimated total annual reporting burden is 250,000 hours. The 
estimated annual burden per respondent is 5,000 hours. The estimated 
number of respondents is 50.
    Comments concerning the accuracy of this burden estimate and 
suggestions for reducing this burden should be sent to the Internal 
Revenue Service, Attn: IRS Reports Clearance Officer, 
SE:W:CAR:MP:T:T:SP, Washington, DC 20224, and 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.
    Books or records relating to a collection of information must be 
retained as long as their contents may become material in the 
administration of any internal revenue law. Generally, tax returns and 
return information are confidential, as required by 26 U.S.C. 6103.

Background

    This document contains final regulations that amend the Income Tax 
Regulations (26 CFR part 1) under section 36B relating to the 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). On 
August 17, 2011, a notice of proposed rulemaking (REG-131491-10) was 
published in the Federal Register (76 FR 50931). Written comments 
responding to the notice of proposed rulemaking were received. The 
comments are available for public inspection at www.regulations.gov or 
on request. A public hearing was held on November 17, 2011. After 
consideration of all the comments, the proposed regulations are adopted 
as amended by this Treasury decision. The comments and revisions are 
discussed in the preamble.

Explanation of Provisions and Summary of Comments

1. Premium Tax Credit Definitions

a. Family Size
    The proposed regulations define a taxpayer's family as the 
individuals for whom a taxpayer claims a deduction for a personal 
exemption under section 151 for the taxable year, which may include the 
taxpayer, the taxpayer's spouse, and dependents. The proposed 
regulations also clarify that the family includes individuals who are 
not applicable individuals under section 5000A(d) and thus are not 
subject to the penalty for failing to maintain minimum essential 
coverage.
    Commentators recommended clarifying that the family also includes 
individuals who are exempt under section 5000A(e) from the requirement 
to maintain minimum essential coverage. Accordingly, the final 
regulations clarify that a family may include all individuals not 
subject to the section 5000A penalty.
    Some commentators disagreed with the rule in the proposed 
regulations that a taxpayer's family includes a child only if the 
taxpayer is allowed a dependency exemption deduction for the child. 
Commentators suggested that taxpayers should be able to compute a 
premium tax credit based on premiums for a child for whom the person is 
not allowed a dependency exemption deduction. Section 36B(d)(1) defines 
the family as the individuals for whom the taxpayer is allowed a 
personal exemption deduction under section 151. Accordingly, the final 
regulations do not adopt these comments. We note however, that the non-
dependent child may be able to claim a premium tax credit if otherwise 
eligible. See Sec.  1.36B-3(h).
b. Requirement To File a Return for Purposes of Household Income
    Under section 36B, household income includes the modified adjusted 
gross income of a dependent who is required to file a return of tax 
imposed by section

[[Page 30378]]

1. The final regulations conform to this statutory language, thus 
clarifying that household income does not include the modified adjusted 
gross income of a family member who is required to file a tax return 
solely to report tax imposed under Code sections other than section 1 
(for example, the early distribution penalty imposed under section 
72(q) or self-employment tax under section 1401).
c. Modified Adjusted Gross Income
    Under the proposed regulations, modified adjusted gross income is 
adjusted gross income increased by amounts excluded from gross income 
under section 911 and tax-exempt interest a taxpayer receives or 
accrues during the taxable year. The 3% Withholding Repeal and Job 
Creation Act, Public Law 112-56 (125 Stat. 711 (2011)), which was 
enacted after the proposed regulations were published, amended the 
definition of modified adjusted gross income to include Social Security 
benefits (as defined in section 86(d)) not included in gross income 
under section 86. The final regulations reflect this amendment.
d. Lawfully Present
    Under section 36B(c)(1)(B) and the proposed regulations, a taxpayer 
who is an individual lawfully present in the United States may be 
treated as an applicable taxpayer if the taxpayer's household income is 
under 100 percent of the Federal poverty line (FPL) and the taxpayer is 
not eligible for Medicaid. Under section 1321(f)(3) of the Affordable 
Care Act, an individual who is not lawfully present in the United 
States may not enroll in a qualified health plan through an Exchange. 
The proposed regulations define lawfully present by referencing 45 CFR 
152.2, which also is referenced in defining lawfully present in 
proposed regulations on Exchanges under 45 CFR 155.20 issued by the 
Department of Health and Human Services (HHS).
    Commentators requested that the final regulations expand the 
definition of lawfully present to include the categories of immigrants 
described in the Children's Health Insurance Program Reauthorization 
Act. One commentator stated that the final regulations should allow 
States to use existing administrative mechanisms to determine 
eligibility if those mechanisms are not more restrictive than Federal 
law.
    To maintain consistency with the HHS Exchange final regulations, 
the final regulations define lawfully present by referencing 45 CFR 
155.20, the definition in the HHS Exchange final regulations.
e. Federal Poverty Line
    The proposed regulations define federal poverty line by reference 
to the Federal poverty guidelines published annually by HHS. The 
Federal poverty guidelines for Alaska and Hawaii differ from the 
guidelines for the 48 contiguous states and the District of Columbia. 
The final regulations clarify that, if married taxpayers reside in 
separate States with different Federal poverty guidelines, or if a 
taxpayer resides in States with different Federal poverty guidelines 
during the year, the Federal poverty line that applies for purposes of 
section 36B and the associated regulations is the higher Federal 
poverty line (resulting in a lower percentage of the Federal poverty 
line for the taxpayers' household income and family size).
f. Federally-Facilitated Exchange
    Under the proposed regulations, the term Exchange has the same 
meaning as in 45 CFR 155.20, which provides that the term Exchange 
refers to a State Exchange, regional Exchange, subsidiary Exchange, and 
Federally-facilitated Exchange.
    Commentators disagreed on whether the language in section 
36B(b)(2)(A) limits the availability of the premium tax credit only to 
taxpayers who enroll in qualified health plans on State Exchanges.
    The statutory language of section 36B and other provisions of the 
Affordable Care Act support the interpretation that credits are 
available to taxpayers who obtain coverage through a State Exchange, 
regional Exchange, subsidiary Exchange, and the Federally-facilitated 
Exchange. Moreover, the relevant legislative history does not 
demonstrate that Congress intended to limit the premium tax credit to 
State Exchanges. Accordingly, the final regulations maintain the rule 
in the proposed regulations because it is consistent with the language, 
purpose, and structure of section 36B and the Affordable Care Act as a 
whole.
g. Rating Area
    The proposed regulations define rating area as an Exchange service 
area, as described in 45 CFR 155.20. Commentators suggested that an 
Exchange service area is different than a rating area as that term is 
used in section 36B(b)(3) for determining the applicable benchmark 
plan. The final regulations reserve the definition of rating area.

2. Eligibility for the Premium Tax Credit

a. Applicable Taxpayer
    Under section 36B(c)(1) and the proposed regulations, in general a 
taxpayer is an applicable taxpayer for a taxable year only if the 
taxpayer's household income for the taxable year is at least 100 
percent but not more than 400 percent of the FPL for the taxpayer's 
family size. Commentators requested that the final regulations treat a 
taxpayer whose household income exceeds 400 percent of the FPL for the 
taxpayer's family size as an applicable taxpayer if, at enrollment, the 
Exchange estimates that the taxpayer's household income will be between 
100 and 400 percent of the FPL for the taxpayer's family size and 
approves advance credit payments. Other commentators advocated allowing 
taxpayers with household income above 400 percent of the FPL for their 
family size to be treated as eligible for a premium tax credit for the 
months before a change in circumstances affecting household income 
occurs or for the months for which the taxpayer receives advance 
payments.
    The final regulations do not adopt these comments because they are 
contrary to the language of section 36B limiting the premium tax credit 
to taxpayers with household income for the taxable year at or below 400 
percent of the FPL for the taxpayer's family size.
    Commentators requested that the final regulations clarify that a 
taxpayer who has household income between 100 percent and 133 percent 
of the FPL but is not eligible for Medicaid qualifies for the premium 
tax credit. Under section 36B(c)(1)(A) and the proposed regulations, an 
applicable taxpayer who may claim the premium tax credit is a taxpayer 
with household income between 100 and 400 percent of the FPL for the 
family size. Thus, it is clear that a taxpayer with household income 
between 100 percent and 133 percent of the FPL for the taxpayer's 
family size may be an applicable taxpayer.
    Commentators requested that the final regulations allow an 
individual who may be claimed as a dependent by another taxpayer to 
qualify as an applicable taxpayer for a taxable year if, for the 
taxable year, another taxpayer does not claim the individual as a 
dependent. The final regulations do not adopt this comment because it 
is inconsistent with section 36B(c)(1)(D), which provides that a 
premium tax credit is not allowed to any individual for whom a 
deduction under section 151 is ``allowable to another taxpayer'' for 
the taxable year.

[[Page 30379]]

b. Incarceration
    Under section 1312(f) of the Affordable Care Act, individuals who 
are incarcerated (other than pending disposition of charges) may not 
enroll in a qualified health plan through an Exchange. The proposed 
regulations provide, however, that an individual who is incarcerated 
may be allowed a premium tax credit if a family member is enrolled in a 
qualified health plan.
    A commentator suggested that the rules relating to incarcerated 
individuals should apply to individuals incarcerated pending 
disposition of charges, as is the case under the Medicaid program. The 
comment addresses an issue beyond the scope of the premium tax credit 
regulations. Standards for enrollment in a qualified health plan fall 
under rules within the jurisdiction of HHS.
c. Minimum Essential Coverage
i. Government-Sponsored Coverage
A. Time of Eligibility
    The proposed regulations provide that 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. The proposed regulations further provide that 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 the coverage on the first day of the second calendar month 
following the event that establishes eligibility.
    Commentators asked that the final regulations allow individuals a 
certain amount of time to complete the requirements (such as submitting 
an application) necessary to obtain government-sponsored minimum 
essential coverage. Some commentators suggested that the final 
regulations could provide this period by defining ``reasonably 
promptly'' as 90 days after the event that establishes eligibility. 
Commentators requested that the final regulations allow exemptions from 
the 90-day period, however, when additional delay in receiving benefits 
occurs despite the good faith efforts of the taxpayer, for example as a 
result of inaction of a government agency or official.
    To provide greater clarity, the final regulations delete the 
language ``reasonably promptly'' and extend this time period. Under the 
final regulations, an individual who fails to complete the requirements 
necessary to receive benefits available under a government-sponsored 
program by the last day of the third full calendar month following the 
event that establishes eligibility is treated as eligible for the 
coverage on the first day of the fourth calendar month. Because an 
individual who timely completes the necessary requirements is treated 
as eligible for government-sponsored minimum essential coverage no 
earlier than the first month that the individual may receive benefits, 
this 3-month time period does not include the time needed for a 
government agency to process an application.
    The proposed regulations request comments on whether rules should 
provide flexibility if operational challenges prevent timely transition 
from coverage under a qualified health plan to coverage under a 
government-sponsored program. Commentators stated that the final 
regulations should provide that an individual transitioning from a 
qualified health plan to coverage under a government-sponsored program 
should not be treated as eligible for government-sponsored minimum 
essential coverage until the individual is able to effectively 
terminate his or her qualified health plan coverage. They expressed 
concern that an individual may be unable to discontinue advance credit 
payments by the beginning of a month for which the individual is 
eligible for government-sponsored coverage and could be responsible for 
an excess advance payment for that month.
    The concerns expressed in these comments are addressed in the HHS 
final regulations on Exchanges. Under 45 CFR 155.430, an Exchange must 
permit an enrollee to terminate coverage in a qualified health plan no 
later than 14 days after the enrollee requests termination. For an 
enrollee who is newly eligible for Medicaid or the Children's Health 
Insurance Program (CHIP), 45 CFR 155.430(d)(2)(iv) provides that 
qualified health plan coverage terminates on the last day before 
Medicaid or CHIP coverage begins. These termination rules enable 
individuals transitioning to coverage under a government-sponsored 
program to effectively terminate qualified health plan coverage (and 
liability for advance credit payments) before they are eligible for 
government-sponsored minimum essential coverage.
B. Definition of ``Eligible''
    The proposed regulations provide that an individual is eligible for 
government-sponsored minimum essential coverage when an individual 
meets the requirements for coverage under the program. For 
administrative convenience, however, because the standards for 
eligibility in veterans' programs do not allow Exchanges to identify 
everyone who may be eligible for veterans' coverage at the time he or 
she is seeking an eligibility determination for advance payments of the 
premium tax credit, the proposed regulations provide that an individual 
is eligible for minimum 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.
    The final regulations conform the rules to amendments to section 
5000A that delete the word ``veteran's'' in describing health care 
programs under chapter 17 or 18 of Title 38. Thus, the special rule for 
veterans' coverage may apply to individuals who are not veterans but 
are eligible for the Civilian Health and Medical Program of the 
Department of Veterans Affairs (VA) or the VA's spina bifida program.
    Commentators requested that the final regulations define 
eligibility for government-sponsored programs as actual enrollment for 
individuals suffering from end stage renal disease who become eligible 
for Medicare as a result of their diagnosis. Other commentators 
requested this treatment for any individual suffering from an acute 
illness who becomes eligible for a government-sponsored program. The 
commentators asserted that these seriously-ill individuals should be 
able to choose to remain enrolled in a qualified health plan with the 
benefit of a premium tax credit to maintain continuity of medical care, 
which may be disrupted if the individual loses eligibility for the 
premium tax credit and is required to move to a government-sponsored 
program in which the individual's medical provider does not 
participate.
    Section 36B(c)(2)(B) establishes a clear structure under which 
eligibility for government-sponsored minimum essential coverage in a 
given month precludes including an individual in a taxpayer's coverage 
family for purposes of computing the premium assistance amount for that 
month. In keeping with the statutory scheme, the final regulations do 
not adopt these comments. However, the IRS and the Treasury Department 
expect to publish additional guidance, see Sec.  601.601(d)(2), 
clarifying when or if an individual becomes ``eligible for government-
sponsored minimum essential coverage'' when the eligibility for that 
coverage is a result of a particular illness or

