[Federal Register Volume 78, Number 22 (Friday, February 1, 2013)]
[Rules and Regulations]
[Pages 7264-7265]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-02136]



Internal Revenue Service

26 CFR Part 1

[TD 9611]
RIN 1545-BL49

Health Insurance Premium Tax Credit

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.


SUMMARY: This document contains final regulations relating to the 
health insurance premium tax credit enacted by the Patient Protection 
and Affordable Care Act and the Health Care and Education 
Reconciliation Act of 2010. These final regulations provide guidance to 
individuals related to employees who may enroll in eligible employer-
sponsored coverage and who wish to enroll in qualified health plans 
through Affordable Insurance Exchanges (Exchanges) and claim the 
premium tax credit.

DATES: Effective date: These regulations are effective on February 1, 
    Applicability date: For date of applicability, see Sec.  1.36B-

FOR FURTHER INFORMATION CONTACT: Andrew S. Braden, (202) 622-4960 (not 
a toll-free number).



    This document contains final regulations that amend the Income Tax 
Regulations (26 CFR part 1) under section 36B of the Internal Revenue 
Code (Code) regarding whether health coverage under an employer-
sponsored plan is affordable for individuals who are eligible to enroll 
in the plan by reason of their relationship to an employee (related 
    On August 17, 2011, a notice of proposed rulemaking (REG-131491-10) 
was published in the Federal Register (76 FR 50931). On May 23, 2012, 
final regulations (TD 9590) were published in the Federal Register (77 
FR 30377). The final regulations reserved a rule (Sec.  1.36B-
2(c)(3)(v)(A)(2)) for determining affordability of employer-sponsored 
coverage for related individuals. Written comments responding to the 
proposed and final regulations were received. The comments are 
available for public inspection at www.regulations.gov or on request. A 
public hearing was held on November 17, 2011. After consideration of 
all the comments, the proposed rule is adopted without change by this 
Treasury decision.

[[Page 7265]]

Explanation of Provisions and Summary of Comments

    The proposed regulations provided that, for taxable years beginning 
before January 1, 2015, an eligible employer-sponsored plan is 
affordable for related individuals if the portion of the annual premium 
the employee must pay for self-only coverage (the required contribution 
percentage) does not exceed 9.5% of the taxpayer's household income. 
While several comments supported this rule, other comments asserted 
that the affordability of coverage for related individuals should be 
based on the portion of the annual premium the employee must pay for 
family coverage.
    These final regulations adopt the proposed rule without change. The 
language of section 36B, through a cross-reference to section 
5000A(e)(1)(B), specifies that the affordability test for related 
individuals is based on the cost of self-only coverage. By contrast, 
section 5000A, which establishes the shared responsibility payment 
applicable to individuals for failure to maintain minimum essential 
coverage, addresses affordability for employees in section 
5000A(e)(1)(B) and, separately, for related individuals in section 
5000A(e)(1)(C). Thus, proposed regulations under section 5000A, which 
the Treasury Department is releasing concurrently with these final 
regulations, provide that, for purposes of applying the affordability 
exemption from the shared responsibility payment in the case of related 
individuals, the required contribution is based on the premium the 
employee would pay for employer-sponsored family coverage.

Effective/Applicability Date

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

Special Analyses

    This Treasury decision is not a significant regulatory action as 
defined in Executive Order 12866, as supplemented by Executive Order 
13563. Therefore, a regulatory assessment is not required. Section 
553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does 
not apply to these regulations, and, because the regulations do not 
impose a collection of information requirement on small entities, the 
Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. 
Pursuant to section 7805(f) of the Code, the notice of proposed 
rulemaking that preceded these final regulations was submitted to the 
Chief Counsel for Advocacy of the Small Business Administration for 
comment on its impact on small business.

Drafting Information

    The principal authors of these final regulations are Frank W. 
Dunham III and Stephen J. Toomey of the Office of Associate Chief 
Counsel (Income Tax and Accounting). However, other personnel from the 
IRS and the Treasury Department participated in their development.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR part 1 is amended as follows:


Paragraph 1. The authority citation for part 1 continues to read in 
part as follows:

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

Par. 2. Section 1.36B-2 is amended by revising paragraphs 
(c)(3)(v)(A)(2) and (c)(3)(v)(D), Example 2, to read as follows:

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

* * * * *
    (c) * * *
    (3) * * *
    (v) * * *
    (A) * * *
    (2) Affordability for related individual. Except as provided in 
paragraph (c)(3)(v)(A)(3) of this section, an eligible employer-
sponsored plan is affordable for a related individual if the portion of 
the annual premium the employee must pay for self-only coverage does 
not exceed the required contribution percentage, as described in 
paragraph (c)(3)(v)(A)(1) of this section.
* * * * *
    (D) * * *

    Example 2. Basic determination of affordability for a related 
individual. The facts are the same as in Example 1, except that C is 
married to J and X's plan requires C to contribute $5,300 for 
coverage for C and J for 2014 (11.3 percent of C's household 
income). Because C's required contribution for self-only coverage 
($3,450) does not exceed 9.5 percent of household income, under 
paragraph (c)(3)(v)(A)(2) of this section, X's plan is affordable 
for C and J, and C and J are eligible for minimum essential coverage 
for all months in 2014.

* * * * *

Steven T. Miller,
Deputy Commissioner for Services and Enforcement.
    Approved: January 25, 2013.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2013-02136 Filed 1-30-13; 11:15 am]