--- kind: "range" citation: "26 C.F.R. §§ 1.36B-1–1.36B-6" title: "26" from: "1.36B-1" to: "1.36B-6" count: 6 url: "https://uscodex.org/cfr/26/1.36B-1..1.36B-6" --- # §1.36B-1. Premium tax credit definitions. - (a) **In general.** [Section 36B](/cfr/26/36B.md) allows a refundable premium tax credit for taxable years ending after December 31, 2013. The definitions in this section apply to this section and [§§ 1.36B-2 through 1.36B-5](/cfr/26/1.36B-2..1.36B-5.md). - (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)](/usc/42/18021.md?p=a)) but does not include a catastrophic plan described in section 1302(e) of the Affordable Care Act ([42 U.S.C. 18022(e)](/usc/42/18022.md?p=e)). - (d) **Family and family size—** - (1) **In general.** A taxpayer's family means the individuals for whom a taxpayer properly claims a deduction for a personal exemption under [section 151](/cfr/26/151.md) 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](/cfr/26/5000A.md) for failing to maintain minimum essential coverage. - (2) **Special rule for tax years to which section 151(d)(5) applies.** For taxable years to which [section 151(d)(5)](/cfr/26/151.md?p=d-5) applies, a taxpayer's family means the taxpayer, including both spouses in the case of a joint return, except for individuals who qualify as a dependent of another taxpayer under [section 152](/cfr/26/152.md), and any other individual for whom the taxpayer is allowed a personal exemption deduction and whom the taxpayer properly reports on the taxpayer's income tax return for the taxable year. For purposes of this [paragraph (d)(2)](#d-2), an individual is reported on the taxpayer's income tax return if the individual's name and taxpayer identification number (TIN) are listed on the taxpayer's Form 1040 series return. See [§ 601.602](/cfr/26/601.602.md) of this chapter. - (e) **Household income—** - (1) **In general.** Household income means the sum of— - (i) A taxpayer's modified adjusted gross income (including the modified adjusted gross income of a child for whom an election under [section 1(g)(7)](/cfr/26/1.md?p=g-7) is made for the taxable year); - (ii) **The aggregate modified adjusted gross income of all other individuals who—** - (A) Are included in the taxpayer's family under [paragraph (d)](#d) of this section; and - (B) **Are required to file a return of tax imposed by section 1 for the taxable year.** - (2) **Modified adjusted gross income.** Modified adjusted gross income means adjusted gross income (within the meaning of [section 62](/cfr/26/62.md)) increased by— - (i) Amounts excluded from gross income under [section 911](/cfr/26/911.md); - (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)](/cfr/26/86.md?p=d)) not included in gross income under [section 86](/cfr/26/86.md). - (f) **Dependent.** Dependent has the same meaning as in [section 152](/cfr/26/152.md). - (g) **Lawfully present.** Lawfully present has the same meaning as in [45 CFR 155.20](/cfr/45/155.20.md). - (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)](/usc/42/9902.md?p=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](/cfr/45/155.410.md). 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](/cfr/26/36B.md) 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](/usc/42/18082.md)). - (k) **Exchange.** Exchange has the same meaning as in [45 CFR 155.20](/cfr/45/155.20.md). - (l) **Self-only coverage.** Self-only coverage means health insurance that covers one individual and provides coverage for the essential health benefits as defined in section 1302(b)(1) of the Affordable Care Act ([42 U.S.C. 18022](/usc/42/18022.md)). - (m) **Family coverage.** Family coverage means health insurance that covers more than one individual and provides coverage for the essential health benefits as defined in section 1302(b)(1) of the Affordable Care Act ([42 U.S.C. 18022](/usc/42/18022.md)). - (n) **Rating area.** The term rating area has the same meaning as used in section 2701(a)(2) of the Public Health Service Act ([42 U.S.C. 300gg(a)(2)](/usc/42/300gg.md?p=a-2)) and [45 CFR 147.102(b)](/cfr/45/147.102.md?p=b). - (o) **Applicability dates.** - (1) Except for paragraphs [(d)(2)](#d-2), (l), and (m) of this section, this section applies to taxable years ending after December 31, 2013. - (2) [Paragraph (d)(2)](#d-2) of this section applies to taxable years ending on or after December 31, 2020. - (3) **Paragraphs (l) and (m) of this section apply to taxable years beginning after December 31, 2018.** Paragraphs [(l)](#l) and [(m)](#m) of § 1.36B-1 as contained in [26 CFR part 1](/cfr/26/part1.md) edition revised as of April 1, 2016, apply to taxable years ending after December 31, 2013, and beginning before January 1, 2019. # §1.36B-2. Eligibility for premium tax credit. - (a) **In general.** An applicable taxpayer (within the meaning of [paragraph (b)](#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)](#c) of this section) other than coverage described in [section 5000A(f)(1)(C)](/cfr/26/5000A.md?p=f-1-C) (relating to coverage in the individual market). - (b) **Applicable taxpayer—** - (1) **In general.** Except as otherwise provided in this [paragraph (b)](#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—** - (i) **In general.** Except as provided in [paragraph (b)(2)(ii)](#b-2-ii) of this section, a taxpayer who is married (within the meaning of [section 7703](/cfr/26/7703.md)) 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. - (ii) **Victims of domestic abuse and abandonment.** Except as provided in [paragraph (b)(2)(v)](#b-2-v) of this section, a married taxpayer satisfies the joint filing requirement of [paragraph (b)(2)(i)](#b-2-i) of this section if the taxpayer files a tax return using a filing status of married filing separately and the taxpayer— - (A) Is living apart from the taxpayer's spouse at the time the taxpayer files the tax return; - (B) Is unable to file a joint return because the taxpayer is a victim of domestic abuse, as described in [paragraph (b)(2)(iii)](#b-2-iii) of this section, or spousal abandonment, as described in [paragraph (b)(2)(iv)](#b-2-iv) of this section; and - (C) Certifies on the return, in accordance with the relevant instructions, that the taxpayer meets the criteria of this [paragraph (b)(2)(ii)](#b-2-ii). - (iii) **Domestic abuse.** For purposes of [paragraph (b)(2)(ii)](#b-2-ii) of this section, domestic abuse includes physical, psychological, sexual, or emotional abuse, including efforts to control, isolate, humiliate, and intimidate, or to undermine the victim's ability to reason independently. All the facts and circumstances are considered in determining whether an individual is abused, including the effects of alcohol or drug abuse by the victim's spouse. Depending on the facts and circumstances, abuse of the victim's child or another family member living in the household may constitute abuse of the victim. - (iv) **Abandonment.** For purposes of [paragraph (b)(2)(ii)](#b-2-ii) of this section, a taxpayer is a victim of spousal abandonment for a taxable year if, taking into account all facts and circumstances, the taxpayer is unable to locate his or her spouse after reasonable diligence. - (v) **Three-year rule.** [Paragraph (b)(2)(ii)](#b-2-ii) of this section does not apply if the taxpayer met the requirements of [paragraph (b)(2)(ii)](#b-2-ii) of this section for each of the three preceding taxable years. - (3) **Dependents.** An individual is not an applicable taxpayer if another taxpayer may claim a deduction under [section 151](/cfr/26/151.md) 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)](/usc/42/18032.md?p=f-1-B) and [(f)(3)](/usc/42/18032.md?p=f-f-3)) and [§ 1.36B-3(b)(2)](/cfr/26/1.36B-3.md?p=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—** - (i) **In general.** A taxpayer (other than a taxpayer described in [paragraph (b)(5)](#b-5) of this section) whose household income for a taxable year is less than 100 percent of the Federal poverty line for the taxpayer's family size is treated as an applicable taxpayer for the taxable year if— - (A) The taxpayer or a family member enrolls in a qualified health plan through an Exchange for one or more months during the taxable year; - (B) An Exchange estimates at the time of enrollment that the taxpayer's household income will be at least 100 percent but not more than 400 percent of the Federal poverty line for the taxable year; - (C) Advance credit payments are authorized and paid for one or more months during the taxable year; and - (D) The taxpayer would be an applicable taxpayer if the taxpayer's household income for the taxable year was at least 100 but not more than 400 percent of the Federal poverty line for the taxpayer's family size. - (ii) **Exceptions.** This [paragraph (b)(6)](#b-6) does not apply for an individual who, with intentional or reckless disregard for the facts, provides incorrect information to an Exchange for the year of coverage. A reckless disregard of the facts occurs if the taxpayer makes little or no effort to determine whether the information provided to the Exchange is accurate under circumstances that demonstrate a substantial deviation from the standard of conduct a reasonable person would observe. A disregard of the facts is intentional if the taxpayer knows the information provided to the Exchange is inaccurate. - (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)](#b-5) or [(b)(6)](#b-6) of this section, the taxpayer's actual household income for the taxable year is used to compute the premium assistance amounts under [§ 1.36B-3(d)](/cfr/26/1.36B-3.md?p=d). - (c) **Minimum essential coverage—** - (1) **In general.