[[Page 30380]]

condition. For example, as the preamble to the proposed regulations 
notes, the additional guidance would clarify the rules in the case of 
eligibility for Medicaid on the basis of blindness or disability.
C. Eligibility for Limited Benefits
    Commentators requested that the final regulations address whether 
eligibility for benefits with a limited scope under government programs 
(for example, eligibility only for family planning services under 
Medicaid) constitutes eligibility for minimum essential coverage. The 
final regulations do not address these comments because minimum 
essential coverage is defined in section 5000A(f). It is anticipated 
that regulations under section 5000A will provide that government-
sponsored health benefit programs that offer only very limited benefits 
are not minimum essential coverage.
D. Medicare Eligibility
    A commentator noted that the dates in some of the examples in the 
proposed regulations concerning eligibility for Medicare inaccurately 
describe when an individual's Medicare coverage begins. The commentator 
also asked that the final regulations create a safe harbor for 
taxpayers whose Medicare coverage is delayed because they enroll during 
the later months of their Medicare initial enrollment period.
    The final regulations revise the examples in response to this 
comment. The final regulations do not include the suggested Medicare 
safe harbor because the commentator's concerns are addressed by the 
general rule that an individual is eligible for minimum essential 
coverage on the first day of the first full month the individual may 
receive benefits. Additionally, as discussed earlier in this preamble, 
the final regulations revise the rule that an individual who fails to 
complete the requirements to obtain coverage is treated as eligible on 
the first day of the fourth month after the event establishing 
eligibility. Thus, individuals enrolling during the later months of 
their initial Medicare enrollment period will not be deemed eligible 
for Medicare before the expiration of the enrollment period.
E. Indian Health Service
    Commentators requested that the final regulations provide that 
individuals eligible to receive health care from the Indian Health 
Service (IHS) are not eligible for government-sponsored minimum 
essential coverage. Section 5000A(f) defines minimum essential 
coverage. It does not designate the IHS as providing minimum essential 
coverage. Section 5000A(f)(1)(E) authorizes HHS to designate other 
coverage as minimum essential coverage. HHS has advised the IRS and the 
Treasury Department that it does not intend to designate access to the 
IHS as minimum essential coverage. Thus, individuals who are eligible 
to receive health care from the IHS will not be barred by IHS access 
alone from eligibility for the premium tax credit or from access to the 
special cost-sharing reduction for tribal members under section 1402(d) 
of the Affordable Care Act.
ii. Employer-Sponsored Coverage
A. Affordability
    The proposed regulations provide that an eligible employer-
sponsored plan is affordable for an employee and related individuals if 
the portion of the annual premium the employee must pay for self-only 
coverage does not exceed the required contribution percentage (9.5 
percent for taxable years beginning before January 1, 2015) of the 
taxpayer's household income. Commentators suggested that the 
affordability of coverage for related individuals should be based on 
the portion of the annual premium the employee must pay for family 
coverage.
    Under section 36B(c)(2)(C), an individual who may enroll in an 
eligible employer-sponsored plan may nonetheless be eligible for a 
premium tax credit if the employer-sponsored coverage either is 
unaffordable or fails to provide minimum value. Future regulations 
concerning employer-sponsored coverage will provide final rules on 
determining affordability for related individuals and proposed rules on 
determining minimum value.
    Some commentators asked that the final rules clarify how employer 
contributions to health savings accounts (HSAs), and amounts made 
available under health reimbursement arrangements (HRAs) are treated in 
determining affordability. Employer contributions to an HSA would not 
affect the affordability of employer-sponsored coverage because HSA 
contributions may not be used to pay for premiums for health insurance 
coverage (except in limited circumstances not applicable in the context 
of employer-sponsored coverage). Amounts available under an HRA that 
may be used only to reimburse medical expenses other than the 
employee's required share of the cost of employer-sponsored coverage 
also would not affect the affordability of employer-sponsored coverage. 
These final regulations do not address how other HRAs are treated for 
purposes of determining the affordability of an employer-sponsored 
plan, which may be addressed further in additional published guidance, 
see Sec.  601.601(d)(2).
    Some commentators also asked for clarification on how wellness 
incentive programs affect the premium affordability determination. The 
final regulations authorize the Commissioner to publish additional 
guidance, see Sec.  601.601(d)(2), to address the effect on 
affordability of wellness incentives that increase or decrease an 
employee's share of premiums. Comments are requested on types of 
wellness incentives, how these programs affect the affordability of 
eligible employer-sponsored coverage for employees and related 
individuals, and how incentives are earned and applied. The 
administrability of any rule on wellness incentives must consider the 
extent to which employees can be certain they will qualify for the 
incentives at the time they otherwise would be evaluated for 
eligibility for advance credit payments.
B. Affordability Safe Harbor
    Under the proposed regulations, an employer-sponsored plan is not 
affordable for an employee or family member for a plan year if, when 
the employee or family member enrolls in a qualified health plan, an 
Exchange determines that the eligible employer-sponsored plan is not 
affordable. Individuals applying for advance credit payments are 
required to provide the Exchange with information on whether employer-
sponsored coverage is available to them. Because an Exchange will make 
an affordability determination only when an individual represents that 
employer-sponsored coverage is available, the affordability safe harbor 
will not be available to a taxpayer who misrepresents to an Exchange 
the availability of employer-sponsored coverage. The final regulations 
provide that the affordability safe harbor does not apply if a 
taxpayer, with reckless disregard for the facts, provides incorrect 
information to an Exchange concerning an employee's portion of the 
annual premium for employer coverage. The final regulations clarify 
that the affordability safe harbor applies only until such time as the 
availability of employer-sponsored coverage changes. If new or 
different employer-sponsored coverage becomes available after an 
individual enrolls in a qualified health plan, the individual must 
notify the Exchange and get a new affordability determination to extend 
the safe harbor. As the preamble to the proposed regulation notes, 
regulations under

[[Page 30381]]

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 affordability safe harbor if the employer offers to its 
full-time employees affordable coverage that provides minimum value.
    Under 45 CFR 155.335, Exchanges generally will conduct an annual 
redetermination process that will allow individuals who enroll in a 
qualified health plan to maintain their eligibility and enrollment for 
subsequent years with limited burden. This process involves notifying 
the individual of the information the Exchange intends to use to make a 
new determination of eligibility for advance credit payments and 
soliciting the individual to report changes. The final regulations 
clarify that the affordability safe harbor does not carry over to later 
plan years automatically as part of the redetermination process. The 
affordability safe harbor applies only to a plan year for which a 
taxpayer responds to the notification and affirmatively provides 
information relating to the affordability in the upcoming year of 
available employer-sponsored coverage, allowing an Exchange to 
determine that employer-sponsored coverage available to the taxpayer 
for that plan year is unaffordable.
C. Eligibility During a Waiting Period
    Under section 2708 of the Public Health Service Act, employers are 
permitted to apply a waiting period of up to 90 days beginning when the 
employee is otherwise eligible for coverage under a group health plan. 
See Notice 2012-17 (2012-9 IRB 430). The final regulations clarify that 
an employee or related individual is treated as not eligible for 
coverage under the employer's plan during a waiting period.
D. Minimum Value
    The proposed regulations provide that 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 is at least 60 
percent. Commentators provided various recommendations for determining 
minimum value. Some commentators requested transition relief. Notice 
2012-31 (2012-20 IRB 906) solicits additional comments on potential 
approaches for determining minimum value. All comments will be 
considered in separate guidance on determining minimum value.
E. Individuals Enrolled in Coverage
    Section 36B(c)(2)(C)(iii) and the proposed regulations provide that 
an individual who enrolls in an eligible employer-sponsored plan is not 
eligible for the premium tax credit even if the plan is unaffordable or 
fails to offer minimum value. Commentators asked whether an individual 
who enrolls in an eligible employer-sponsored plan and then terminates 
coverage during the plan year is treated as eligible for minimum 
essential coverage under the plan for the entire plan year under this 
rule, even though the coverage is unaffordable or does not provide 
minimum value. Commentators similarly asked if individuals who enroll 
in continuation coverage and then disenroll from it later during the 
year are treated as eligible for minimum essential coverage for the 
entire year. In response to these comments, the final regulations 
clarify that an individual is treated as eligible for minimum essential 
coverage under an eligible employer-sponsored plan by reason of 
enrolling in the plan or in continuation coverage only for months the 
individual is enrolled in the coverage.
    Commentators expressed concern that an employee may be enrolled 
automatically in employer-sponsored coverage and would be treated as 
eligible for minimum essential coverage under an employer-sponsored 
plan by reason of the automatic enrollment even though the plan is not 
affordable or does not provide minimum value. The commentators were 
specifically concerned about the automatic enrollment provision in 
section 18A of the Fair Labor Standards Act (added by section 1511 of 
the Affordable Care Act), which is applicable to employers with more 
than 200 full-time employees. (The Department of Labor, which has 
jurisdiction over the automatic enrollment provisions under section 18A 
of the Fair Labor Standards Act, does not intend to require employers 
to comply with the automatic enrollment provisions until after it 
publishes regulations and those regulations become applicable, and has 
indicated that the regulations will not take effect by 2014. See Notice 
2012-17, Q&A-1.)
    Commentators also raised concerns about the automatic enrollment of 
an employee in an employer-sponsored plan for other reasons, which 
could include automatic enrollment that a plan might provide for 
without regard to the automatic enrollment requirements of the 
Affordable Care Act, automatic enrollment that might occur because of 
administrative error, or automatic re-enrollment in the plan in a 
subsequent year. The commentators recommended allowing an employee to 
opt out of the employer-sponsored coverage following automatic 
enrollment.
    In response to these comments, the final regulations provide that 
an employee or related individual is treated as not enrolled in an 
eligible employer-sponsored plan for a month in a plan year or other 
period if (1) the employee or related individual is automatically 
enrolled in the plan for that plan year or other period, and (2) 
terminates the coverage before the later of the first day of the second 
full calendar month of the plan year or other period or the last day of 
any permissible opt-out period provided by the employer-sponsored plan 
or in regulations to be issued by the Department of Labor. Thus, an 
individual who is automatically enrolled for a plan year or other 
period in coverage that is unaffordable or that does not provide 
minimum value and who terminates that coverage by the date specified in 
the preceding sentence will not be treated as eligible for minimum 
essential coverage under the employer-sponsored plan for the months in 
which the individual was automatically enrolled in the plan that are 
within that plan year or period. Accordingly, the individual will not 
be precluded by the automatic enrollment from inclusion in the 
taxpayer's coverage family for computing the amount of the premium tax 
credit for those months.
iii. Nondependent Eligibility for Minimum Essential Coverage
    Commentators asked whether individuals who may enroll in an 
eligible employer-sponsored plan based on their relationship to an 
employee but who are not tax dependents (for example, a 25-year old 
child or a domestic partner of the employee) are treated as eligible 
for minimum essential coverage under the plan. In response to these 
comments, the final regulations provide that an individual who may 
enroll in minimum essential coverage because of a relationship to 
another person eligible for the coverage, but for whom the other 
eligible person does not claim a personal exemption deduction under 
section 151, is treated as eligible for minimum essential coverage 
under the coverage only for months that the related individual is 
enrolled in the coverage. This change reflects the fact that the 
related individual is a member of a different family with different 
household income for purposes of the premium tax credit. Furthermore, a 
person who may not claim a related individual as a

[[Page 30382]]

dependent is not responsible for the section 5000A penalty for the 
related individual who does not receive coverage. Thus, the final 
regulations ensure that coverage available through another person does 
not create an obstacle to a related individual claiming a premium tax 
credit.

3. Computing the Premium Tax Credit

a. Definition of Coverage Month
    Section 36B(c)(2)(A)(ii) and the proposed regulations provide that 
a month is a coverage month for an individual only if the individual is 
enrolled in a qualified health plan and is not eligible for other 
minimum essential coverage on the first day of the month, and the 
premiums are paid by the taxpayer or through advance credit payments.
    Consistent with the proposed regulations, the final regulations 
provide that an individual must be enrolled in a qualified health plan 
as of the first day of the month for a month to be a coverage month. 
However, instead of testing whether the individual is eligible for 
other minimum essential coverage as of the first day of the month, the 
final regulations provide that an individual may have a coverage month 
as long as there is at least one day of the month when the individual 
is not eligible for other minimum essential coverage. The final 
regulations also clarify that a month is not a coverage month for a 
taxpayer if the taxpayer's share of premiums is not paid in full by the 
unextended due date for filing the taxpayer's income tax return for the 
taxable year.
b. Third-Party Payments
    Under the proposed regulations, premiums another person pays for 
coverage of the taxpayer or a member of the taxpayer's family for a 
month are treated as paid by the taxpayer solely for purposes of the 
month qualifying as a coverage month. Commentators asked for 
confirmation that an Indian tribe may pay premiums on behalf of a 
tribal member. The final regulations add an example illustrating that 
premiums paid for a taxpayer by an Indian tribe are treated as paid by 
the taxpayer under the coverage month rule.
c. Adjusted Monthly Premium
    Under section 36B(b)(3)(C), the adjusted monthly premium is the 
premium an issuer would charge to cover all members of a taxpayer's 
coverage family, adjusted only for age. A commentator noted that the 
definition of adjusted monthly premium in the proposed regulations does 
not include the statutory qualification that, in the case of a State 
participating in the wellness discount demonstration project under 
section 2705(d) of the Public Health Service Act, the adjusted monthly 
premium is determined without regard to any premium discount or rebate 
under the project. The final regulations revise the definition of 
adjusted monthly premium in accordance with this comment and clarify 
that the premium may not be adjusted for tobacco use, see section 
36B(b)(3)(C).
d. Applicable Benchmark Plan
i. In General
    Under section 36B(b)(3)(B), a taxpayer's premium tax credit is 
computed based on the premium for the applicable second lowest cost 
silver plan in the rating area where the taxpayer resides and offered 
by the Exchange where the taxpayer enrolls in a qualified health plan. 
For simplicity, the proposed regulations refer to this plan as the 
applicable benchmark plan.
    Section 36B(b)(3)(B)(ii) describes the ``applicable'' benchmark 
plan as providing self-only or family coverage. The proposed 
regulations define family coverage as insurance that covers more than 
one individual. The proposed regulations further provide that a 
taxpayer's ``applicable'' benchmark plan is the benchmark plan that 
``applies'' to the members of the taxpayer's coverage family. The 
proposed regulations define the coverage family, in general, as the 
members of the taxpayer's family (the individuals for whom the taxpayer 
properly claims a personal exemption deduction under section 151) who 
are not eligible for other minimum essential coverage. The final 
regulations clarify that the coverage family includes only those 
individuals in the taxpayer's family who are not eligible for other 
minimum essential coverage and enroll in a qualified health plan.
    For purposes of determining the benchmark plan that ``applies'' to 
a coverage family, the proposed regulations provide that if an Exchange 
offers categories of family coverage (such as coverage for two adults 
or coverage for one adult plus children), 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. The final regulations delete the reference to coverage 
categories. The final Exchange rules promulgated by HHS removed 
references to rating categories, which are a parallel concept to 
coverage categories. The final regulations provide that the applicable 
benchmark plan for family coverage is the plan that applies to the 
members of the taxpayer's coverage family.
    Commentators requested clarification on how the applicable 
benchmark plan would be determined for a qualified health plan that 
covers children only. The final regulations provide an example in 
response to this comment.
ii. Families Not Covered by One Applicable Benchmark Plan
    The proposed regulations provide that the premium for the 
applicable benchmark plan is the sum of the premiums for the applicable 
benchmark plans that cover components of the taxpayer's coverage family 
if a single benchmark plan would not cover the family, for example 
because members live in different rating areas. The final regulations 
provide that, if there is at least one silver level plan offered on an 
Exchange that does not cover all members of a taxpayer's coverage 
family under one policy and premium, for example because of 
nontraditional relationships within the family, the premium for the 
applicable benchmark plan is the single premium or the combination of 
premiums that is the second lowest cost silver option for covering the 
entire family. The final regulations reserve rules for determining the 
applicable benchmark plan for families with members residing in 
different locations.
    Commentators stated that the final regulations should allow 
domestic partners and other two-adult groups to use a family benchmark 
plan to compute their premium tax credit if the Exchange allows both 
adults to be covered by the same qualified health plan. The final 
regulations do not adopt this suggestion. If the adults constitute two 
separate households for Federal tax purposes, section 36B requires a 
separate credit computation for each household that includes only those 
individuals for whom each taxpayer claims a personal exemption 
deduction under section 151.
iii. Plans Closed to Enrollment
    The proposed regulations provide that, in general, an applicable 
benchmark plan is the second lowest cost silver plan offered through 
the Exchange at the time a taxpayer or family member enrolls. However, 
a plan does not cease to be a taxpayer's applicable benchmark plan for 
that enrollment period because the plan or a lower cost plan closes to 
enrollment during the taxable year. Thus, a plan may continue to be an 
applicable benchmark plan if it closes to

[[Page 30383]]

enrollment after a taxpayer enrolls in a qualified health plan, but it 
is disregarded in determining the applicable benchmark plan if it is 
closed to enrollment at the time the taxpayer enrolls.
    A commentator requested that the final regulations exclude certain 
qualified health plans open to enrollment only to certain individuals 
when determining which plan constitutes a taxpayer's applicable 
benchmark plan. The final regulations clarify that a plan is taken into 
account in determining the taxpayer's applicable benchmark plan only if 
it is open to enrollment to one or more members of a taxpayer's 
coverage family.
iv. Changes Affecting Applicable Benchmark Plan
    Commentators asked whether a taxpayer's applicable benchmark plan 
is locked in at enrollment and whether the benchmark plan could change 
during the year if a plan is decertified or if members of the 
taxpayer's family leave the plan. The proposed regulations provide that 
a taxpayer's applicable benchmark plan may change from month to month 
if changes in the taxpayer's coverage family occur (for example, if a 
family member becomes eligible or ineligible for minimum essential 
coverage during the taxable year). The proposed regulations also 
provide that a taxpayer's applicable benchmark plan 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 year. The 
final regulations adopt the proposed regulations without change.
e. Combining Qualified Health Plan Premiums With Premiums for Other 
Coverage
    Section 36B(b) and the proposed regulations provide that the 
premium tax credit is the lesser of (1) the premiums for the qualified 
health plan or plans in which a taxpayer or family member enrolls, or 
(2) the difference between the premium for a benchmark qualified health 
plan and the amount of the premium that the taxpayer would be required 
to pay if the taxpayer purchased the benchmark plan (the taxpayer's 
contribution amount). Commentators suggested that the final regulations 
allow taxpayers to determine the premium tax credit by combining the 
premiums for one or more qualified health plans with premiums a 
taxpayer pays for other minimum essential coverage (particularly 
premiums for coverage under CHIP). Under the rule suggested by the 
commentators, the taxpayer's contribution amount would be reduced by 
the amount of the family's other premiums to ensure that a family could 
afford the combined premiums for qualified health plan coverage and 
CHIP or other coverage.
    Under section 36B(b)(2), the premium tax credit is computed by 
taking into account only the premiums for qualified health plans. Thus, 
the credit may not be increased for premiums for other minimum 
essential coverage.
f. Pediatric Dental Coverage
    Under section 36B(b)(3)(E), if an individual enrolls in both a 
qualified health plan and a dental plan, the portion of the premium for 
the dental plan properly allocable to pediatric dental benefits that 
are essential health benefits is treated as premiums payable for a 
qualified health plan for purposes of determining the monthly premium. 
The proposed regulations requested comments on methods for determining 
the amount of the premium properly allocable to pediatric dental 
benefits.
    Commentators requested that the final regulations use a methodology 
that reflects the true costs of medical and dental care for children. 
Other commentators recommended that the Federal government split the 
value of the premium tax credit on a basis proportionate to the premium 
for the pediatric service in the dental plan and the qualified health 
plan premium. Some commentators requested a simple formula for 
allocating a taxpayer's dental benefits premium to pediatric dental 
care. A commentator requested a safe harbor permitting dental insurance 
carriers to use a reasonable method based on sound actuarial practice.
    The final regulations provide that the portion of the premium for a 
stand-alone dental plan properly allocable to pediatric dental benefits 
is determined under guidance issued by HHS. Under the final HHS 
Exchange regulations at 45 CFR 156.210, a qualified health plan issuer 
that offers a standalone dental plan is required to provide information 
on the plan's rates to the Exchange each year. It is anticipated that 
future HHS guidance will address how this required reporting on rates 
will include reporting on the portion of the premium allocable to 
pediatric dental coverage.
g. Families With Individuals Not Lawfully Present
    Section 36B(e)(1)(B) describes a method for determining the FPL 
percentage for families that include an individual not lawfully present 
(the statutory method) and allows a comparable method that reaches the 
same results to be prescribed by regulations. Commentators suggested 
that the final regulations provide a comparable method based on the 
Medicaid rules for income and family size determinations.
    The commentators' suggested method may not reach the same result as 
the statutory method. Thus, the final regulations do not adopt this 
suggestion. The final regulations provide that the Commissioner may 
provide a comparable method in additional published guidance, see Sec.  
601.601(d)(2).

4. Reconciling the Credit and Advance Credit Payments

a. Months for Which an Issuer Does Not Provide Coverage
    Section 1412(c)(2)(B) of the Affordable Care Act provides that an 
issuer receiving an advance credit payment must reduce the premiums 
charged to the insured for the period covered by the advance payment 
but may terminate coverage if the insured fails to pay premiums for a 
3-month period. The final HHS Exchange regulations describe the 
operation of this grace period in more detail. Under the retroactive 
termination rule, if a taxpayer does not pay premiums in full for 3 
months, the issuer must terminate coverage retroactive to the end of 
the first of those months and will be required to return any advance 
payments received for any terminated coverage months. These final 
regulations clarify that a taxpayer does not have an advance credit 
payment for a month in which the issuer of the qualified health plan 
does not provide coverage and will not be required to reconcile 
payments for those months. The taxpayer will, however, have to 
reconcile the payment for the first month of the grace period. If the 
taxpayer has not paid the taxpayer's share of the premium for that 
month by the unextended due date for filing the return, the first month 
is not a coverage month, and the taxpayer is not eligible for the 
premium tax credit for that month.
b. Changes in Circumstances
    Section 36B(f) provides that a taxpayer must reconcile on the 
taxpayer's income tax return for the taxable year the premium tax 
credit allowed under section 36B with the advance payments paid during 
the course of the taxable year and must pay the amount of any excess 
advance payments as additional tax. For taxpayers with household income 
below 400 percent of the FPL, the amount of

[[Page 30384]]

additional tax liability the taxpayer must repay is capped.
    Commentators requested that the final regulations include rules to 
mitigate the effects of the requirement to repay excess advance 
payments. Commentators suggested that the final regulations adopt a 
safe harbor for individuals and families who can demonstrate that they 
accurately reported any changes in income or family size to the 
Exchange and that their advance payments were properly computed based 
on the information available at the time the payments were made. 
Commentators suggested that taxpayers who experience changes in 
circumstances during the year, including taxpayers whose household 
income for the taxable year exceeds 400 percent of the FPL, should be 
allowed to prorate the repayment limitations based on the portion of 
the year the taxpayer receives advance payments. Other commentators 
asked that taxpayers who would experience a hardship as a result of 
repaying excess advance payments be exempt from the repayment 
requirement or that the IRS should disregard changes that cause income 
to slightly exceed 400 percent of the FPL. Commentators also suggested 
that taxpayers be allowed to compute their premium tax credit using the 
largest family size of the household during the year rather than the 
family size reported on the tax return.
    The statute sets forth clear rules for reconciling advance credit 
payments, which are not consistent with the suggestions made by the 
commentators. Accordingly, the final regulations do not adopt these 
comments.
    Commentators suggested that the IRS should offer automatic payment 
plans for taxpayers who have an additional tax liability and should not 
impose interest or penalties on this additional tax liability repaid 
through the payment plan. Although these comments are beyond the scope 
of these final regulations, the IRS will consider possible avenues of 
administrative relief in appropriate cases for taxpayers who have 
additional tax liability as a result of excess advance payments.
c. Changes in Filing Status
i. Taxpayers Who Marry During the Taxable Year
    The proposed regulations provide that, like other taxpayers, newly-
married taxpayers compute their premium tax credit using family size 
and household income as reported on their tax return and the 
appropriate applicable benchmark plan for each coverage month 
regardless of whether the taxpayers were married or single during the 
month. The proposed regulations request comments on alternative credit 
computations for taxpayers who receive advance payments, marry during 
the year, and owe additional tax, even if the Exchange accurately 
projects each spouse's separate income.
    Some commentators suggested an alternative computation that 
computes the credit for the single months separately for each spouse as 
if each taxpayer's annual income was one-half of the actual household 
income for the year. For the married months, the credit would be 
computed using actual household income for the year. The premium tax 
credit would be the sum of the credits computed for the single months 
and the married months. This computation generally results in a smaller 
amount of excess advance payments compared to the amount computed under 
the proposed regulations.
    The final regulations adopt the alternative credit computation 
suggested by the commentators as an option for taxpayers who marry 
during the taxable year. Under this alternative method, the credit for 
the single months is computed separately for each spouse as if each 
taxpayer's annual income was one-half of the actual household income 
for the year, the credit for the married months is computed using 
actual household income for the year, and the premium tax credit is the 
sum of the credits computed for the single months and the married 
months. However, to avoid allowing taxpayers an increased amount of 
additional premium tax credit resulting from marriage, the final 
regulations cap any additional premium tax credit allowed to a taxpayer 
under this alternative computation method at the amount of additional 
credit that results from computing the credit under the general rule.
    Commentators requested that the final regulations allow a year-of-
marriage waiver on repaying excess advance payments. The final 
regulations do not adopt these comments as these rules would create 
unwarranted benefits, for example in cases of taxpayers who marry 
during the year and owe additional tax because their income is 
significantly higher than what the Exchange projected.
ii. Taxpayers Whose Marital Status Changes From Married to Single 
During the Taxable Year
    The proposed regulations provide that taxpayers who are married to 
each other at the beginning but not at the end of 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. The proposed regulations 
permit the allocation to be made in any proportion, but if the 
taxpayers cannot agree on a proportion, these items are allocated 50 
percent to each taxpayer.
    Commentators opined that the final regulations should provide for 
allocating these items to each taxpayer in proportion to each 
taxpayer's household income. The final regulations do not adopt this 
suggestion as it would require divorced taxpayers to exchange income 
information or require the IRS to associate each taxpayer's return with 
the other. Divorced taxpayers may allocate the premium for the 
applicable benchmark plan, the premium for the plan in which the 
taxpayers enroll, and the advance credit payments in proportion to 
household income under the final regulations if they choose.
iii. Married Taxpayers Filing Separately
    Section 36B(c)(1)(C) provides that married taxpayers who do not 
file a joint return are not applicable taxpayers and are not allowed a 
premium tax credit. Accordingly, married taxpayers who receive advance 
credit payments but do not file a joint return must repay the advance 
credit payments. The advance credit payments must be allocated equally 
to each taxpayer for purposes of determining the amount of excess 
advance payments. The final regulations clarify that this equal 
allocation also applies if one spouse is treated as unmarried under 
section 7703(b) (and may, for example, properly claim the premium tax 
credit on a return filed as head of household).
    The proposed regulations requested comments on special rules for 
taxpayers who receive advance payments but face challenges in meeting 
the joint return requirement, for example because of the incarceration 
of a spouse, domestic abuse, or a pending divorce.
    Numerous commentators stated that the final regulations should 
provide special rules allowing these spouses to file separate returns 
and claim the premium tax credit. Commentators suggested that abandoned 
spouses also warrant an exception. Other commentators noted that other 
married taxpayers may face challenges in filing a joint return and 
asked for a hardship exemption from the joint filing requirement.
    Commentators suggested that taxpayers should be able to certify on 
the premium tax credit form that they meet the criteria for an 
exemption from the joint filing requirement. One

[[Page 30385]]

commentator suggested granting an exception in case of domestic 
violence for a taxpayer who has or during the taxable year had an order 
of protection.
    Some commentators, noting that many of these situations are not 
resolved in a single taxable year, requested a three-year exception to 
the joint filing requirement.
    The final regulations do not provide special rules allowing married 
taxpayers to claim the premium tax credit on separate returns. However, 
the IRS and the Treasury Department intend to propose additional 
regulations regarding eligibility for the premium tax credit to address 
circumstances in which domestic abuse, abandonment, or similar 
circumstances create obstacles to the ability of taxpayers to file 
joint returns. Comments are requested on the documentation that a 
taxpayer could provide to establish that he or she cannot file a joint 
return because of the domestic abuse, abandonment, or other similar 
circumstances, on what treatment should be accorded the other spouse if 
he or she does not file with documentation supporting an exception, and 
the need for anti-abuse rules.