** Minimum essential coverage is defined in [section 5000A(f)](/cfr/26/5000A.md?p=f) and regulations issued under that section. As described in [section 5000A(f)](/cfr/26/5000A.md?p=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)](/cfr/26/5000A.md?p=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)](#c-2-ii) of this section. The Commissioner may define eligibility for specific government-sponsored programs further in additional published guidance, see [§ 601.601(d)(2)](/cfr/26/601.601.md?p=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)](#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 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](/cfr/26/5000A.md). - (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 such as a Basic Health Program, for a period of coverage under a qualified health plan if, when the individual enrolls in the qualified health plan, an Exchange conducts an eligibility determination or, if applicable, eligibility assessment (within the meaning of [45 CFR 155.302(b)](/cfr/45/155.302.md?p=b)) for Medicaid, CHIP, or a similar program and determines or assesses the individual to be not eligible for coverage under the program. This [paragraph (c)(2)(v)](#c-2-v) does not apply for an individual who, with intentional or reckless disregard for the facts, provides incorrect information to an Exchange for the year of coverage. A reckless disregard of the facts occurs if the taxpayer makes little or no effort to determine whether the information provided to the Exchange is accurate under circumstances that demonstrate a substantial deviation from the standard of conduct a reasonable person would observe. A disregard of the facts is intentional if the taxpayer knows that information provided to the Exchange is inaccurate. - (vi) **Examples.** The following examples illustrate the provisions of this [paragraph (c)(2)](#c-2): - (3) **Employer-sponsored minimum essential coverage—** - (i) - (A) **Plans other than health reimbursement arrangements (HRAs) or other account-based group health plans described in paragraph (c)(3)(i)(B) of this section.** For purposes of [section 36B](/cfr/26/36B.md), an employee who may enroll in an eligible employer-sponsored plan (as defined in [section 5000A(f)(2)](/cfr/26/5000A.md?p=f-2) and the regulations under that section) that is minimum essential coverage, and an individual who may enroll in the plan because of a relationship to the employee (a related individual), are eligible for minimum essential coverage under the plan for any month only if the plan is affordable and provides minimum value. Except for the Nonappropriated Fund Health Benefits Program of the Department of Defense, established under section 349 of the National Defense Authorization Act for Fiscal Year 1995 (Public Law 103-337; [10 U.S.C. 1587](/usc/10/1587.md) note), government-sponsored minimum essential coverage is not an eligible employer-sponsored plan. The Nonappropriated Fund Health Benefits Program of the Department of Defense is considered eligible employer-sponsored coverage, but not government-sponsored coverage, for purposes of determining if an individual is eligible for minimum essential coverage under this section. - (B) **HRAs and other account-based group health plans integrated with individual health insurance coverage.** An employee who is offered an HRA or other account-based group health plan that would be integrated with individual health insurance coverage (or Medicare Part A and B or Medicare Part C), within the meaning of §§ [54.9802-4](/cfr/26/54.9802-4.md) and [54.9815-2711(d)(4)](/cfr/26/54.9815-2711.md?p=d-4) of this chapter, if the employee enrolls in individual health insurance coverage (or Medicare Part A and B or Medicare Part C), and an individual who is offered the HRA or other account-based group health plan because of a relationship to the employee (a related HRA individual), are eligible for minimum essential coverage under an eligible employer-sponsored plan for any month for which the HRA or other account-based group health plan is offered if the HRA or other account-based group health plan is affordable for the month under [paragraph (c)(5)](#c-5) of this section or if the employee does not opt out of and waive future reimbursements from the HRA or other account-based group health plan. An HRA or other account-based group health plan described in this [paragraph (c)(3)(i)(B)](#c-3-i-B) that is affordable for a month under [paragraph (c)(5)](#c-5) of this section is treated as providing minimum value for the month. For purposes of paragraphs [(c)(3)](#c-3) and [(5)](#c-5) of this section, the definitions under [§ 54.9815-2711(d)(6)](/cfr/26/54.9815-2711.md?p=d-6) of this chapter apply. - (ii) **Plan year.** For purposes of this [paragraph (c)(3)](#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). The plan year for an HRA or other account-based group health plan described in [paragraph (c)(3)(i)(B)](#c-3-i-B) of this section is the plan's 12-month coverage period (or the remainder of the 12-month coverage period for a newly eligible individual 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 for the plan year. If an enrollment period relates to coverage for not only the upcoming plan year (or the current plan year in the case of an enrollment period other than an open enrollment period), but also coverage in one or more succeeding plan years, this [paragraph (c)(3)(iii)(A)](#c-3-iii-A) applies only to eligibility for the coverage in the upcoming plan year (or the current plan year in the case of an enrollment period other than an open enrollment period). - (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)](#c-3-iii): - (iv) **Post-employment coverage.** A former employee (including a retiree), or an individual related (within the meaning of [paragraph (c)(3)(i)](#c-3-i) of this section) to a former employee, who may enroll in eligible employer-sponsored coverage or in continuation coverage required under Federal law or a State law that provides comparable continuation coverage is eligible for minimum essential coverage under this coverage only for months that the former employee or related individual is enrolled in the coverage. - (v) **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)](#c-3-v-C) of this section) of the applicable taxpayer's household income for the taxable year. See [paragraph (c)(5)](#c-5) of this section for rules for when an HRA or other account-based group health plan described in [paragraph (c)(3)(i)(B)](#c-3-i-B) of this section is affordable for an employee for a month. (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 employee's required contribution for family coverage under the plan does not exceed the required contribution percentage, as defined in [paragraph (c)(3)(v)(C)](#c-3-v-C) of this section, of the applicable taxpayer's household income for the taxable year. For purposes of this paragraph (c)(3)(v)(A)(2), an employee's required contribution for family coverage is the portion of the annual premium the employee must pay for coverage of the employee and all other individuals included in the employee's family, as defined in [§ 1.36B-1(d)](/cfr/26/1.36B-1.md?p=d), who are offered coverage under the eligible employer-sponsored plan. (3) Employee safe harbor. An eligible 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](/cfr/45/155.335.md) unless the individual receiving an Exchange redetermination notification affirmatively responds and provides current information about affordability. This paragraph (c)(3)(v)(A)(3) does not apply for an individual who, with intentional or reckless disregard for the facts, provides incorrect information to an Exchange concerning the portion of the annual premium for coverage for the employee or related individual under the plan. A reckless disregard of the facts occurs if the taxpayer makes little or no effort to determine whether the information provided to the Exchange is accurate under circumstances that demonstrate a substantial deviation from the standard of conduct a reasonable person would observe. A disregard of the facts is intentional if the taxpayer knows that the information provided to the Exchange is inaccurate. See [paragraph (c)(5)](#c-5) of this section for an employee safe harbor that applies when an Exchange determines that an HRA or other account-based group health plan described in [paragraph (c)(3)(i)(B)](#c-3-i-B) of this section is not affordable for an employee or a related HRA individual for the period of enrollment in a qualified health plan. (4) Wellness program incentives. Nondiscriminatory wellness program incentives offered by an eligible employer-sponsored plan that affect premiums are treated as earned in determining an employee's required contribution for purposes of affordability of an eligible employer-sponsored plan to the extent the incentives relate exclusively to tobacco use. Wellness program incentives that do not relate to tobacco use or that include a component unrelated to tobacco use are treated as not earned for this purpose. For purposes of this section, the term wellness program incentive has the same meaning as the term reward in [§ 54.9802-1(f)(1)(i)](/cfr/26/54.9802-1.md?p=f-1-i) of this chapter. (5) Employer contributions to HRAs integrated with eligible employer-sponsored plans. Amounts newly made available for the current plan year under an HRA that an employee may use to pay premiums, or may use to pay cost-sharing or benefits not covered by the primary plan in addition to premiums, reduce the employee's required contribution if the HRA would be integrated, within the meaning of [§ 54.9815-2711(d)(2)](/cfr/26/54.9815-2711.md?p=d-2) of this chapter, with an eligible employer-sponsored plan for an employee enrolled in the plan. The eligible employer-sponsored plan and the HRA must be offered by the same employer. Employer contributions to an HRA described in this paragraph (c)(3)(v)(A)(5) reduce an employee's required contribution only to the extent the amount of the annual contribution is required under the terms of the plan or otherwise determinable within a reasonable time before the employee must decide whether to enroll in the eligible employer-sponsored plan. (6) Employer contributions to cafeteria plans. Amounts made available for the current plan year under a cafeteria plan, within the meaning of [section 125](/cfr/26/125.md), reduce an employee's or a related individual's required contribution if— (i) The employee may not opt to receive the amount as a taxable benefit; (ii) The employee may use the amount to pay for minimum essential coverage; and (iii) The employee may use the amount exclusively to pay for medical care, within the meaning of [section 213](/cfr/26/213.md). (7) Opt-out arrangements. [Reserved] (8) Multiple offers of coverage. An individual who has offers of coverage under eligible employer-sponsored plans from multiple employers, either as an employee or a related individual, has an offer of affordable coverage if at least one of the offers of coverage is affordable under paragraph (c)(3)(v)(A)(1) or (2) of this section. - (B) **Affordability for part-year period.