5. Information Reporting

    Commentators requested that the final regulations require an 
Exchange, in reporting information under section 36B(f)(3), to strictly 
define and limit the use and disclosure of immigration status 
information for any purpose other than ensuring efficient operation of 
the Exchange and prohibit the transfer of immigration status 
information from the Exchange to the IRS. The final regulations do not 
include a rule responding to these comments because the IRS does not 
require information on immigration status of any individual in order to 
administer the premium tax credit and will not obtain this information. 
The Exchange will verify that an individual is a citizen or lawfully 
present and eligible to enroll in coverage through the Exchange.
    The proposed regulations provide that the IRS will provide rules on 
the time and manner of information reporting by Exchanges in additional 
published guidance, see Sec.  601.601(d)(2). Commentators requested 
that the final regulations provide information on the time and manner 
of information reporting by Exchanges. A commentator suggested that the 
information returns should be provided to taxpayers by December 31. 
Another commentator suggested that the annual information return should 
report the cost of the applicable benchmark plan on the first day of 
each month. The final regulations defer rules on the time for 
information reporting by Exchanges to additional regulations, which are 
expected to provide for monthly reporting by Exchanges to the IRS and 
an annual report to the IRS and the taxpayer due by January 31.

6. American Indians/Alaska Natives

    Commentators asked that the final regulations provide special 
provisions for American Indians and Alaska Natives, for example that 
they be treated as eligible for employer-sponsored minimum essential 
coverage only if they are enrolled in the coverage, that they should 
not be required to pay any premiums for a qualified health plan, and 
that they be exempted from reconciliation. The IRS and HHS have 
conducted several tribal consultations on these and other issues under 
the proposed regulations. The final regulations do not adopt these 
suggestions, as they are inconsistent with the statute.

7. Effective/Applicability Date

    These final regulations apply to taxable years ending after 
December 31, 2013.

Special Analyses

    It has been determined that this Treasury decision is not a 
significant regulatory action as defined in Executive Order 12866, as 
supplemented by Executive Order 13563. Therefore, a regulatory 
assessment is not required. Section 553(b) of the Administrative 
Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, 
and, because the regulations do not impose a collection of information 
requirement on small entities, the Regulatory Flexibility Act (5 U.S.C. 
chapter 6) does not apply. Pursuant to section 7805(f) of the Code, the 
notice of proposed rulemaking that preceded these final regulations was 
submitted to the Chief Counsel for Advocacy of the Small Business 
Administration for comment on its impact on small business, and no 
comments were received.

Comments

    Written (including electronic) comments must be received by August 
21, 2012. Comments should be submitted to Internal Revenue Service, 
CC:PA:LPD:PR (REG-131491-10), Room 5203, P.O. Box 7604, Ben Franklin 
Station, Washington, DC 20044, or electronically to www.regulations.gov 
(IRS REG-131491-10). Alternatively, comments may be hand delivered 
between the hours of 8:00 a.m. and 4:00 p.m. Monday to Friday to 
CC:PA:LPD:PR (REG-131491-10), Courier's Desk, Internal Revenue Service, 
1111 Constitution Avenue NW., Washington, DC All comments will be 
available for public inspection and copying.

Drafting Information

    The principal authors of these final regulations are Shareen S. 
Pflanz, Frank W. Dunham III, Andrew S. Braden, 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

26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 602

    Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR parts 1 and 602 are amended as follows:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 is amended by adding an 
entry 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).
* * * * *

0
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:


Sec.  1.36B-0  Table of contents.

    This section lists the captions contained in Sec. Sec.  1.36B-1 
through 1.36B-5.

Sec.  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.

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

(a) In general.

[[Page 30386]]

(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) Obligation to complete administrative requirements to obtain 
coverage.
(iii) Special rule for coverage for veterans and other individuals 
under chapter 17 or 18 of Title 38, U.S.C.
(iv) Retroactive effect of eligibility determination.
(v) Determination of Medicaid or Children's Health Insurance Program 
(CHIP) ineligibility.
(vi) Examples.
(3) Employer-sponsored minimum essential coverage.
(i) In general.
(ii) Plan year.
(iii) Eligibility for months during a plan year.
(A) Failure to enroll in plan.
(B) Waiting periods.
(C) Example.
(iv) Continuation coverage.
(v) Affordable coverage.
(A) In general.
(1) Affordability for employee.
(2) Affordability for related individual.
(3) Employee safe harbor.
(4) Wellness incentives and employer contributions to health 
reimbursement arrangements.
(B) Affordability for part-year period.
(C) Required contribution percentage.
(D) Examples.
(vi) Minimum value.
(vii) Enrollment in eligible employer-sponsored plan.
(A) In general.
(B) Automatic enrollment.
(C) Examples.
(4) Related individual not claimed as a personal exemption 
deduction.

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

(a) In general.
(b) Definitions.
(c) Coverage month.
(1) In general.
(2) Premiums paid for a taxpayer.
(3) Examples.
(d) Premium assistance amount.
(e) Adjusted monthly premium.
(f) Applicable benchmark plan.
(1) In general.
(2) Family coverage.
(3) Silver level plan not covering a taxpayer's family.
(4) Family members residing at different locations.
(5) Plan closed to enrollment.
(6) Benchmark plan terminates or closes to enrollment during the 
year.
(7) 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.
(3) Examples.
(k) Pediatric dental coverage.
(1) In general.
(2) Method of allocation.
(3) Example.
(l) Families including individuals not lawfully present.
(1) In general.
(2) Revised household income computation.
(i) Statutory method.
(ii) Comparable method.

Sec.  1.36B-4 Reconciling the premium tax credit with advance 
credit payments.

(a) Reconciliation.
(1) Coordination of premium tax credit with advance credit payments.
(i) In general.
(ii) Responsibility for advance credit payments.
(iii) Advance credit payment for a month in which an issuer does not 
provide coverage.
(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 who marry during the taxable year.
(i) In general.
(ii) Alternative computation of additional tax liability.
(A) In general.
(B) Alternative premium assistance amounts for pre-marriage months.
(C) Premium assistance amounts for marriage months.
(3) Taxpayers not married to each other at the end of the taxable 
year.
(4) Married taxpayers filing separate returns.
(5) Taxpayers filing returns as head of household and married filing 
separately.
(6) Examples.

Sec.  1.36B-5 Information reporting by Exchanges.

(a) Information required to be reported.
(b) Time of reporting.
(c) Manner of reporting.

Sec.  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 Sec. Sec.  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)), the Department of Defense and Full-Year 
Continuing Appropriations Act, 2011, Public Law 112-10 (125 Stat. 38 
(2011)), and the 3% Withholding Repeal and Job Creation Act, Public Law 
112-56 (125 Stat. 711 (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 
may include individuals who are not subject to or are exempt from the 
penalty under section 5000A for failing to maintain minimum essential 
coverage.
    (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 a return of tax imposed by section 1 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--
    (i) Amounts excluded from gross income under section 911;
    (ii) Tax-exempt interest the taxpayer receives or accrues during 
the taxable year; and
    (iii) Social security benefits (within the meaning of section 
86(d)) not included in gross income under section 86.

[[Page 30387]]

    (f) Dependent. Dependent has the same meaning as in section 152.
    (g) Lawfully present. Lawfully present has the same meaning as in 
45 CFR 155.20.
    (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. If a 
taxpayer's primary residence changes during a taxable year from one 
state to a state with different Federal poverty guidelines or married 
taxpayers reside in separate states with different Federal poverty 
guidelines (for example, Alaska or Hawaii and another state), the 
Federal poverty line that applies for purposes of section 36B and the 
associated regulations is the higher Federal poverty guideline 
(resulting in a lower percentage of the Federal poverty line for the 
taxpayers' household income and family size).
    (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. [Reserved]
    (o) Effective/applicability date. This section and Sec. Sec.  
1.36B-2 through 1.36B-5 apply for taxable years ending after December 
31, 2013.


Sec.  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 one or more members of the applicable 
taxpayer's family (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) is not 
eligible to enroll in 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 Sec.  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 lawfully present 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 
Sec.  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. 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) as of the first day of the first full month the 
individual may receive benefits under the program, subject to the 
limitation in paragraph (c)(2)(ii) of this section. The Commissioner 
may define eligibility for specific government-sponsored programs 
further in additional published guidance, see Sec.  601.601(d)(2) of 
this chapter.
    (ii) Obligation to complete administrative requirements to obtain 
coverage. An individual who meets the criteria for eligibility for 
government-sponsored minimum essential coverage must complete the 
requirements necessary to receive benefits. An individual who fails by 
the last day of the third full calendar month following the event that 
establishes eligibility under paragraph (c)(2)(i) of this section to 
complete the requirements to obtain government-sponsored minimum 
essential coverage (other than a veteran's health care program) is 
treated

[[Page 30388]]

as eligible for government-sponsored minimum essential coverage as of 
the first day of the fourth calendar month following the event that 
establishes eligibility.
    (iii) Special rule for coverage for veterans and other individuals 
under chapter 17 or 18 of Title 38, U.S.C. An individual is eligible 
for minimum essential coverage under a health care program under 
chapter 17 or 18 of Title 38, U.S.C. only if the individual is enrolled 
in a health care program under chapter 17 or 18 of Title 38, U.S.C. 
identified as minimum essential coverage in regulations issued under 
section 5000A.
    (iv) 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.
    (v) 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, when the individual enrolls in the 
qualified health plan, an Exchange determines or considers (within the 
meaning of 45 CFR 155.302(b)) the individual to be not eligible for 
Medicaid or CHIP.
    (vi) Examples. The following examples illustrate the provisions of 
this paragraph (c)(2):

    Example 1. Delay in coverage effectiveness. On April 10, 2015, 
Taxpayer D applies for coverage under a government-sponsored health 
care program. D's application is approved on July 12, 2015, but her 
coverage is not effective until September 1, 2015. Under paragraph 
(c)(2)(i) of this section, D is eligible for government-sponsored 
minimum essential coverage on September 1, 2015.
    Example 2. Time of eligibility. Taxpayer E turns 65 on June 3, 
2015, and becomes eligible for Medicare. Under section 
5000A(f)(1)(A)(i), Medicare is minimum essential coverage. However, 
E must enroll in Medicare to receive benefits. E enrolls in Medicare 
in September, which is the last month of E's initial enrollment 
period. Thus, E may receive Medicare benefits on December 1, 2015. 
Because E completed the requirements necessary to receive Medicare 
benefits by the last day of the third full calendar month after the 
event that establishes E's eligibility (E turning 65), under 
paragraph (c)(2)(i) and (c)(2)(ii) of this section E is eligible for 
government-sponsored minimum essential coverage on December 1, 2015, 
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 during E's 
initial enrollment period. E is treated as eligible for government-
sponsored minimum essential coverage under paragraph (c)(2)(ii) of 
this section as of October 1, 2015, the first day of the fourth 
month following the event that establishes E's eligibility (E 
turning 65).
    Example 4. Retroactive effect of eligibility. In November 2014, 
Taxpayer F enrolls in a qualified health plan for 2015 and receives 
advance credit payments. F loses her part-time employment and on 
April 10, 2015 applies for coverage under the Medicaid program. F's 
application is approved on May 15, 2015, and her Medicaid coverage 
is effective as of April 1, 2015. Under paragraph (c)(2)(iv) of this 
section, F is eligible for government-sponsored 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 G applies through the Exchange to enroll in health 
coverage for 2015. The Exchange determines that G is not eligible 
for Medicaid and estimates that G's household income will be 140 
percent of the Federal poverty line for G's family size for purposes 
of determining advance credit payments. G enrolls in a qualified 
health plan and begins receiving advance credit payments. G 
experiences a reduction in household income during the year and his 
household income for 2015 is 130 percent of the Federal poverty line 
(within the Medicaid income threshold). However, under paragraph 
(c)(2)(v) of this section, G 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 G returns to the 
Exchange in July 2015 and the Exchange determines that G is eligible 
for Medicaid. Medicaid approves G for coverage and the Exchange 
discontinues G's advance credit payments effective August 1. Under 
paragraphs (c)(2)(iv) and (c)(2)(v) of this section, G is treated as 
not eligible for Medicaid for the months when G is covered by a 
qualified health plan. G is eligible for government-sponsored 
minimum essential coverage for the months after G is approved for 
Medicaid and can receive benefits, 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 
employer-sponsored 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 months during a plan year--(A) Failure to 
enroll in plan. An employee or related individual may be eligible for 
minimum essential coverage under an eligible employer-sponsored plan 
for a month during a plan year if the employee or related individual 
could have enrolled in the plan for that month during an open or 
special enrollment period.
    (B) Waiting periods. An employee or related individual is not 
eligible for minimum essential coverage under an eligible employer-
sponsored plan during a required waiting period before the coverage 
becomes effective.
    (C) 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 under X's plan for the months that B 
is enrolled in the qualified health plan during X's plan year 
(January through September 2015).

    (iv) 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 for months that the individual is enrolled in 
the coverage.
    (v) Affordable coverage--(A) In general--(1) Affordability for 
employee. Except as provided in paragraph (c)(3)(v)(A)(3) of this 
section, an eligible employer-sponsored plan is affordable for an 
employee if the portion of the annual premium the employee must pay, 
whether by salary reduction or otherwise (required contribution), for 
self-only coverage does not exceed the required contribution percentage 
(as defined in paragraph (c)(3)(v)(C) of this section) of the 
applicable taxpayer's household income for the taxable year.

[[Page 30389]]

    (2) Affordability for related individual. [Reserved]
    (3) Employee safe harbor. An employer-sponsored plan is 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 employer-sponsored plan is not 
affordable for that plan year. This paragraph (c)(3)(v)(A)(3) does not 
apply to a determination made as part of the redetermination process 
described in 45 CFR 155.335 unless the individual receiving an Exchange 
redetermination notification affirmatively responds and provides 
current information on affordability. This paragraph (c)(3)(v)(A)(3) 
does not apply for an individual who, with reckless disregard for the 
facts, provides incorrect information to an Exchange concerning the 
portion of the annual premium for coverage for the employee or related 
individual under the plan.
    (4) Wellness incentives and employer contributions to health 
reimbursement arrangements. The Commissioner may provide rules in 
published guidance, see Sec.  601.601(d)(2) of this chapter, for 
determining how wellness incentives and amounts made available under a 
health reimbursement arrangement are treated in determining the 
affordability of eligible employer-sponsored coverage under this 
paragraph (c)(3)(v).
    (B) Affordability for part-year period. Affordability under 
paragraph (c)(3)(v)(A) of this section is determined separately for 
each employment period that is less than a full calendar year or for 
the portions of an employer's plan year that fall in different taxable 
years of an applicable taxpayer (a part-year period). An eligible 
employer-sponsored plan is affordable for a part-year period if the 
employee's annualized required contribution for self-only coverage 
under the plan for the part-year period does not exceed the required 
contribution percentage of the applicable taxpayer's household income 
for the taxable year. The employee's annualized required contribution 
is the employee's required contribution for the part-year period times 
a fraction, the numerator of which is 12 and the denominator of which 
is the number of months in the part-year period during the applicable 
taxpayer's taxable year. Only full calendar months are included in the 
computation under this paragraph (c)(3)(v)(B).
    (C) Required contribution percentage. The required contribution 
percentage is 9.5 percent. The percentage may be adjusted in published 
guidance, see Sec.  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.
    (D) 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 employer-sponsored 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. [Reserved]
    Example 3. Determination of unaffordability at enrollment. (i) 
Taxpayer D is an employee of Employer X. In November 2013 the 
Exchange for 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 
D's 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)(3) of this section, X's plan is not 
affordable for D and D is not eligible for minimum essential 
coverage under X's plan 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 for 
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)(3) of this section, X's plan is not 
affordable for D and D is 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. No affordability information affirmatively provided 
for annual redetermination. (i) The facts are the same as in Example 
3, except the Exchange redetermines D's eligibility for advance 
credit payments for 2015. D does not affirmatively provide the 
Exchange with current information regarding affordability and the 
Exchange determines that D's coverage is not affordable for 2015 and 
approves advance credit payments based on information from the 
previous enrollment period. In 2015, D's required contribution for 
coverage under X's plan is 9.4 percent of D's household income.
    (ii) Because D does not respond to the Exchange notification and 
the Exchange makes an affordability determination based on 
information from an earlier year, the employee safe harbor in 
paragraph (c)(3)(v)(A)(3) of this section does not apply. D's 
required contribution for 2015 does not exceed 9.5 percent of D's 
household income. Thus, X's plan is affordable for D for 2015 and D 
is eligible for minimum essential coverage for all months in 2015.
    Example 6. Determination of unaffordability for part of plan 
year (part-year period). (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 for E's rating area projects 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) Under paragraph (c)(3)(v)(B) of this section, 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)(3) of 
this section, X's plan is 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 7. 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 enroll in X's plan during X's open season 
but enrolls in a qualified health plan for September through 
December 2014. F does not request advance credit payments and does 
not ask the Exchange for his rating

[[Page 30390]]

area to determine whether X's coverage is affordable for F. 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) 
under paragraph (c)(3)(v)(B) of this section. 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 approve advance credit payments or 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 8 Coverage unaffordable at year end. Taxpayer G is 
employed by Employer X. In November 2014, the Exchange for 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 employer-sponsored 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 under X's plan for 2015.

    (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 to the employee under the plan (as determined under 
guidance 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 employer-sponsored plan--(A) In 
general. Except as provided in paragraph (c)(3)(vii)(B) of this 
section, the requirements of affordability and minimum value do not 
apply for months that an individual is enrolled in an eligible 
employer-sponsored plan.
    (B) Automatic enrollment. An employee or related individual is 
treated as not enrolled in an eligible employer-sponsored plan for a 
month in a plan year or other period for which the employee or related 
individual is automatically enrolled if the employee or related 
individual terminates the coverage before the later of the first day of 
the second full calendar month of that plan year or other period or the 
last day of any permissible opt-out period provided by the employer-
sponsored plan or in regulations to be issued by the Department of 
Labor, for that plan year or other period.
    (C) Examples. The following examples illustrate the provisions of 
this paragraph (c)(3)(vii):

    Example 1. Taxpayer H is employed by Employer X in 2014. H's 
required contribution for self-only employer coverage exceeds 9.5 
percent of H's 2014 household income. H enrolls in X's calendar year 
plan for 2014. Under paragraph (c)(3)(vii)(A) of this section, H is 
eligible for minimum essential coverage for 2014 because H is 
enrolled in an eligible employer-sponsored plan for 2014.
    Example 2.  The facts are the same as in Example 1, except that 
H terminates plan coverage on June 30, 2014. Under paragraph 
(c)(3)(vii)(A) of this section, H is eligible for minimum essential 
coverage under X's plan for January through June 2014 but is not 
eligible for minimum essential coverage under X's plan for July 
through December 2014.
    Example 3.  The facts are the same as in Example 1, except that 
Employer X automatically enrolls H in the plan for calendar year 
2015. H terminates the coverage on January 20, 2015. Under paragraph 
(c)(3)(vii)(B) of this section, H is not eligible for minimum 
essential coverage under X's plan for January 2015.

    (4) Related individual not claimed as a personal exemption 
deduction. An individual who may enroll in minimum essential coverage 
because of a relationship to another person eligible for the coverage, 
but for whom the other eligible person does not claim a personal 
exemption deduction under section 151, is treated as eligible for 
minimum essential coverage under the coverage only for months that the 
related individual is enrolled in the coverage.


Sec.  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 enroll in a qualified health plan and are not eligible for 
minimum essential coverage (other than coverage in the individual 
market).
    (c) Coverage month--(1) In general. A month is a coverage month for 
an individual if--
    (i) As of the first day of the month, the individual is enrolled in 
a qualified health plan through an Exchange;
    (ii) The taxpayer pays the taxpayer's share of the premium for the 
individual's coverage under the plan for the month by the unextended 
due date for filing the taxpayer's income tax return for that taxable 
year, or the full premium for the month is paid by advance credit 
payments; and
    (iii) The individual is not eligible for the full calendar month 
for minimum essential coverage (within the meaning of Sec.  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 a 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):

    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. M pays M's share of the 
premiums. On May 15, 2014, M enlists in the U.S. Army and is 
eligible immediately for government-sponsored 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 government-sponsored 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 terminates enrollment in 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. N pays all premiums 
not covered by advance credit payments.
    (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

[[Page 30391]]

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 
portion of T's qualified health plan premiums not covered by advance 
credit payments.
    (ii) Because P claims T as a dependent, P (and not O) may claim 
a premium tax credit for coverage for T. See Sec.  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 and not eligible for other 
minimum essential coverage are coverage months under paragraph 
(c)(1) of this section in computing P's premium tax credit under 
paragraph (a) of this section.
    Example 4.  Q, an American Indian, enrolls in a qualified health 
plan for 2014. Q's tribe pays the portion of Q's qualified health 
plan premiums not covered by advance credit payments. Under 
paragraph (c)(2) of this section, the premiums that Q's tribe pays 
for Q are treated as paid by Q. Thus, the months when Q is covered 
by a qualified health plan and not eligible for other minimum 
essential coverage are coverage months under paragraph (c)(1) of 
this section in computing Q'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 issuer 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). The adjusted 
monthly premium is determined without regard to any premium discount or 
rebate under the wellness discount demonstration project under section 
2705(d) of the Public Health Service Act (42 U.S.C. 300gg-4(d)) and may 
not include any adjustments for tobacco use.
    (f) Applicable benchmark plan--(1) In general. Except as otherwise 
provided in this paragraph (f), the applicable benchmark plan for each 
coverage month is the second lowest cost silver plan (as described in 
section 1302(d)(1)(B) of the Affordable Care Act (42 U.S.C. 
18022(d)(1)(B))) offered through the Exchange for the rating area where 
the taxpayer resides for--
    (i) Self-only coverage for a taxpayer--
    (A) Who computes tax under section 1(c) (unmarried individuals 
other than surviving spouses and heads of household) and is not allowed 
a deduction under section 151 for a dependent for the taxable year;
    (B) Who purchases only self-only coverage for one individual; or
    (C) Whose coverage family includes only one individual; and
    (ii) Family coverage for all other taxpayers.
    (2) Family coverage. The applicable benchmark plan for family 
coverage is the second lowest cost silver plan that applies to the 
members of the taxpayer's coverage family (such as a plan covering two 
adults if the members of a taxpayer's coverage family are two adults).
    (3) Silver level plan not covering a taxpayer's family. If one or 
more silver level plans for family coverage offered through an Exchange 
do not cover all members of a taxpayer's coverage family under one 
policy (for example, because of the relationships within the family), 
the premium for the applicable benchmark plan determined under 
paragraphs (f)(1) and (f)(2) of this section may be the premium for a 
single policy or for more than one policy, whichever is the second 
lowest cost silver option.
    (4) Family members residing at different locations. [Reserved]
    (5) Plan closed to enrollment. A qualified health plan that is not 
open to enrollment by a taxpayer or family member at the time the 
taxpayer or family member enrolls in a qualified health plan is 
disregarded in determining the applicable benchmark plan.
    (6) Benchmark plan terminates or closes to enrollment during the 
year. 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.
    (7) Examples. The following examples illustrate the rules of this 
paragraph (f). Unless otherwise stated, in each example the plans are 
open to enrollment to a taxpayer or family member at the time of 
enrollment and are offered through the Exchange for the rating area 
where the taxpayer resides:

    Example 1. Single taxpayer enrolls. Taxpayer M is single, has no 
dependents and enrolls in a qualified health plan. Under paragraph 
(f)(1)(i) of this section, M's applicable benchmark plan is the 
second lowest cost silver plan providing self-only coverage for M.
    Example 2. Family enrolls. The facts are the same as in Example 
1, except that M, her spouse N, and their dependent enroll in a 
qualified health plan. Under paragraphs (f)(1)(ii) and (f)(2) of 
this section, M's and N's applicable benchmark plan is the second 
lowest cost silver plan covering M, N, and their dependent.
    Example 3. Single taxpayer enrolls with nondependent. Taxpayer O 
is single and resides with his daughter, K, but may not claim K as a 
dependent. O purchases family coverage for himself and K. Under 
paragraphs (f)(1)(i)(A) and (f)(1)(i)(C) of this section, O's 
applicable benchmark plan is the second lowest cost silver plan 
providing self-only coverage for O. However, K may qualify for a 
premium tax credit if K is otherwise eligible. See paragraph (h) of 
this section.
    Example 4. Single taxpayer enrolls with dependent and 
nondependent. The facts are the same as in Example 3, except that O 
also resides with his teenage son, L, and claims L as a dependent. O 
purchases family coverage for himself, K, and L. Under paragraphs 
(f)(1)(ii) and (f)(2) of this section, O's applicable benchmark plan 
is the second lowest cost silver plan covering O and L.
    Example 5. Children only enroll. The facts are the same as in 
Example 4, except that O enrolls only K and L in the coverage. Under 
paragraph (f)(1)(i)(C) of this section, O's applicable benchmark 
plan is the second lowest cost silver plan providing self-only 
coverage for L.
    Example 6. Applicable benchmark plan unrelated to coverage 
purchased. Taxpayers P and Q, who are married, reside with Q's two 
teenage daughters, M and N, whom they claim as dependents. P and Q 
purchase self-only coverage for P and family coverage for Q, M, and 
N. Under paragraphs (f)(1)(ii) and (f)(2) of this section, P's and 
Q's applicable benchmark plan is the second lowest cost silver plan 
covering P, Q, M, and N.
    Example 7. Change in coverage family. Taxpayer R is single and 
has no dependents when she enrolls in a qualified health plan for 
2014. On August 1, 2014, R has a child, O, whom she claims as a 
dependent for 2014. R enrolls in a qualified health plan covering R 
and O effective August 1. Under paragraph (f)(1)(i) of this section, 
R's applicable benchmark plan for January through July is the second 
lowest cost silver plan providing self-only coverage for R. Under 
paragraphs (f)(1)(ii) and (f)(2) of this section, R's applicable 
benchmark plan for the months August through December is the second 
lowest cost silver plan covering R and O.
    Example 8. Minimum essential coverage for some coverage months. 
Taxpayer S claims his daughter, P, as a dependent. S and P enroll in 
a qualified health plan for 2014. S, but not P, 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 P and January 
through August are coverage months for S. Because, under paragraphs 
(d) and (f)(1) of this section, the premium assistance amount for a 
coverage month is