** Affordability under [paragraph (c)(3)(v)(A)](#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). Coverage under an eligible employer-sponsored plan is affordable for a part-year period if the annualized required contribution for self-only coverage, in the case of an employee, or family coverage, in the case of a related individual, 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-3-v-B). - (C) **Required contribution percentage.** The required contribution percentage is 9.5 percent. For plan years beginning in a calendar year after 2014, the percentage will be adjusted by the ratio of premium growth to income growth for the preceding calendar year and may be further adjusted to reflect changes to the data used to compute the ratio of premium growth to income growth for the 2014 calendar year or the data sources used to compute the ratio of premium growth to income growth. Premium growth and income growth will be determined under published guidance, see [§ 601.601(d)(2)](/cfr/26/601.601.md?p=d-2) of this chapter. In addition, the percentage may be adjusted for plan years beginning in a calendar year after 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)](#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: (1) Example 1: Basic determination of affordability. For all of 2023, taxpayer C works for an employer, X, that offers its employees and their spouses a health insurance plan under which, to enroll in self-only coverage, C must contribute an amount for 2023 that does not exceed the required contribution percentage of C's 2023 household income. Because C's required contribution for self-only coverage does not exceed the required contribution percentage of C's 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 2023. (2) Example 2: Basic determination of affordability for a related individual. (i) The facts are the same as in paragraph (c)(3)(v)(D)(1) of this section (Example 1), except that C is married to J, they file a joint return, and to enroll C and J, X's plan requires C to contribute an amount for coverage for C and J for 2023 that exceeds the required contribution percentage of C's and J's household income. J does not work for an employer that offers employer-sponsored coverage. (ii) J is a member of C's family as defined in [§ 1.36B-1(d)](/cfr/26/1.36B-1.md?p=d). Because C's required contribution for coverage of C and J exceeds the required contribution percentage of C's and J's household income, under paragraph (c)(3)(v)(A)(2) of this section, X's plan is unaffordable for J. Accordingly, J is not eligible for minimum essential coverage for 2023. However, 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 2023. (3) Example 3: Multiple offers of coverage. The facts are the same as in paragraph (c)(3)(v)(D)(2) of this section (Example 2), except that J works all year for an employer that offers employer-sponsored coverage to employees. J's required contribution for the cost of self-only coverage from J's employer does not exceed the required contribution percentage of C's and J's household income. Although the coverage offered by C's employer for C and J is unaffordable for J, the coverage offered by J's employer is affordable for J. Consequently, under paragraphs (c)(3)(v)(A)(1) and (8) of this section, J is eligible for minimum essential coverage for all months in 2023. (4) Example 4: Cost of covering individuals not part of taxpayer's family. (i) D and E are married, file a joint return, and have two children, F and G, under age 26. F is a dependent of D and E, but G is not. D works all year for an employer that offers employer-sponsored coverage to employees, their spouses, and their children under age 26. E, F, and G do not work for employers offering coverage. D's required contribution for self-only coverage under D's employer's coverage does not exceed the required contribution percentage of D's and E's household income. D's required contribution for coverage of D, E, F, and G exceeds the required contribution percentage of D's and E's household income, but D's required contribution for coverage of D, E, and F does not exceed the required contribution percentage of the household income. (ii) E and F are members of D's family as defined in [§ 1.36B-1(d)](/cfr/26/1.36B-1.md?p=d). G is not a member of D's family under [§ 1.36B-1(d)](/cfr/26/1.36B-1.md?p=d), because G is not D's dependent. Under paragraph (c)(3)(v)(A)(1) of this section, D's employer's coverage is affordable for D because D's required contribution for self-only coverage does not exceed the required contribution percentage of D's and E's household income. D's employer's coverage also is affordable for E and F, because, under paragraph (c)(3)(v)(A)(2) of this section, D's required contribution for coverage of D, E, and F does not exceed the required contribution percentage of D's and E's household income. Although D's cost to cover D, E, F, and G exceeds the required contribution percentage of D's and E's household income, under paragraph (c)(3)(v)(A)(2) of this section, the cost to cover G is not considered in determining whether D's employer's coverage is affordable for E and F, regardless of whether G actually enrolls in the plan, because G is not in D's family. D, E, and F are eligible for minimum essential coverage for all months in 2023. Under [paragraph (c)(4)(i)](#c-4-i) of this section, G is considered eligible for the coverage offered by D's employer only if G enrolls in the coverage. (5) Example 5: More than one family member with an employer offering coverage. (i) K and L are married, file a joint return, and have one dependent child, M. K works all year for an employer that offers coverage to employees, spouses, and children under age 26. L works all year for an employer that offers coverage to employees only. K's required contribution for self-only coverage under K's employer's coverage does not exceed the required contribution percentage of K's and L's household income. Likewise, L's required contribution for self-only coverage under L's employer's coverage does not exceed the required contribution percentage of K's and L's household income. However, K's required contribution for coverage of K, L, and M exceeds the required contribution percentage of K's and L's household income. (ii) L and M are members of K's family as defined in [§ 1.36B-1(d)](/cfr/26/1.36B-1.md?p=d). Under paragraph (c)(3)(v)(A)(1) of this section, K's employer's coverage is affordable for K because K's required contribution for self-only coverage does not exceed the required contribution percentage of K's and L's household income. Similarly, L's employer's coverage is affordable for L, because L's required contribution for self-only coverage does not exceed the required contribution percentage of K's and L's household income. Thus, K and L are eligible for minimum essential coverage for all months in 2023. However, under paragraph (c)(3)(v)(A)(2) of this section, K's employer's coverage is unaffordable for M, because K's required contribution for coverage of K, L, and M exceeds the required contribution percentage of K's and L's household income. Accordingly, M is not eligible for minimum essential coverage for 2023. (6) Example 6: Multiple offers of coverage for a related individual. (i) The facts are the same as in paragraph (c)(3)(v)(D)(5) of this section (Example 5), except that L works all year for an employer that offers coverage to employees, spouses, and children under age 26. L's required contribution for coverage of K, L, and M does not exceed the required contribution percentage of K's and L's household income. (ii) Although M is not eligible for affordable employer coverage under K's employer's coverage, paragraph (c)(3)(v)(A)(8) of this section dictates that L's employer coverage must be evaluated to determine whether L's employer coverage is affordable for M. Under paragraph (c)(3)(v)(A)(2) of this section, L's employer's coverage is affordable for M, because L's required contribution for K, L, and M does not exceed the required contribution percentage of K's and L's household income. Accordingly, M is eligible for minimum essential coverage for all months in 2023. (7) Example 7: 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. (8) Example 8: Determination of unaffordability for plan year. The facts are the same as in paragraph (c)(3)(v)(D)(7) of this section (Example 7), 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. (9) Example 9: No affordability information affirmatively provided for annual redetermination. (i) The facts are the same as in paragraph (c)(3)(v)(D)(7) of this section (Example 7), 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. (10) Example 10: 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)](#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. (11) Example 11: 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 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)](#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. (12) Example 12: 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. (13) Wellness program incentives: (i) Employer X offers an eligible employer-sponsored plan with a nondiscriminatory wellness program that reduces premiums by $300 for employees who do not use tobacco products or who complete a smoking cessation course. Premiums are reduced by $200 if an employee completes cholesterol screening within the first six months of the plan year. Employee B does not use tobacco and the cost of his premiums is $3,700. Employee C uses tobacco and the cost of her premiums is $4,000. (ii) Under paragraph (c)(3)(v)(A)(4) of this section, only the incentives related to tobacco use are counted toward the premium amount used to determine the affordability of X's plan. C is treated as having earned the $300 incentive for attending a smoking cessation course regardless of whether C actually attends the course. Thus, the required contribution for determining affordability for both Employee B and Employee C is $3,700. The $200 incentive for completing cholesterol screening is treated as not earned and does not reduce their required contribution. - (vi) **Minimum value.** See [§ 1.36B-6](/cfr/26/1.36B-6.md) for rules for determining whether an eligible employer-sponsored plan provides minimum value. An HRA or other account-based group health plan described in [paragraph (c)(3)(i)(B)](#c-3-i-B) of this section that is affordable for a month under [paragraph (c)(5)](#c-5) of this section is treated as providing minimum value for the month. - (vii) **Enrollment in eligible employer-sponsored plan—** - (A) **In general.** Except as provided in [paragraph (c)(3)(vii)(B)](#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)](#c-3-vii): - (4) **Special eligibility rules—** - (i) **Related individual.** An individual who may enroll in minimum essential coverage because of a relationship to another person eligible for the coverage, but is not included in the family, as defined in [§ 1.36B-1(d)](/cfr/26/1.36B-1.md?p=d), of the other eligible person, is treated as eligible for such minimum essential coverage only for months that the related individual is enrolled in the coverage. - (ii) **Exchange unable to discontinue advance credit payments—** - (A) **In general.** If an individual who is enrolled in a qualified health plan for which advance credit payments are made informs the Exchange that the individual is or will soon be eligible for other minimum essential coverage and that advance credit payments should be discontinued, but the Exchange does not discontinue advance credit payments for the first calendar month beginning after the month the individual informs the Exchange, the individual is treated as eligible for the other minimum essential coverage no earlier than the first day of the second calendar month beginning after the first month the individual may enroll in the other minimum essential coverage. - (B) **Medicaid or CHIP.** If a determination is made that an individual who is enrolled in a qualified health plan for which advance credit payments are made is eligible for Medicaid or CHIP but the advance credit payments are not discontinued for the first calendar month beginning after the eligibility determination, the individual is treated as eligible for the Medicaid or CHIP no earlier than the first day of the second calendar month beginning after the eligibility determination. - (5) **Affordable HRA or other account-based group health plan—** - (i) **In general.** Except as otherwise provided in this [paragraph (c)(5)](#c-5), an HRA or other account-based group health plan described in [paragraph (c)(3)(i)(B)](#c-3-i-B) of this section is affordable for a month if the employee's required HRA contribution (as defined in [paragraph (c)(5)(ii)](#c-5-ii) of this section) for the month does not exceed 1/12 of the product of the employee's household income for the taxable year and the required contribution percentage (as defined in [paragraph (c)(3)(v)(C)](#c-3-v-C) of this section). - (ii) **Required HRA contribution.** An employee's required HRA contribution is the excess of— - (A) The monthly premium for the lowest cost silver plan for self-only coverage of the employee offered in the Exchange for the rating area in which the employee resides, over - (B) The monthly self-only HRA or other account-based group health plan amount (or the monthly maximum amount available to the employee under the HRA or other account-based group health plan if the HRA or other account-based group health plan provides for reimbursements up to a single dollar amount regardless of whether an employee has self-only or other-than-self-only coverage). - (iii) **Monthly amounts—** - (A) **Monthly lowest cost silver plan premium.** For purposes of [paragraph (c)(5)(ii)(A)](#c-5-ii-A) of this section, the premium for the lowest cost silver plan is determined without regard to any wellness program incentive that affects premiums unless the wellness program incentive relates exclusively to tobacco use, in which case the incentive is treated as earned. If the premium differs for tobacco users and non-tobacco users, the premium for the lowest cost silver plan is the premium that applies to non-tobacco users. For the purpose of this [paragraph (c)(5)(iii)(A)](#c-5-iii-A), the term wellness program incentive has the same meaning as the term reward in [26 CFR 54.9802-1(f)(1)(i)](/cfr/26/54.9802-1.md?p=f-1-i). A silver-level qualified health plan that is used for purposes of determining a taxpayer's lowest cost silver plan for self-only coverage under [paragraph (c)(5)(ii)(A)](#c-5-ii-A) of this section does not cease to be the taxpayer's lowest cost silver plan for self-only coverage solely because the plan terminates or closes to enrollment during the taxable year. - (B) **Monthly HRA amount.** For purposes of [paragraph (c)(5)(ii)(B)](#c-5-ii-B) of this section, the monthly self-only HRA or other account-based group health plan amount is the self-only HRA or other account-based group health plan amount newly made available under the HRA for the plan year, divided by the number of months in the plan year the HRA or other account-based group health plan is available to the employee. The monthly maximum amount available to the employee under the HRA or other account-based group health plan is the maximum amount newly made available for the plan year to the employee under the plan, divided by the number of months in the plan year the HRA or other account-based group health plan is available to the employee. - (iv) **Employee safe harbor.** An HRA or other account-based group health plan described in [paragraph (c)(3)(i)(B)](#c-3-i-B) of this section is not affordable for a month for an employee or a related HRA individual if, when the employee or related HRA individual enrolls in a qualified health plan for a period coinciding with the period the HRA or other account-based group health plan is available to the employee or related HRA individual (in whole or in part), an Exchange determines that the HRA or other account-based group health plan is not affordable for the period of enrollment in the qualified health plan. This [paragraph (c)(5)(iv)](#c-5-iv) does not apply to a determination made as part of the redetermination process described in [45 CFR 155.335](/cfr/45/155.335.md) unless the individual receiving an Exchange redetermination notification affirmatively responds and provides current information about affordability. This [paragraph (c)(5)(iv)](#c-5-iv) does not apply for an individual who, with intentional or reckless disregard for the facts, provides incorrect information to an Exchange concerning the relevant HRA or other account-based group health plan amount offered by the employee's employer. A reckless disregard of the facts occurs if the taxpayer makes little or no effort to determine whether the information provided to the Exchange is accurate under circumstances that demonstrate a substantial deviation from the standard of conduct a reasonable person would observe. A disregard of the facts is intentional if the taxpayer knows that the information provided to the Exchange is inaccurate. - (v) **Amounts used for affordability determination.** Only amounts that are newly made available for the plan year of the HRA or other account-based group health plan described in [paragraph (c)(3)(i)(B)](#c-3-i-B) of this section and determinable within a reasonable time before the beginning of the plan year of the HRA or other account-based health plan are considered in determining whether an HRA or other account-based group health plan described in [paragraph (c)(3)(i)(B)](#c-3-i-B) of this section is affordable. Amounts made available for a prior plan year that carry over to the current plan year are not taken into account for purposes of this [paragraph (c)(5)](#c-5). Similarly, amounts made available to account for amounts remaining in a different HRA or other account-based group health plan the employer previously provided to the employee and under which the employee is no longer covered are not taken into account for purposes of this [paragraph (c)(5)](#c-5). - (vi) **Affordability for part-year period.** Affordability under this [paragraph (c)(5)](#c-5) is determined separately for each employment period that is less than a full calendar year or for the portions of the plan year of an employer's HRA or other account-based group health plan that fall in different taxable years of an applicable taxpayer. An HRA or other account-based group health plan described in [paragraph (c)(3)(i)(B)](#c-3-i-B) of this section is affordable for a part-year period if the employee's annualized required HRA contribution 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 HRA contribution is the employee's required HRA 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)(5)(vi)](#c-5-vi). - (vii) **Related individual not allowed as a personal exemption deduction.** A related HRA individual is treated as ineligible for minimum essential coverage under an HRA or other account-based group health plan described in [paragraph (c)(3)(i)(B)](#c-3-i-B) of this section for months that the employee opted out of and waived future reimbursements from the HRA or other account-based group health plan and the employee is not allowed a personal exemption deduction under [section 151](/cfr/26/151.md) for the related HRA individual. - (viii) **Post-employment coverage.