[[Page 30392]]

computed based on the applicable benchmark plan for that coverage 
month, S's applicable benchmark plan for January through August is 
the second lowest cost silver plan under paragraphs (f)(1)(ii) and 
(f)(2) of this section covering S and P. Under paragraph 
(f)(1)(i)(C) of this section, S's applicable benchmark plan for 
September through December is the second lowest cost silver plan 
providing self-only coverage for P.
    Example 9. Family member eligible for minimum essential coverage 
for the taxable year. The facts are the same as in Example 8, except 
that S is not eligible for government-sponsored minimum essential 
coverage for any months and P is eligible for government-sponsored 
minimum essential coverage for the entire year. Under paragraph 
(f)(1)(i)(C) of this section, S's applicable benchmark plan is the 
second lowest cost silver plan providing self-only coverage for S.
    Example 10. Qualified health plans not covering certain 
families. (i) Taxpayers V and W are married and live with W's 
mother, K, whom they claim as a dependent. The Exchange for their 
rating area offers self-only and family coverage at the silver level 
through Issuers A, B, and C, who each offer only one silver level 
plan. Issuers A and B respectively charge V and W a monthly premium 
of $900 and $700 for family coverage, but do not allow individuals 
to enroll a parent in family coverage. Issuers A and B respectively 
charge $600 and $400 for self-only coverage for K. Issuer C offers a 
qualified health plan that provides family coverage for V, W, and K 
under one policy for a $1,200 monthly premium. Thus, the Exchange 
offers the following silver level options for covering V's and W's 
coverage family:
    Issuer A: $1,500 for premiums for two policies ($900 for V and 
W, $600 for K)
    Issuer B: $1,100 for premiums for two policies ($700 for V and 
W, $400 for K)
    Issuer C: $1,200 for premiums for one policy ($1,200 for V, W, 
and K)
    (ii) Because some silver level qualified health plans for family 
coverage offered on the Exchange do not cover all members of their 
coverage family under one policy, under paragraph (f)(3) of this 
section, the premium for V's and W's applicable benchmark plan may 
be the premium for a single policy or for more than one policy. The 
coverage offered by Issuer C is the second lowest cost silver level 
option for covering V's and W's family. The premium for their 
applicable benchmark plan is the premium for the Issuer C coverage.
    Example 11. (i) The facts are the same as in Example 10, except 
that Issuer B covers V, W, and K under one policy for a premium of 
$1,100, and Issuer C does not allow individuals to enroll parents in 
family coverage. Issuer C charges a monthly premium of $700 for 
family coverage for V and W and a monthly premium of $500 for self-
only coverage for K. Thus, the Exchange offers the following silver 
level options for covering V's and W's coverage family:
    Issuer A: $1,500 for premiums for two policies ($900 for V and 
W, $600 for K)
    Issuer B: $1,100 for premiums for one policy ($1,100 for V, W, 
and K)
    Issuer C: $1,200 for premiums for two policies ($700 for V and 
W, $500 for K)
    (ii) The coverage offered by Issuer C is the second lowest cost 
silver level option for covering V's and W's family. The premium for 
their applicable benchmark plan is the premiums for the two policies 
available through Issuer C.
    Example 12. Family members residing in different locations. 
[Reserved]
    Example 13. Qualified health plan closed to enrollment. Taxpayer 
Y has two dependents, R and S. Y, R, and S enroll in a qualified 
health plan. The Exchange for the rating area where the family 
resides offers silver level plans J, K, L, and M, which are the 
first, second, third, and fourth lowest cost silver plans covering 
Y's family. When Y's family enrolls, Plan J is closed to enrollment. 
Under paragraph (f)(5) of this section, Plan J is disregarded in 
determining Y's applicable benchmark plan, and Plan L is Y's 
applicable benchmark plan.
    Example 14. Benchmark plan closes to new enrollees during the 
year. (i) 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 the two adults in each 
coverage family offered through the Exchange. The X and Y families 
each enroll in a qualified health plan that is not the applicable 
benchmark plan (Plan 4) in November during the annual open 
enrollment period. Plan 2 closes to new enrollees the following 
June. Thus, on July 1, Plan 3 is the second lowest cost silver plan 
available to new enrollees through the Exchange. The Z family 
enrolls in a qualified health plan in July.
    (ii) Under paragraphs (f)(1), (f)(2), and (f)(6) 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 open to enrollment through the 
Exchange when the Z family enrolls.
    Example 15. Benchmark plan terminates for all enrollees during 
the year. The facts are the same as in Example 14, except that Plan 
2 terminates for all enrollees on June 30. Under paragraphs (f)(1), 
(f)(2), and (f)(6) 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 
required share 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, see Sec.  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       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 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

[[Page 30393]]

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.
    (ii) Determine the excess of B's Federal poverty line 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 x 1.75 = .35
6.3 + .35 = 6.65.

    (h) Plan covering more than one family--(1) In general. If a 
qualified health plan covers more than one family under a single 
policy, 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 applicable benchmark plan.
    (2) Example. The following example illustrates the rules of this 
paragraph (h):

    Example. (i) Taxpayers A and B enroll in a single policy under a 
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 
additional 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 covering only A and A's dependents is 
$12,000 and the premium for the second lowest cost silver plan 
providing self-only coverage to B 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 x $12,000/$18,000) and the 
portion allocated to B is $5,000 ($15,000 x $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 guidance issued by 
the Secretary of Health and Human Services. See section 36B(b)(3)(D).
    (3) Examples. The following examples illustrate the rules of this 
paragraph (j):

    Example 1. (i) Taxpayer B enrolls in a qualified health plan 
that provides benefits in addition to the essential health benefits 
the plan must provide (additional benefits). The monthly premium for 
the plan in which B enrolls is $385 (Amount 1), of which $35 is 
allocable to the additional benefits. The premium for B's applicable 
benchmark plan is $440, of which $40 is allocable to the additional 
benefits. The excess of the premium for B's applicable benchmark 
plan over B's $60 contribution amount (which is the product of B's 
household income and the applicable percentage) is $380 per month 
(Amount 2).
    (ii) Under this paragraph (j), the premium for the qualified 
health plan in which B enrolls and the applicable benchmark premium 
each is reduced by the portion of the premium that is allocable to 
the additional benefits provided under that plan. Therefore, Amount 
1 is reduced to $350 ($385-$35), the premium for B's applicable 
benchmark plan is reduced to $400 ($440-$40), and Amount 2 is 
reduced to $340 ($400 less $60). B's premium assistance amount for a 
coverage month is $340, the lesser of Amount 1 and Amount 2.
    Example 2. (i) The facts are the same as in Example 1, except 
that B's applicable benchmark plan provides no benefits in addition 
to the essential health benefits required to be provided by the 
plan. Thus, under paragraph (j) of this section, only the amount of 
the monthly premium for the plan in which B enrolls is reduced by 
the portion of the premium that is allocable to the additional 
benefits provided under that plan, and Amount 1 is $350 ($385-$35). 
The premium for B's applicable benchmark plan is not reduced under 
this paragraph (j), and Amount 2 is $380 ($440-$60). B's premium 
assistance amount for a coverage month is $350, the lesser of these 
two amounts.

    (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)) (a stand-alone dental plan), the portion of the 
premium for the stand-alone 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. The portion of the premium for a stand-
alone dental plan properly allocable to pediatric dental benefits is 
determined under guidance issued by the Secretary of Health and Human 
Services.
    (3) Example. The following example illustrates the rules of this 
paragraph (k):

    Example. (i) Taxpayer C and C's dependent, R, enroll in a 
qualified health plan. The premium for the plan in which C and R 
enroll is $7,200 ($600/month) (Amount 1). The plan does not provide 
dental coverage. C also enrolls in a stand-alone dental plan 
covering C and R. The portion of the premium for the dental plan 
allocable to pediatric dental benefits that are essential health 
benefits is $240 ($20 per month). The excess of the premium for C's 
applicable benchmark plan over C's contribution amount (the product 
of C's household income and the applicable percentage) is $7,260 
($605/month) (Amount 2).
    (ii) Under this paragraph (k), the amount C pays for premiums 
(Amount 1) for purposes of computing the premium assistance amount 
is increased by the portion of the premium for the stand-alone 
dental plan allocable to pediatric dental benefits that are 
essential

[[Page 30394]]

health benefits. Thus, the amount of the premiums for the plan in 
which C enrolls is treated as $620 for purposes of computing the 
amount of the premium tax credit. C's premium assistance amount for 
each coverage month is $605 (Amount 2), the lesser of Amount 1 
(increased by the premiums allocable to pediatric dental benefits) 
and Amount 2.

    (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 Sec.  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. The Commissioner may describe a comparable 
method in additional published guidance, see Sec.  601.601(d)(2) of 
this chapter.


Sec.  1.36B-4  Reconciling the premium tax credit with advance credit 
payments.

    (a) Reconciliation--(1) Coordination of premium tax credit with 
advance credit payments--(i) In general. A taxpayer must reconcile the 
amount of credit allowed under section 36B with advance credit payments 
on the 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.
    (ii) Responsibility for advance credit payments. A taxpayer must 
reconcile all advance credit payments for coverage of any member of the 
taxpayer's family. If advance credit payments are made for coverage of 
an individual for whom no taxpayer claims a personal exemption 
deduction, the taxpayer who attests to the Exchange to the intention to 
claim a personal exemption deduction for the individual as part of the 
determination that the taxpayer is eligible for advance credit payments 
for coverage of the individual must reconcile the advance credit 
payments.
    (iii) Advance credit payment for a month in which an issuer does 
not provide coverage. For purposes of reconciliation, a taxpayer does 
not have an advance credit payment for a month if the issuer of the 
qualified health plan in which the taxpayer or a family member is 
enrolled does not provide coverage for that month.
    (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. The applicable benchmark 
plan for each coverage month is determined under Sec.  1.36B-3(f).
    (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, see Sec.  601.601(d)(2) of this chapter, to reflect 
changes in the consumer price index.
    (ii) Additional tax limitation table.

----------------------------------------------------------------------------------------------------------------
                                                                 Limitation amount for
                                                                 taxpayers whose tax is   Limitation amount for
      Household income percentage of Federal poverty line           determined under       all other taxpayers
                                                                      section 1(c)
----------------------------------------------------------------------------------------------------------------
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 following examples illustrate the rules of this 
paragraph (a). In each example the taxpayer enrolls in a higher cost 
qualified health plan than the applicable benchmark plan:

    Example 1. Household income increases. (i) Taxpayer A is single 
and has no dependents. The Exchange for A's rating area projects A's 
2014 household income to be $27,925 (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 
$2,952, computed as follows: benchmark plan premium of $5,200 less 
contribution amount of $2,248 (projected household income of $27,925 
x .0805) = $2,952.
    (ii) A's household income for 2014 is $33,622, 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 
$2,006 (benchmark plan premium of $5,200 less contribution amount of 
$3,194 (household income of $33,622 x .095)). Because A's advance 
credit payments for 2014 are $2,952 and A's 2014 credit is $2,006, A 
has excess advance payments of $946. Under paragraph (a)(1) of this 
section, A's tax liability for 2014 is increased by $946. Because 
A's household income is between 300 percent and 400 percent of the 
Federal poverty line, if A's excess advance payments exceeded 
$1,250, under the limitation of paragraph (a)(3) of this section, 
A's additional tax liability would be limited to that amount.
    Example 2. Household income increases, repayment limitation 
applies. The facts are the same as in Example 1, except that A's 
household income for 2014 is $43,560 (390 percent of the Federal 
poverty line for a family of one, applicable percentage 9.5). 
Consequently, A's premium tax credit for 2014 is $1,062 ($5,200 
benchmark plan premium less contribution amount of $4,138 (household 
income of $43,560 x .095)). A's advance credit payments for 2014 are 
$2,952; therefore, A has excess advance payments of $1,890. Because 
A's household income is between 300 percent and 400 percent of the 
Federal poverty line, A's additional tax liability for the taxable 
year is $1,250 under the repayment limitation of paragraph (a)(3) of 
this section.
    Example 3. Household income decreases. The facts are the same as 
in Example 1, except that A's actual household income for 2014 is 
$22,340 (200 percent of the Federal poverty line for a family of 
one, applicable

[[Page 30395]]

percentage 6.3). Consequently, A's premium tax credit for 2014 is 
$3,793 ($5,200 benchmark plan premium less contribution amount of 
$1,407 (household income of $22,340 x .063)). Because A's advance 
credit payments for 2014 are $2,952, A is allowed an additional 
credit of $841 ($3,793 less $2,952).
    Example 4. Family size decreases. (i) Taxpayers B and C are 
married and have two children, K and L (ages 17 and 20), whom they 
claim as their dependents in 2013. The Exchange for their rating 
area projects their 2014 household income to be $63,388 (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's and C's advance credit 
payments for 2014 are $8,535, computed as follows: benchmark plan 
premium of $14,100 less contribution amount of $5,565 (projected 
household income of $63,388 x .0878) = $8,535.
    (ii) In 2014, B and C do not claim L as their dependent. 
Consequently, B's and C's family size for 2014 is three, their 
household income of $63,388 is 332 percent of the Federal poverty 
line for a family of three (applicable percentage 9.5), and the 
annual premium for their applicable benchmark plan is $12,000. Their 
premium tax credit for 2014 is $5,978 ($12,000 benchmark plan 
premium less $6,022 contribution amount (household income of $63,388 
x .095)). Because B's and C's advance credit payments for 2014 are 
$8,535 and their 2014 credit is $5,978, B and C have excess advance 
payments of $2,557. B's and C's additional tax liability for 2014 
under paragraph (a)(1) of this section, however, is limited to 
$2,500 under paragraph (a)(3) of this section.
    Example 5. Repayment limitation does not apply. (i) Taxpayer D 
is single and has no dependents. The Exchange for D's rating area 
approves advance credit payments for D based on 2014 household 
income of $39,095 (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 $1,486, computed as follows: 
benchmark plan premium of $5,200 less contribution amount of $3,714 
(projected household income of $39,095 x .095) = $1,486.
    (ii) D's actual household income for 2014 is $44,903, 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 $1,486 (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 $1,486.
    Example 6. Coverage for less than a full taxable year. (i) 
Taxpayer F is single and has no dependents. In November 2013, the 
Exchange for F's rating area projects F's 2014 household income to 
be $27,925 (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 $246, computed as 
follows: benchmark plan premium of $5,200 less contribution amount 
of $2,248 (projected household income of $27,925 x .0805) = $2,952; 
$2,952/12 = $246.
    (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 $28,707 (257 percent of the Federal poverty line for a family 
size of one, applicable percentage 8.25).
    (iii) Under Sec.  1.36B-3(a), F's premium assistance credit 
amount is the sum of the premium assistance amounts for the coverage 
months. Under Sec.  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 $2,832 (benchmark plan premium of $5,200 less contribution 
amount of $2,368 (household income of $28,707 x .0825)). Because F 
has only eight coverage months in 2014, F's credit is $1,888 
($2,832/12 x 8). Because F does not discontinue her Exchange 
coverage until November 1, 2014, F's advance credit payments for 
2014 are $2,460 ($246 x 10). Consequently, F has excess advance 
payments of $572 ($2,460 less $1,888) and F's tax liability for 2014 
is increased by $572 under paragraph (a)(1) of this section.
    Example 7. 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 for E's rating area 
projects E's 2014 household income to be $30,260 (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 $275, computed as 
follows: benchmark plan premium of $5,200 less contribution amount 
of $1,906 (projected household income of $30,260 x .063) = $3,294; 
$3,294/12 = $275.
    (ii) On August 1, 2014, E loses her eligibility for government-
sponsored minimum essential coverage. E enrolls in the qualified 
health plan that covers 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 to be $675 as follows: benchmark plan 
premium of $10,000 less contribution amount of $1,906 (projected 
household income of $30,260 x .063) = $8,094; $8,094/12 = $675. E's 
household income for 2014 is $28,747 (190 percent of the Federal 
poverty line, applicable percentage 5.84).
    (iii) Under Sec.  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).......          $1,925  ($275 x 7)
Advance credit payments (Aug. to Dec.).......           3,375  ($675 x 5)
                                              ----------------
    Total advance credit payments............           5,300
 
Benchmark plan premium (Jan. to July)........           3,033  (($5,200/12) x 7)
Benchmark plan premium (Aug. to Dec.)........           4,167  (($10,000/12) x 5)
                                              ----------------
    Total benchmark plan premium.............           7,200
Contribution amount (taxable year household             1,679  ($28,747 x .0584)
 income x applicable percentage).
                                              ----------------
    Credit (total benchmark plan premium less           5,521
     contribution amount).
 

    (iv) E's advance credit payments for 2014 are $5,300. E's 
premium tax credit is $5,521. Thus, E is allowed an additional 
credit of $221.
    Example 8. Part-year coverage and changes in coverage months and 
applicable benchmark plan. (i) The facts are the same as in Example 
7, except that F is 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. Thus, March through 
July are coverage months for F and August through December are 
coverage months for E and F.
    (ii) E reconciles her premium tax credit with advance credit 
payments as follows:

[[Page 30396]]



Advance credit payments (March to July)......          $1,375  ($275 x 5)
Advance credit payments (Aug. to Dec.).......           3,375  ($675 x 5)
                                              ----------------
    Total advance credit payments............           4,750
 
Benchmark plan premium (March to July).......           2,167  (($5,200/12) x 5)
Benchmark plan premium (Aug. to Dec.)........           4,167  (($10,000/12) x 5)
                                              ----------------
    Total benchmark plan premium.............           6,334
Contribution amount for 10 coverage months              1,399  ($28,747 x .0584 x 10/12)
 (taxable year household income x applicable
 percentage x 10/12).
                                              ----------------
    Credit (total benchmark plan premium less           4,935
     contribution amount).
 

    (iii) E's advance credit payments for 2014 are $4,750. E's 
premium tax credit is $4,935. Thus, E is allowed an additional 
credit of $185.
    Example 9. Advance credit payments for months an issuer does not 
provide coverage. (i) Taxpayer F enrolls in a qualified health plan 
for 2014 and the Exchange approves advance credit payments. F pays 
the portion of the premium not covered by advance credit payments 
for January through April of 2014 but fails to make payments in May, 
June, and July. As a result, the issuer of the qualified health plan 
initiates the 3-month grace period under section 
1412(c)(2)(B)(iv)(II) of the Affordable Care Act and 45 CFR 
156.270(d). During the grace period the issuer continues to receive 
advance credit payments on behalf of F. On July 1 the issuer 
rescinds F's coverage retroactive to the end of the first month of 
the grace period, May 31.
    (ii) Under paragraph (a)(1)(iii) of this section, F does not 
take into account advance credit payments for June or July of 2014 
when reconciling the premium tax credit with advance credit payments 
under paragraph (a)(1) of this section.

    (b) Changes in filing status--(1) In general. Except as provided in 
paragraph (b)(2) or (b)(3) of this section, 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 who marry during the taxable year--(i) In general. 
Taxpayers who marry during and file a joint return for the taxable year 
may compute the additional tax imposed under paragraph (a)(1) of this 
section under paragraph (b)(2)(ii) of this section. Only taxpayers who 
are unmarried at the beginning of the taxable year and are married 
(within the meaning of section 7703) at the end of the taxable year, at 
least one of whom receives advance credit payments, may use this 
alternative computation.
    (ii) Alternative computation of additional tax liability--(A) In 
general. The additional tax liability determined under this paragraph 
(b)(2)(ii) is equal to the excess of the taxpayers' advance credit 
payments for the taxable year over the amount of the alternative 
marriage-year credit. The alternative marriage-year credit is the sum 
of both taxpayers' alternative premium assistance amounts for the pre-
marriage months and the premium assistance amounts for the marriage 
months. This paragraph (b)(2)(ii) may not be used to increase the 
additional premium tax credit computed under paragraph (a)(1)(i) of 
this section.
    (B) Alternative premium assistance amounts for pre-marriage months. 
Taxpayers compute the alternative premium assistance amounts for each 
taxpayer for each full or partial month the taxpayers are unmarried as 
described in paragraph (a)(2) of this section, except that each 
taxpayer treats the amount of household income as one-half of the 
actual household income for the taxable year and treats family size as 
the number of individuals in the taxpayer's family prior to the 
marriage. The taxpayers may include a dependent of the taxpayers for 
the taxable year in either taxpayer's family size for the pre-marriage 
months.
    (C) Premium assistance amounts for marriage months. Taxpayers 
compute the premium assistance amounts for each full month the 
taxpayers are married as described in paragraph (a)(2) of this section.
    (3) 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 married 
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.
    (4) Married taxpayers filing separate returns. The premium tax 
credit is allowed to married (within the meaning of section 7703) 
taxpayers only if they file joint returns. See Sec.  1.36B-2(b)(2). A 
married taxpayer who receives advance credit payments and files an 
income tax return as married filing separately has received excess 
advance payments. Taxpayers who receive advance credit payments as 
married taxpayers and do not file a joint return must allocate the 
advance credit payments equally to each taxpayer. 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.
    (5) Taxpayers filing returns as head of household and married 
filing separately. If taxpayers enroll in one qualified health plan and 
receive advance credit payments based on a filing status of married 
filing a joint tax return, and one taxpayer properly files a tax return 
as head of household and the other taxpayer files a tax return as 
married filing separately for that taxable year, advance credit 
payments are allocated to each taxpayer equally for any period the 
taxpayers are enrolled in the same qualified health plan.
    (6) Examples. The following examples illustrate the provisions of 
this paragraph (b). In each example the taxpayer enrolls in a higher 
cost qualified health plan than the applicable benchmark plan:

    Example 1. Taxpayers marry during the taxable year, general rule 
for computing additional tax. (i) P is a single taxpayer with no 
dependents. In 2013 the Exchange for the rating area where P resides 
determines that P's 2014 household income will be $40,000 (358 
percent of the Federal poverty line,

[[Page 30397]]

applicable percentage 9.5). P enrolls in a qualified health plan. 
The premium for the applicable benchmark plan is $5,200. P's monthly 
advance credit payment is $117, computed as follows: $5,200 
benchmark plan premium minus contribution amount of $3,800 ($40,000 
x .095) equals $1,400 (total advance credit payment); $1,400/12 = 
$117.
    (ii) Q is a single taxpayer with two dependents. In 2013 the 
Exchange for the rating area where Q resides determines that Q's 
2014 household income will be $35,000 (183 percent of the Federal 
poverty line, applicable percentage 5.52). Q enrolls in a qualified 
health plan. The premium for the applicable benchmark plan is 
$10,000. Q's monthly advance credit payment is $672, computed as 
follows: $10,000 benchmark plan premium minus contribution amount of 
$1,932 ($35,000 x .0552) equals $8,068 (total advance credit); 
$8,068/12 = $672.
    (iii) P and Q marry on July 17, 2014 and enroll in a single 
policy for a qualified health plan covering four family members, 
effective August 1, 2014. The premium for the applicable benchmark 
plan is $14,000. Based on household income of $75,000 and a family 
size of four (325 percent of the Federal poverty line, applicable 
percentage 9.5), the Exchange approves advance credit payments of 
$573 per month, computed as follows: $14,000 benchmark plan premium 
minus contribution amount of $7,125 ($75,000 x .095) equals $6,875 
(total advance credit); $6,875/12 = $573.
    (iv) P and Q file a joint return for 2014 and report $75,000 in 
household income and a family size of four. P and Q compute their 
credit at reconciliation under paragraph (b)(1) of this section. 
They use the premiums for the applicable benchmark plans that apply 
for the months married and the months not married, and their 
contribution amount is 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 July)...................            $819
Advance payments for Q (Jan. to July)...................           4,704
Advance payments for P and Q (Aug. to Dec.).............           2,865
                                                         ---------------
    Total advance payments..............................           8,388
                                                         ===============
Benchmark plan premium for P (Jan. to July).............           3,033
Benchmark plan premium for Q (Jan. to July).............           5,833
Benchmark plan premium for P and Q (Aug. to Dec.).......           5,833
                                                         ---------------
    Total benchmark plan premium........................          14,699
                                                         ===============
Contribution amount (taxable year household income x               7,125
 applicable percentage).................................
                                                         ---------------
    Credit (total benchmark plan premium less                      7,574
     contribution amount)...............................
Additional tax..........................................             814
 

    (v) P's and Q's tax liability for 2014 is increased by $814 
under paragraph (a)(1) of this section.
    Example 2. Taxpayers marry during the taxable year, alternative 
computation of additional tax. (i) The facts are the same as in 
Example 1, except that P and Q compute their additional tax 
liability under paragraph (b)(2)(ii) of this section. P's and Q's 
additional tax is the excess of their advance credit payments for 
the taxable year ($8,388) over their alternative marriage-year 
credit, which is the sum of the alternative premium assistance 
amounts for the pre-marriage months and the premium assistance 
amounts for the marriage months.

    (ii) P and Q compute the alternative marriage-year credit as 
follows:

Alternative premium assistance amounts for
 pre-marriage months:
    Benchmark plan premium for P (Jan. to              $3,033  (($5,200/12) x 7)
     July).
    Contribution amount (\1/2\ taxable year             2,078  ($37,500 x .095 x 7/12)
     household income x applicable
     percentage) x 7/12).
    Alternative premium assistance amount for             955  ($3,033-$2,078)
     P's pre-marriage months.
    Benchmark plan premium for Q (Jan. to               5,833  (($10,000/12) x 7)
     July).
    Contribution amount (\1/2\ taxable year             1,339  ($37,500 x .0612 x 7/12)
     household income x applicable percentage
     x 7/12).
    Alternative premium assistance amount for           4,494  ($5,833-$1,339)
     Q's pre-marriage months.
Premium assistance amount for marriage
 months:
    Benchmark plan premium for P and Q (Aug.            5,833  (($14,000/12 x 5)
     to Dec.).
    Contribution amount (taxable year                   2,969  ($75,000 x .095 x 5/12)
     household income x applicable percentage
     x 5/12).
    Premium assistance amount for marriage              2,864  ($5,833-$2,969)
     months.
 

    Alternative marriage-year credit (sum of premium assistance amounts 
for pre-marriage months and marriage months): $955 + $4,494 + $2,864 = 
$8,313.
    (iii) P and Q reconcile their premium tax credit with advance 
credit payments by determining the excess of their advance credit 
payments ($8,388) over their alternative marriage-year credit ($8,313). 
P and Q must increase their tax liability by $75 under paragraph (a)(1) 
of this section.