** An individual who is offered an HRA or other account-based group health plan described in [paragraph (c)(3)(i)(B)](#c-3-i-B) of this section, for months after an employee terminates employment with the employer offering the HRA or other account-based group health plan, is eligible for minimum essential coverage under the HRA or other account-based group health plan for months after termination of employment only if the employee does not forfeit or opt out of and waive future reimbursements from the HRA or other account-based group health plan for months after termination of employment. - (ix) **Examples.** The following examples illustrate the provisions of this [paragraph (c)(5)](#c-5). The required contribution percentage is defined in [paragraph (c)(3)(v)(C)](#c-3-v-C) of this section and is updated annually. Because the required contribution percentage for 2020 has not yet been determined, the examples assume a required contribution percentage for 2020 of 9.78 percent. - (A) **Example 1: Determination of affordability—** (1) Facts. In 2020 Taxpayer A is single, has no dependents, and has household income of $28,000. A is an employee of Employer X for all of 2020. X offers its employees an HRA described in [paragraph (c)(3)(i)(B)](#c-3-i-B) of this section that reimburses $2,400 of medical care expenses for single employees with no children (the self-only HRA amount) and $4,000 for employees with a spouse or children for the medical expenses of the employees and their family members. A enrolls in a qualified health plan through the Exchange in the rating area in which A resides and remains enrolled for all of 2020. The monthly premium for the lowest cost silver plan for self-only coverage of A that is offered in the Exchange for the rating area in which A resides is $500. (2) Conclusion. A's required HRA contribution, as defined in [paragraph (c)(5)(ii)](#c-5-ii) of this section, is $300, the excess of $500 (the monthly premium for the lowest cost silver plan for self-only coverage of A) over $200 (1/12 of the self-only HRA amount provided by Employer X to its employees). In addition, 1/12 of the product of 9.78 percent and A's household income is $228 ($28,000 × .0978 = $2,738; $2,738/12 = $228). Because A's required HRA contribution of $300 exceeds $228 (1/12 of the product of 9.78 percent and A's household income), the HRA is unaffordable for A for each month of 2020 under [paragraph (c)(5)](#c-5) of this section. If A opts out of and waives future reimbursements from the HRA, A is not eligible for minimum essential coverage under the HRA for each month of 2020 under [paragraph (c)(3)(i)(B)](#c-3-i-B) of this section. - (B) **Example 2: Determination of affordability for a related HRA individual—** (1) Facts. In 2020 Taxpayer B is married and has one child who is a dependent of B for 2020. B has household income of $28,000. B is an employee of Employer X for all of 2020. X offers its employees an HRA described in [paragraph (c)(3)(i)(B)](#c-3-i-B) of this section that reimburses $3,600 of medical care expenses for single employees with no children (the self-only HRA amount) and $5,000 for employees with a spouse or children for the medical expenses of the employees and their family members. B, B's spouse, and B's child enroll in a qualified health plan through the Exchange in the rating area in which B resides and they remain enrolled for all of 2020. No advance credit payments are made for their coverage. The monthly premium for the lowest cost silver plan for self-only coverage of B that is offered in the Exchange for the rating area in which B resides is $500. (2) Conclusion. B's required HRA contribution, as defined in [paragraph (c)(5)(ii)](#c-5-ii) of this section, is $200, the excess of $500 (the monthly premium for the lowest cost silver plan for self-only coverage for B) over $300 (1/12 of the self-only HRA amount provided by Employer X to its employees). In addition, 1/12 of the product of 9.78 percent and B's household income for 2020 is $228 ($28,000 × .0978 = $2,738; $2,738/12 = $228). Because B's required HRA contribution of $200 does not exceed $228 (1/12 of the product of 9.78 percent and B's household income for 2020), the HRA is affordable for B under [paragraph (c)(5)](#c-5) of this section, and B is eligible for minimum essential coverage under an eligible employer-sponsored plan for each month of 2020 under [paragraph (c)(3)(i)(B)](#c-3-i-B) of this section. In addition, B's spouse and child are also eligible for minimum essential coverage under an eligible employer-sponsored plan for each month of 2020 under [paragraph (c)(3)(i)(B)](#c-3-i-B) of this section. - (C) **Example 3: Exchange determines that HRA is unaffordable—** (1) Facts. The facts are the same as in [paragraph (c)(5)(ix)(B)](#c-5-ix-B) of this section (Example 2), except that B, when enrolling in Exchange coverage for B's family, received a determination by the Exchange that the HRA was unaffordable, because B believed B's household income would be lower than it turned out to be. Consequently, advance credit payments were made for their 2020 coverage. (2) Conclusion. Under [paragraph (c)(5)(iv)](#c-5-iv) of this section, the HRA is considered unaffordable for B, B's spouse, and B's child for each month of 2020 provided that B did not, with intentional or reckless disregard for the facts, provide incorrect information to the Exchange concerning the HRA. - (D) **Example 4: Affordability determined for part of a taxable year (part-year period)—** (1) Facts. Taxpayer C is an employee of Employer X. C's household income for 2020 is $28,000. X offers its employees an HRA described in [paragraph (c)(3)(i)(B)](#c-3-i-B) of this section that reimburses medical care expenses of $3,600 for single employees without children (the self-only HRA amount) and $5,000 to employees with a spouse or children for the medical expenses of the employees and their family members. X's HRA plan year is September 1 to August 31 and C is first eligible to participate in the HRA for the period beginning September 1, 2020. C enrolls in a qualified health plan through the Exchange in the rating area in which C resides for all of 2020. The monthly premium for the lowest cost silver plan for self-only coverage of C that is offered in the Exchange for the rating area in which C resides for 2020 is $500. (2) Conclusion. Under [paragraph (c)(3)(vi)](#c-3-vi) of this section, the affordability of the HRA is determined separately for the period September 1 through December 31, 2020, and for the period January 1 through August 31, 2021. C's required HRA contribution, as defined in [paragraph (c)(5)(ii)](#c-5-ii) of this section, for the period September 1 through December 31, 2020, is $200, the excess of $500 (the monthly premium for the lowest cost silver plan for self-only coverage for C) over $300 (1/12 of the self-only HRA amount provided by X to its employees). In addition, 1/12 of the product of 9.78 percent and C's household income is $228 ($28,000 × .0978 = $2,738; $2,738/12 = $228). Because C's required HRA contribution of $200 does not exceed $228, the HRA is affordable for C for each month in the period September 1 through December 31, 2020, under [paragraph (c)(5)](#c-5) of this section. Affordability for the period January 1 through August 31, 2021, is determined using C's 2021 household income and required HRA contribution. - (E) **Example 5: Carryover amounts ignored in determining affordability—** (1) Facts. Taxpayer D is an employee of Employer X for all of 2020 and 2021. D is single. For each of 2020 and 2021, X offers its employees an HRA described in [paragraph (c)(3)(i)(B)](#c-3-i-B) of this section that provides reimbursement for medical care expenses of $2,400 to single employees with no children (the self-only HRA amount) and $4,000 to employees with a spouse or children for the medical expenses of the employees and their family members. Under the terms of the HRA, amounts that an employee does not use in a calendar year may be carried over and used in the next calendar year. In 2020, D used only $1,500 of her $2,400 maximum reimbursement and the unused $900 is carried over and may be used by D in 2021. (2) Conclusion. Under [paragraph (c)(5)(v)](#c-5-v) of this section, only the $2,400 self-only HRA amount offered to D for 2021 is considered in determining whether D's HRA is affordable for D. The $900 carryover amount is not considered in determining the affordability of the HRA. - (d) **Applicability date.** Paragraphs [(b)(2)](#b-2) and [(c)(3)(v)(C)](#c-3-v-C) of this section apply to taxable years beginning after December 31, 2013. - (e) **Applicability dates.** - (1) Except as provided in [paragraphs (e)(2) through (6)](#e-2..e-6) of this section, this section applies to taxable years ending after December 31, 2013. - (2) [Paragraph (b)(6)(ii)](#b-6-ii), the last three sentences of [paragraph (c)(2)(v)](#c-2-v), [paragraph (c)(3)(i)](#c-3-i), [paragraph (c)(3)(iii)(A)](#c-3-iii-A), the last three sentences of paragraph (c)(3)(v)(A)(3), and [paragraph (c)(4)](#c-4) of this section apply to taxable years beginning after December 31, 2016. Paragraphs [(b)(6)](#b-6), [(c)(3)(i)](#c-3-i), [(c)(3)(iii)(A)](#c-3-iii-A), and (c)(4) of § 1.36B-2 as contained in [26 CFR part](/cfr/26.md) I edition revised as of April 1, 2016, apply to taxable years ending after December 31, 2013, and beginning before January 1, 2017. - (3) Paragraphs [(c)(3)(i)(B)](#c-3-i-B) and (c)(5) of this section, and the last sentences of paragraphs [(c)(3)(ii)](#c-3-ii), [(c)(3)(v)(A)(1) through (3)](#c-3-v-A-1..c-3-v-A-3), and (c)(3)(vi) of this section apply to taxable years beginning on or after January 1, 2020. - (4) [Paragraph (c)(4)(i)](#c-4-i) of this section applies to taxable years ending on or after December 31, 2020. - (5) The first two sentences of paragraph (c)(3)(v)(A)(2), paragraph (c)(3)(v)(A)(8), the second sentence of [paragraph (c)(3)(v)(B)](#c-3-v-B), [paragraphs (c)(3)(v)(D)(1) through (6)](#e-c-3-v-D-1..e-c-3-v-D-6), and the first sentences of paragraphs (c)(3)(v)(D)(8) and (9) of this section apply to taxable years beginning after December 31, 2022. - (6) The first sentence of [paragraph (c)(2)(v)](#c-2-v) of this section applies to taxable years beginning on or after January 1, 2025. The first sentence of [paragraph (c)(2)(v)](#c-2-v) of this section, as contained in [26 CFR part 1](/cfr/26/part1.md) edition revised as of April 1, 2024, applies to taxable years ending after December 31, 2013, and beginning before January 1, 2025. # §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)](#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 means, in each month, the members of a taxpayer's family for whom the month is a coverage month. - (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, the full premium for the month is paid by advance credit payments, or the amount of the premium paid (including by advance credit payments) for the month is sufficient to avoid termination of the individual's coverage for that month under one of the scenarios described in [paragraph (c)(4)](#c-4) of this section; and - (iii) The individual is not eligible for the full calendar month for minimum essential coverage (within the meaning of [§ 1.36B-2(c)](/cfr/26/1.36B-2.md?p=c)) other than coverage described in [section 5000A(f)(1)(C)](/cfr/26/5000A.md?p=f-1-C) (relating to coverage in the individual market). - (2) **Certain individuals enrolled during a month.** If an individual enrolls in a qualified health plan and the enrollment is effective on the date of the individual's birth, adoption, or placement for adoption or in foster care, or on the effective date of a court order, the individual is treated as enrolled as of the first day of that month for purposes of this [paragraph (c)](#c). - (3) **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. - (4) **Scenarios for payments sufficient to avoid coverage termination.** The scenarios under which the amount of the premium paid (including by advance credit payments) for the month is sufficient to avoid termination of an individual's coverage for that month under [paragraph (c)(1)(ii)](#c-1-ii) of this section are the following: - (i) The first month of a grace period described in [45 CFR 156.270(d)](/cfr/45/156.270.md?p=d) for the individual. - (ii) A month for which a premium payment threshold under [45 CFR 155.400(g)](/cfr/45/155.400.md?p=g) has been met and for which month the issuer of the individual's qualified health plan provides coverage. - (iii) A month for which a State department of insurance has, during a declared emergency, issued an order prohibiting the issuer of the individual's qualified health plan from terminating the individual's coverage for the month irrespective of whether the full premium for the month is paid. - (5) **Appeals of coverage eligibility.** A taxpayer who is eligible for advance credit payments pursuant to an eligibility appeal decision implemented under [45 CFR 155.545(c)(1)(ii)](/cfr/45/155.545.md?p=c-1-ii) for coverage of a member of the taxpayer's coverage family who, based on the appeal decision, retroactively enrolls in a qualified health plan is considered to have met the requirement in [paragraph (c)(1)(ii)](#c-1-ii) of this section for a month if the taxpayer pays the taxpayer's share of the premiums for coverage under the plan for the month on or before the 120th day following the date of the appeals decision. - (6) **Examples.** The following examples illustrate the provisions of this [paragraph (c)](#c): - (d) **Premium assistance amount—** - (1) **Premium assistance amount.** The premium assistance amount for a coverage month is the lesser of— - (i) The enrollment premiums, which are 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, reduced by any amounts— - (A) Refunded in the same taxable year as the premium liability is incurred; or - (B) Unpaid as of the unextended due date for filing the taxpayer's income tax return for the taxable year that includes the month; or - (ii) The excess of the adjusted monthly premium for the applicable benchmark plan (benchmark plan premium) over 1/12 of the product of a taxpayer's household income and the applicable percentage for the taxable year (the taxpayer's contribution amount). - (2) **Examples.** The following examples illustrate the rules of [paragraph (d)(1)](#d-1) of this section. - (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](/usc/42/300gg.md)). 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)](/usc/42/300gg-4.md?p=d)) and may not include any adjustments for tobacco use. The adjusted monthly premium for a coverage month is determined as of the first day of the month. - (f) **Applicable benchmark plan—** - (1) **In general.** Except as otherwise provided in this [paragraph (f)](#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)](/usc/42/18022.md?p=d-1-B))) offered to the taxpayer's coverage family through the Exchange for the rating area where the taxpayer resides for— - (i) **Self-only coverage for a taxpayer—** - (A) Who computes tax under [section 1(c)](/cfr/26/1.md?p=c) (unmarried individuals other than surviving spouses and heads of household) and is not allowed a deduction under [section 151](/cfr/26/151.md) for a dependent for the taxable year; - (B) Who purchases only self-only coverage for one individual; or - (C) Whose coverage family includes only one individual; and - (ii) **Family coverage for all other taxpayers.** - (2) **Family coverage.** The applicable benchmark plan for family coverage is the second lowest-cost silver plan that would cover the members of the taxpayer's coverage family (such as a plan covering two adults if the members of a taxpayer's coverage family are two adults). - (3) **Silver-level plan not covering pediatric dental benefits.** If one or more silver-level qualified health plans offered through an Exchange do not cover pediatric dental benefits, the premium for the applicable benchmark plan is determined based on the second lowest-cost option among— - (i) The silver-level qualified health plans that are offered by the Exchange to the members of the coverage family and that provide pediatric dental benefits; and - (ii) The silver-level qualified health plans that are offered by the Exchange to the members of the coverage family that do not provide pediatric dental benefits in conjunction with the second lowest-cost portion of the premium for a stand-alone dental plan (within the meaning of section 1311(d)(2)(B)(ii) of the Affordable Care Act ([42 U.S.C. 18031(d)(2)(B)(ii)](/usc/42/18031.md?p=d-2-B-ii)) offered by the Exchange to the members of the coverage family that is properly allocable to pediatric dental benefits determined under guidance issued by the Secretary of Health and Human Services. - (4) **Family members residing in different locations.** If members of a taxpayer's coverage family reside in different locations, the taxpayer's benchmark plan premium is the sum of the premiums for the applicable benchmark plans for each group of coverage family members residing in different locations, based on the plans offered to the group through the Exchange where the group resides. If all members of a taxpayer's coverage family reside in a single location that is different from where the taxpayer resides, the taxpayer's benchmark plan premium is the premium for the applicable benchmark plan for the coverage family, based on the plans offered through the Exchange to the taxpayer's coverage family for the rating area where the coverage family resides. - (5) **Single or multiple policies needed to cover the family—** - (i) **Policy covering a taxpayer's family.** If a silver-level plan or a stand-alone dental plan offers coverage to all members of a taxpayer's coverage family who reside in the same location under a single policy, the premium (or allocable portion thereof, in the case of a stand-alone dental plan) taken into account for the plan for purposes of determining the applicable benchmark plan under paragraphs [(f)(1)](#f-1), [(f)(2)](#f-2), and [(f)(3)](#f-3) of this section is the premium for this single policy. - (ii) **Policy not covering a taxpayer's family.** If a silver-level qualified health plan or a stand-alone dental plan would require multiple policies to cover all members of a taxpayer's coverage family who reside in the same location (for example, because of the relationships within the family), the premium (or allocable portion thereof, in the case of a standalone dental plan) taken into account for the plan for purposes of determining the applicable benchmark plan under paragraphs [(f)(1)](#f-1), [(f)(2)](#f-2), and [(f)(3)](#f-3) of this section is the sum of the premiums (or allocable portion thereof, in the case of a stand-alone dental plan) for self-only policies under the plan for each member of the coverage family who resides in the same location. - (6) **Plan not available for enrollment.** A silver-level qualified health plan or a stand-alone dental plan that is not open to enrollment by a taxpayer or family member at the time the taxpayer or family member enrolls in a qualified health plan is disregarded in determining the applicable benchmark plan. - (7) **Benchmark plan terminates or closes to enrollment during the year.** A silver-level qualified health plan or a stand-alone dental plan that is used for purposes of determining the applicable benchmark plan under this [paragraph (f)](#f) for a taxpayer does not cease to be the applicable benchmark plan for a taxable year solely because the plan or a lower cost plan terminates or closes to enrollment during the taxable year. - (8) **Only one silver-level plan offered to the coverage family.** If there is only one silver-level qualified health plan or one stand-alone dental plan offered through an Exchange that would cover all members of a taxpayer's coverage family who reside in the same location (whether under one policy or multiple policies), that plan is used for purposes of determining the taxpayer's applicable benchmark plan. - (9) **Examples.