    Example 3. Taxpayers marry during the taxable year, alternative 
computation of additional tax, alternative marriage-year tax credit 
exceeds advance credit payments. The facts are the same as in 
Example 2, except that the amount of P's and Q's advance credit 
payments is $8,301. Thus, their alternative marriage-year credit 
($8,313) exceeds the amount of their advance credit payments 
($8,301). Under paragraph (b)(2)(ii)(A) of this section, the amount 
of additional tax liability and additional tax credit that P and Q 
report on their tax return is $0.
    Example 4. Taxpayers marry during the taxable year, alternative 
computation of additional tax. (i) Taxpayer R is single and has no 
dependents. In 2013, the Exchange for the rating area where R 
resides determines that R's 2014 household income will be $40,000 
(358 percent of the Federal poverty line, applicable percentage 
9.5). R enrolls in a qualified health plan. The premium for the 
applicable benchmark plan is $5,200. R's monthly advance credit 
payment is $117, computed as follows: $5,200 benchmark plan premium 
minus contribution amount of $3,800 ($40,000 x .095) = $1,400 (total 
advance credit); $1,400/12 = $117.
    (ii) Taxpayer S is single with no dependents. In 2013, the 
Exchange for the rating area where S resides determines that S's 
2014 household income will be $20,000 (179 percent of the Federal 
poverty line, applicable percentage 5.33). S enrolls in a qualified 
health plan. The premium for the applicable benchmark plan is 
$5,200. S's monthly advance credit payment is $345, computed as 
follows: $5,200 benchmark plan premium minus contribution amount of 
$1,066 ($20,000 x .0533) = $4,134 (total advance credit); $4,134/12 
= $345.
    (iii) R and S marry in September 2014 and enroll in a single 
policy for a qualified health plan covering them both, beginning 
October 1, 2014. The premium for the applicable benchmark plan is 
$10,000. Based on

[[Page 30398]]

household income of $60,000 and a family size of two (397 percent of 
the Federal poverty line, applicable percentage 9.5), R's and S's 
monthly advance credit payment is $358, computed as follows: $10,000 
benchmark plan premium minus contribution amount of $5,700 ($60,000 
x .095) = $4,300; $4,300/12 = $358. R's and S's advance credit 
payments for 2014 are $5,232, computed as follows:

Advance payments for R (Jan. to Sept.).......          $1,053  ($117 x 9)
Advance payments for S (Jan. to Sept.).......           3,105  ($345 x 9)
Advance payments for R and S (Oct. to Dec.)..           1,074  ($358 x 3)
                                              ----------------
    Total advance payments...................           5,232
 

    (iv) R and S file a joint return for 2014 and report $62,000 in 
household income and a family size of two (410 percent of the FPL 
for a family of 2). Thus, under Sec.  1.36B-2(b)(2), R and S are not 
applicable taxpayers for 2014 and may not claim a premium tax credit 
for 2014. However, they compute their additional tax liability under 
paragraph (b)(2)(ii) of this section. R's and S's additional tax is 
the excess of their advance credit payments for the taxable year 
($5,232) over their alternative marriage-year credit, which is the 
sum of the alternative premium assistance amounts for the pre-
marriage months and the premium assistance amounts for the marriage 
months. In this case, R and S have no premium assistance amounts for 
the married months because their household income is over 400 
percent of the Federal poverty line for a family of 2.
    (v) R and S compute their alternative marriage-year credit as 
follows:

Premium assistance amount for pre-marriage
 months:
    Benchmark plan premium for R (Jan. to              $3,900  (($5,200/12) x 9)
     Sept.).
    Contribution amount ((\1/2\ taxable year            2,053  ($31,000 x .0883 x 9/12)
     household income x applicable
     percentage) x 9/12).
    Premium assistance amount for R's pre-              1,847  ($3,900 - $2,053)
     marriage months.
    Benchmark plan premium for S (Jan. to               3,900  (($5,200/12) x 9)
     Sept.).
    Contribution amount ((\1/2\ taxable year            2,053  ($31,000 x .0883 x 9/12)
     household income x applicable
     percentage) x 9/12).
    Premium assistance amount for S's pre-              1,847  ($3,900-$2,053)
     marriage months.
Premium assistance amount for marriage months               0
 

    Alternative marriage-year credit (sum of premium assistance 
amounts for pre-marriage months and marriage months): $1,847 + 1,847 
+ 0 = $3,694.
    (vi) R and S reconcile their premium tax credit with advance 
credit payments by determining the excess of their advance credit 
payments ($5,232) over their alternative marriage-year credit 
($3,694). R and S must increase their tax liability by $1,538 under 
paragraph (a)(1) of this section.
    Example 5. (i) Taxpayers marry during the taxable year, no 
additional tax liability. The facts are the same as in Example 4, 
except that S has no income and is enrolled in Medicaid for January 
through September 2014 and R's and S's household income for 2014 is 
$37,000 (245 percent of the Federal poverty line, applicable 
percentage 7.88). Their advance credit payments for 2014 are $2,707 
($1,053 for R for January to September and $1,654 for R and S for 
October to December). Their premium tax credit for 2014 is $3,484 
(total benchmark premium of $6,400 less contribution amount of 
$2,916).
    (ii) Because R's and S's premium tax credit of $3,484 exceeds 
their advance credit payments of $2,707, R and S are allowed an 
additional credit of $707. Although R and S marry in 2014, paragraph 
(b)(2) of this section (the alternative computation of additional 
tax for taxpayers who marry during the taxable year) does not apply 
because they do not owe additional tax for 2014.
    Example 6. Taxpayers divorce during the taxable year, 50 percent 
allocation. (i) Taxpayers V and W are married and have two 
dependents. In 2013, the Exchange for the rating area where the 
family resides determines that their 2014 household income will be 
$76,000 (330 percent of the Federal poverty line for a family of 4, 
applicable percentage 9.5). V and W 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 V 
and W's contribution amount of $7,220 ($76,000 x .095) equals $6,880 
(total advance credit); $6,880/12 = $573.
    (ii) V and W divorce on June 17, 2014, and obtain separate 
qualified health plans beginning July 1, 2014. V enrolls based on 
household income of $60,000 and a family size of three (314 percent 
of the Federal poverty line, applicable percentage 9.5). The premium 
for the applicable benchmark plan is $10,000. The Exchange approves 
advance credit payments of $358 per month, computed as follows: 
$10,000 benchmark plan premium minus V's contribution amount of 
$5,700 ($60,000 x .095) equals $4,300 (total advance credit); 
$4,300/12 = $358.
    (iii) W enrolls based on household income of $16,420 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 $381 per month, computed as follows: $5,200 benchmark 
plan premium minus W's contribution amount of $627 ($16,420 x .0382) 
equals $4,573 (total advance credit); $4,573/12 = $381. V and W 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) V and W each compute their credit at reconciliation under 
paragraph (b)(1) of this section, using the premiums for the 
applicable benchmark plans that apply to them for the months married 
and the months not married, and the contribution amount based on 
their Federal poverty line percentages at the end of the taxable 
year. Under paragraph (b)(3) of this section, because V and W do not 
agree on an allocation, V and W must equally allocate the benchmark 
plan premium ($7,050) and the advance credit payments ($3,438) for 
the six-month period January through June 2014 when they are married 
and enrolled in the same qualified health plan. Thus, V and W each 
are allocated $3,525 of the benchmark plan premium ($7,050/2) and 
$1,719 of the advance credit payments ($3,438/2) for January through 
June.
    (v) V reports on his 2014 tax return $60,000 in household income 
and family size of three. W reports on her 2014 tax return $16,420 
in household income and family size of one. V and W reconcile their 
premium tax credit with advance credit payments as follows:

------------------------------------------------------------------------
                                                     V            W
------------------------------------------------------------------------
Allocated advance payments (Jan. to June).....       $1,719       $1,719
Actual advance payments (July to Dec.)........        2,148        2,286
                                               -------------------------

[[Page 30399]]

 
    Total advance payments....................        3,867        4,005
 
Allocated benchmark plan premium (Jan. to             3,525        3,525
 June)........................................
Actual benchmark plan premium (July to Dec.)..        5,000        2,600
                                               -------------------------
    Total benchmark plan premium..............        8,525        6,125
 
Contribution amount (taxable year household           5,700          627
 income x applicable percentage)..............
                                               -------------------------
    Credit (total benchmark plan premium less         2,825        5,498
     contribution amount).....................
Additional credit.............................  ...........        1,493
Additional tax................................        1,042  ...........
------------------------------------------------------------------------

    (vi) Under paragraph (a)(1) of this section, on their tax 
returns V's tax liability is increased by $1,042 and W is allowed 
$1,493 as additional credit.
    Example 7. Taxpayers divorce during the taxable year, allocation 
in proportion to household income. (i) The facts are the same as in 
Example 6, except that V and W decide to allocate the benchmark plan 
premium ($7,050) and the advance credit payments ($3,438) for 
January through June 2014 in proportion to their household incomes 
(79 percent and 21 percent). Thus, V is allocated $5,570 of the 
benchmark plan premiums ($7,050 x .79) and $2,716 of the advance 
credit payments ($3,438 x .79), and W is allocated $1,481 of the 
benchmark plan premiums ($7,050 x .21) and $722 of the advance 
credit payments ($3,438 x .21). V and W reconcile their premium tax 
credit with advance credit payments as follows:

------------------------------------------------------------------------
                                                     V            W
------------------------------------------------------------------------
Allocated advance payments (Jan. to June).....       $2,716         $722
Actual advance payments (July to Dec.)........        2,148        2,286
                                               -------------------------
    Total advance payments....................        4,864        3,008
 
Allocated benchmark plan premium (Jan. to             5,570        1,481
 June)........................................
Actual benchmark plan premium (July to Dec.)..        5,000        2,600
                                               -------------------------
    Total benchmark plan premium..............       10,570        4,081
 
Contribution amount (taxable year household           5,700          627
 income x applicable percentage)..............
                                               -------------------------
    Credit (total benchmark plan premium less         4,870        3,454
     contribution amount).....................
Additional credit.............................            6          446
------------------------------------------------------------------------

    (ii) Under paragraph (a)(1) of this section, on their tax 
returns V is allowed an additional credit of $6 and W is allowed an 
additional credit of $446.
    Example 8. Married taxpayers filing separate tax returns. (i) 
Taxpayers X and Y are married and have two dependents. In 2013, the 
Exchange for the rating area where the family resides determines 
that their 2014 household income will be $76,000 (330 percent of the 
Federal poverty line for a family of 4, applicable percentage 9.5). 
W and Y enroll in a qualified health plan for 2014. The premium for 
the applicable benchmark plan is $14,100. X's and Y's monthly 
advance credit payment is $573, computed as follows: $14,100 
benchmark plan premium minus X's and Y's contribution amount of 
$7,220 ($76,000 x .095) equals $6,880 (total advance credit); 
$6,880/12 = $573.
    (ii) X and Y file income tax returns for 2014 using a married 
filing separately filing status. X reports household income of 
$60,000 and a family size of three (314 percent of the Federal 
poverty line). Y reports household income of $16,420 and a family 
size of one (147 percent of the Federal poverty line).
    (iii) Because X and Y are married but do not file a joint return 
for 2014, X and Y are not applicable taxpayers and are not allowed a 
premium tax credit for 2014. See Sec.  1.36B-2(b)(2). Under 
paragraph (b)(4) of this section, half of the advance credit 
payments ($6,880/2 = $3,440) is allocated to X and half is allocated 
to Y for purposes of determining their excess advance payments. The 
repayment limitation described in paragraph (a)(3) of this section 
applies to X and Y based on the household income and family size 
reported on each return. Consequently, X's tax liability for 2014 is 
increased by $2,500 and Y's tax liability for 2014 is increased by 
$600.
    Example 9.  (i) The facts are the same as in Example 8, except 
that X and Y live apart for over 6 months of the year and X properly 
files an income tax return as head of household. Under section 
7703(b), X is treated as unmarried and therefore is not required to 
file a joint return. If X otherwise qualifies as an applicable 
taxpayer, X may claim the premium tax credit based on the household 
income and family size X reports on the return. Y is not an 
applicable taxpayer and is not eligible to claim the premium tax 
credit.
    (ii) X must reconcile the amount of credit with advance credit 
payments under paragraph (a) of this section. The premium for the 
applicable benchmark plan covering X and his two dependents is 
$9,800. X's premium tax credit is computed as follows: $9,800 
benchmark plan premium minus X's contribution amount of $5,700 
($60,000 - .095) equals $4,100.
    (iii) Under paragraph (b)(5) of this section, half of the 
advance payments ($6,880/2 = $3,440) is allocated to X and half is 
allocated to Y. Thus, X is entitled to $660 additional premium tax 
credit ($4,100 - $3,440). Y has $3,440 excess advance payments, 
which is limited to $600 under paragraph (a)(3) of this section.


Sec.  1.36B-5  Information reporting by Exchanges.

    (a) Information required to be reported. An Exchange must report to 
the Internal Revenue Service and each taxpayer the following 
information for the qualified health plan or plans in which the 
taxpayer or a member of the taxpayer's family enrolls through the 
Exchange--
    (1) The premium 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 in which the taxpayer or 
family member enrolls without reduction for advance credit payments;
    (3) The aggregate amount of any advance credit payments;
    (4) The name, address and Social Security number (SSN) of the 
primary insured and the name and SSN or adoption taxpayer 
identification number 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

[[Page 30400]]

circumstances, necessary to determine eligibility for and the amount of 
the premium tax credit;
    (6) Any other information required in published guidance, see Sec.  
601.601(d)(2) of this chapter, necessary to determine whether a 
taxpayer has received excess advance payments.
    (b) Time of reporting. [Reserved]
    (c) Manner of reporting. The Commissioner may provide rules in 
published guidance, see Sec.  601.601(d)(2) of this chapter, for the 
manner of reporting under this section.

0
Par. 3. Section 1.6011-8 is added to read as follows:


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

    (a) Requirement of return. 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.

0
Par. 4. In Sec.  1.6012-1, paragraph (a)(2)(viii) is added to read as 
follows:


Sec.  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 Sec.  1.6011-8(a).
* * * * *

PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT

0
Par. 5. The authority citation for part 602 continues to read as 
follows:

    Authority: 26 U.S.C. 7805.


0
Par. 6. In Sec.  602.101, paragraph (b) is amended by adding an entry 
in numerical order to the table to read as follows:


Sec.  602.101  OMB Control numbers.

* * * * *
    (b) * * *

------------------------------------------------------------------------
                                                            Current OMB
   CFR part or section where identified and described       Control No.
------------------------------------------------------------------------
 
                                * * * * *
1.36B-5.................................................       1545-2232
 
                                * * * * *
------------------------------------------------------------------------


Steven T. Miller,
Deputy Commissioner for Services and Enforcement.
    Approved: May 16, 2012.
Emily S. McMahon,
Acting Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2012-12421 Filed 5-18-12; 11:15 am]
BILLING CODE 4830-01-P