** The following examples illustrate the rules of this [paragraph (f)](#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: - (g) **Applicable percentage—** - (1) **In general.** The applicable percentage multiplied by a taxpayer's household income determines the taxpayer's annual required share of premiums for the benchmark plan. The required share is divided by 12 and this monthly amount is subtracted from the adjusted monthly premium for the applicable benchmark plan when computing the premium assistance amount. The applicable percentage is computed by first determining the percentage that the taxpayer's household income bears to the Federal poverty line for the taxpayer's family size. The resulting Federal poverty line percentage is then compared to the income categories described in the table in [paragraph (g)(2)](#g-2) of this section. 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. For taxable years beginning after December 31, 2014, the applicable percentages in the table will be adjusted by the ratio of premium growth to income growth for the preceding calendar year and may be further adjusted to reflect changes to the data used to compute the ratio of premium growth to income growth for the 2014 calendar year or the data sources used to compute the ratio of premium growth to income growth. Premium growth and income growth will be determined in accordance with published guidance, see [§ 601.601(d)(2)](/cfr/26/601.601.md?p=d-2) of this chapter. In addition, the applicable percentages in the table may be adjusted 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.** - (3) **Examples.** The following examples illustrate the rules of this [paragraph (g)](#g): - (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)](#f) of this section. In determining whether the amount computed under [paragraph (d)(1)(i)](#d-1-i) of this section (the premiums for the qualified health plan in which the taxpayer enrolls) is less than the amount computed under [paragraph (d)(1)(ii)](#d-1-ii) 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)](#h): - (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](/usc/42/18022.md)), or a State requires a qualified health plan to cover benefits in addition to these essential health benefits, the portion of the premium for the plan properly allocable to the additional benefits is excluded from the monthly premiums under paragraph [(d)(1)(i)](#d-1-i) or [(ii)](#d-1-ii) of this section. Premiums are allocated to additional benefits before determining the applicable benchmark plan under [paragraph (f)](#f) 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)](/cfr/26/36B.md?p=b-3-D). - (3) **Examples.** The following examples illustrate the rules of this [paragraph (j)](#j): - (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)(i)](#d-1-i) 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)](/usc/42/13031.md?p=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)](#k): - (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](/cfr/26/151.md) are not lawfully present (within the meaning of [§ 1.36B-1(g)](/cfr/26/1.36B-1.md?p=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)](#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)](#l-2) of this section. - (2) **Revised household income computation—** - (i) **Statutory method.** For purposes of [paragraph (l)(1)](#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)](#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 [§ 601.601(d)(2)](/cfr/26/601.601.md?p=d-2) of this chapter. - (m) **Applicability date.** [Paragraph (g)(1)](#g-1) of this section applies to taxable years beginning after December 31, 2013. - (n) **Applicability dates.** - (1) Except as provided in [paragraphs (n)(2) through (4)](#n-2..n-4) of this section, this section applies to taxable years ending after December 31, 2013. - (2) [Paragraphs (d)(1)](#d-1) (except for [paragraph (d)(1)(i)](#d-1-i)) and (2) of this section apply to taxable years beginning after December 31, 2016. [Paragraph (f)](#f) of this section applies to taxable years beginning after December 31, 2018. Paragraphs [(d)(1)](#d-1) and [(2)](#d-2) of § 1.36B-3, as contained in [26 CFR part 1](/cfr/26/part1.md) edition revised as of April 1, 2016, apply to taxable years ending after December 31, 2013, and beginning before January 1, 2017. [Paragraph (f)](#f) of § 1.36B-3, as contained in [26 CFR part 1](/cfr/26/part1.md) edition revised as of April 1, 2016, applies to taxable years ending after December 31, 2013, and beginning before January 1, 2019. - (3) [Paragraphs (c)(4) through (6)](#c-4..c-6) of this section apply to taxable years beginning on or after January 1, 2025. [Paragraph (c)(4)](#c-4) of this section, as contained in [26 CFR part 1](/cfr/26/part1.md) edition revised as of April 1, 2024, applies to taxable years beginning after December 31, 2016, and beginning before January 1, 2025. [Paragraph (c)(5)](#c-5) of this section, as contained in [26 CFR part 1](/cfr/26/part1.md) edition revised as of April 1, 2024, applies to taxable years ending after December 31, 2013, and beginning before January 1, 2025. - (4) [Paragraph (d)(1)(i)](#d-1-i) of this section applies to taxable years beginning on or after January 1, 2025. [Paragraph (d)(1)(i)](#d-1-i) of § 1.36B-3, as contained in [26 CFR part 1](/cfr/26/part1.md) edition revised as of April 1, 2016, applies to taxable years ending after December 31, 2013, and beginning before January 1, 2017. [Paragraph (d)(1)(i)](#d-1-i) of § 1.36B-3, as contained in [26 CFR part 1](/cfr/26/part1.md) edition revised as of April 1, 2022, applies to taxable years beginning after December 31, 2016, and beginning before January 1, 2023. [Paragraph (d)(1)(i)](#d-1-i) of § 1.36B-3, as contained in [26 CFR part 1](/cfr/26/part1.md) edition revised as of April 1, 2024, applies to taxable years beginning after December 31, 2022, and beginning before January 1, 2025. # §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](/cfr/26/36B.md) 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) **Allocation rules and responsibility for advance credit payments—** - (A) **In general.** A taxpayer must reconcile all advance credit payments for coverage of any member of the taxpayer's family. - (B) **Individuals enrolled by a taxpayer and claimed as a personal exemption deduction by another taxpayer—** (1) In general. If a taxpayer (the enrolling taxpayer) enrolls an individual in a qualified health plan and another taxpayer (the claiming taxpayer) claims a personal exemption deduction for the individual (the shifting enrollee), then for purposes of computing each taxpayer's premium tax credit and reconciling any advance credit payments, the enrollment premiums and advance credit payments for the plan in which the shifting enrollee was enrolled are allocated under this [paragraph (a)(1)(ii)(B)](#a-1-ii-B) according to the allocation percentage described in paragraph (a)(1)(ii)(B)(2) of this section. If advance credit payments are allocated under paragraph (a)(1)(ii)(B)(4) of this section, the claiming taxpayer and enrolling taxpayer must use this same allocation percentage to calculate their [§ 1.36B-3(d)(1)(ii)](/cfr/26/1.36B-3.md?p=d-1-ii) adjusted monthly premiums for the applicable benchmark plan (benchmark plan premiums). This [paragraph (a)(1)(ii)(B)](#a-1-ii-B) does not apply to amounts allocated under [§ 1.36B-3(h)](/cfr/26/1.36B-3.md?p=h) (qualified health plan covering more than one family) or if the shifting enrollee or enrollees are the only individuals enrolled in the qualified health plan. For purposes of this paragraph (a)(1)(ii)(B)(1), a taxpayer who is expected at enrollment in a qualified health plan to be the taxpayer filing an income tax return for the year of coverage with respect to an individual enrolling in the plan has enrolled that individual. For taxable years to which [section 151(d)(5)](/cfr/26/151.md?p=d-5) applies, the claiming taxpayer is the taxpayer who properly includes the shifting enrollee in his or her family for the taxable year. (2) Allocation percentage. The enrolling taxpayer and claiming taxpayer may agree on any allocation percentage between zero and one hundred percent. If the enrolling taxpayer and claiming taxpayer do not agree on an allocation percentage, the percentage is equal to the number of shifting enrollees properly included in the enrolling taxpayer's family divided by the number of individuals enrolled by the enrolling taxpayer in the same qualified health plan as the shifting enrollee. (3) Allocating premiums. In computing the premium tax credit, the claiming taxpayer is allocated a portion of the enrollment premiums for the plan in which the shifting enrollee was enrolled equal to the enrollment premiums times the allocation percentage. The enrolling taxpayer is allocated the remainder of the enrollment premiums not allocated to one or more claiming taxpayers. (4) Allocating advance credit payments. In reconciling any advance credit payments, the claiming taxpayer is allocated a portion of the advance credit payments for the plan in which the shifting enrollee was enrolled equal to the enrolling taxpayer's advance credit payments for the plan times the allocation percentage. The enrolling taxpayer is allocated the remainder of the advance credit payments not allocated to one or more claiming taxpayers. This paragraph (a)(1)(ii)(B)(4) only applies in situations in which advance credit payments are made for coverage of a shifting enrollee. (5) Premiums for the applicable benchmark plan. If paragraph (a)(1)(ii)(B)(4) of this section applies, the claiming taxpayer's benchmark plan premium is the sum of the benchmark plan premium for the claiming taxpayer's coverage family, excluding the shifting enrollee or enrollees, and the allocable portion. The allocable portion for purposes of this paragraph (a)(1)(ii)(B)(5) is the product of the benchmark plan premium for the enrolling taxpayer's coverage family if the shifting enrollee was a member of the enrolling taxpayer's coverage family and the allocation percentage. If the enrolling taxpayer's coverage family is enrolled in more than one qualified health plan, the allocable portion is determined as if the enrolling taxpayer's coverage family includes only the coverage family members who enrolled in the same plan as the shifting enrollee or enrollees. The enrolling taxpayer's benchmark plan premium is the benchmark plan premium for the enrolling taxpayer's coverage family had the shifting enrollee or enrollees remained a part of the enrolling taxpayer's coverage family, minus the allocable portion. - (C) **Responsibility for advance credit payments for an individual not reported on any taxpayer's return.** If advance credit payments are made for coverage of an individual who is not included in any taxpayer's family, as defined in [§ 1.36B-1(d)](/cfr/26/1.36B-1.md?p=d), the taxpayer who attested to the Exchange to the intention to include such individual in the taxpayer's family as part of the advance credit payment eligibility determination 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 [§ 1.36B-3(f)](/cfr/26/1.36B-3.md?p=f). - (3) **Limitation on additional tax—** - (i) **In general.** The additional tax imposed under [paragraph (a)(1)](#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)](#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 [§ 601.601(d)(2)](/cfr/26/601.601.md?p=d-2) of this chapter, to reflect changes in the consumer price index. - (ii) **Additional tax limitation table.** - (iii) **Limitation on additional tax for taxpayers who claim a section 162(l) deduction for a qualified health plan—** - (A) **In general.** A taxpayer who receives advance credit payments and deducts premiums for a qualified health plan under [section 162(l)](/cfr/26/162.md?p=l) must use [paragraph (a)(3)(iii)(B)](#a-3-iii-B), and paragraph [(a)(3)(iii)(C)](#a-3-iii-C) or [(D)](#a-3-iii-D), of this section to determine the limitation on additional tax in this [paragraph (a)(3)](#a-3) (limitation amount). Taxpayers must make this determination before calculating their [section 162(l)](/cfr/26/162.md?p=l) deduction and premium tax credit. For additional rules for taxpayers who may claim a deduction under [section 162(l)](/cfr/26/162.md?p=l) for a qualified health plan for which advance credit payments are made, see [§ 1.162(l)-1](/cfr/26/1.162..1.md). - (B) **Determining the limitation amount.** A taxpayer described in [paragraph (a)(3)(iii)(A)](#a-3-iii-A) of this section must use the limitation amount for which the taxpayer qualifies under paragraph [(a)(3)(iii)(C)](#a-3-iii-C) or [(D)](#a-3-iii-D) of this section. The limitation amount determined under this [paragraph (a)(3)(iii)](#a-3-iii) replaces the limitation amount that would otherwise be determined under the additional tax limitation table in [paragraph (a)(3)(ii)](#a-3-ii) of this section. In applying [paragraph (a)(3)(iii)(C)](#a-3-iii-C) of this section, a taxpayer must first determine whether he or she qualifies for the limitation amount applicable to taxpayers with household income of less than 200 percent of the Federal poverty line for the taxpayer's family size. If the taxpayer does not qualify to use the limitation amount applicable to taxpayers with household income of less than 200 percent of the Federal poverty line for the taxpayer's family size, the taxpayer must next determine whether he or she qualifies for the limitation applicable to taxpayers with household income of less than 300 percent of the Federal poverty line for the taxpayer's family size. If the taxpayer does not qualify to use the limitation amount applicable to taxpayers with household income of less than 300 percent of the Federal poverty line for the taxpayer's family size, the taxpayer must next determine whether he or she qualifies for the limitation applicable to taxpayers with household income of less than 400 percent of the Federal poverty line for the taxpayer's family size. If the taxpayer does not qualify to use the limitation amount applicable to taxpayers with household income of less than 200 percent, 300 percent, or 400 percent of the Federal poverty line for the taxpayer's family size, the limitation on additional tax under [section 36B(f)(2)(B)](/cfr/26/36B.md?p=f-2-B) does not apply to the taxpayer. - (C) **Requirements.** A taxpayer meets the requirements of this [paragraph (a)(3)(iii)(C)](#a-3-iii-C) for a limitation amount if the taxpayer's household income as a percentage of the Federal poverty line is less than or equal to the maximum household income as a percentage of the Federal poverty line for which that limitation is available. Household income for this purpose is determined by using a [section 162(l)](/cfr/26/162.md?p=l) deduction equal to the lesser of— (1) The sum of the specified premiums for the plan not paid through advance credit payments, the limitation amount (determined without regard to paragraph (a)(1)(iii)(C)(2) of this section), and any deduction allowable under [section 162(l)](/cfr/26/162.md?p=l) for premiums other than specified premiums, and (2) The earned income from the trade or business with respect to which the health insurance plan is established. - (D) **Specified premiums not paid through advance credit payments.** For purposes of [paragraph (a)(3)(iii)(C)](#a-3-iii-C) of this section, specified premiums not paid through advance credit payments means specified premiums, as defined in [§ 1.162(l)-1(a)(2)](/cfr/26/1.162..1.md), minus advance credit payments made with respect to the specified premiums. - (E) **Examples.** For examples illustrating the rules of this [paragraph (a)(3)(iii)](#a-3-iii), see Examples 13, 14, and 15 of [paragraph (a)(4)](#a-4) of this section. - (4) **Examples.** The following examples illustrate the rules of this [paragraph (a)](#a). In each example the taxpayer enrolls in a higher cost qualified health plan than the applicable benchmark plan: - (b) **Changes in filing status—** - (1) **In general.** Except as provided in paragraph [(b)(2)](#b-2) or [(b)(3)](#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)](#a-1) of this section under [paragraph (b)(2)(ii)](#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](/cfr/26/7703.md)) 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)](#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)](#b-2-ii) may not be used to increase the additional premium tax credit computed under [paragraph (a)(1)(i)](#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)](#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)](#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](/cfr/26/7703.md)) to each other during a taxable year but legally separate under a decree of divorce or of separate maintenance during the taxable year, and who are enrolled in the same qualified health plan at any time during the taxable year must allocate the benchmark plan premiums, the enrollment premiums, and the advance credit payments for the period the taxpayers are married during the taxable year. Taxpayers must also allocate these items if one of the taxpayers has a dependent enrolled in the same plan as the taxpayer's former spouse or enrolled in the same plan as a dependent of the taxpayer's former spouse. 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 do not agree on an allocation that is reported to the IRS in accordance with the relevant forms and instructions, 50 percent of: The benchmark plan premiums; the enrollment premiums; and the advance credit payments for the married period, is allocated to each taxpayer. If for a period a plan covers only one of the taxpayers and no dependents, only one of the taxpayers and one or more dependents of that same taxpayer, or only one or more dependents of one of the taxpayers, then the benchmark plan premiums, the enrollment premiums, and the advance credit payments for that period are allocated entirely to that taxpayer. - (4) **Taxpayers filing returns as married filing separately or head of household—** - (i) **Allocation of advance credit payments.** Except as provided in [§ 1.36B-2(b)(2)(ii)](/cfr/26/1.36B-2.md?p=b-2-ii), the premium tax credit is allowed to married (within the meaning of [section 7703](/cfr/26/7703.md)) taxpayers only if they file joint returns. See [§ 1.36B-2(b)(2)(i)](/cfr/26/1.36B-2.md?p=b-2-i). Taxpayers who receive advance credit payments as married taxpayers and who do not file a joint return must allocate the advance credit payments for coverage under a qualified health plan equally to each taxpayer for any period the plan covers and in which advance credit payments are made for both taxpayers, only one of the taxpayers and one or more dependents of the other taxpayer, or one or more dependents of both taxpayers. If, for a period a plan covers, advance credit payments are made for only one of the taxpayers and no dependents, only one of the taxpayers and one or more dependents of that same taxpayer, or only one or more dependents of one of the taxpayers, the advance credit payments for that period are allocated entirely to that taxpayer. If one or both of the taxpayers is an applicable taxpayer eligible for a premium tax credit for the taxable year, the premium tax credit is computed by allocating the enrollment premiums under [paragraph (b)(4)(ii)](#b-4-ii) of this section. The repayment limitation described in [paragraph (a)(3)](#a-3) of this section applies to each taxpayer based on the household income and family size reported on that taxpayer's return. This [paragraph (b)(4)](#b-4) also applies to taxpayers who receive advance credit payments as married taxpayers and file a tax return using the head of household filing status. - (ii) **Allocation of premiums.** If taxpayers who are married within the meaning of [section 7703](/cfr/26/7703.md), without regard to [section 7703(b)](/cfr/26/7703.md?p=b), do not file a joint return, 50 percent of the enrollment premiums are allocated to each taxpayer. However, all of the enrollment premiums are allocated to only one of the taxpayers for a period in which a qualified health plan covers only that taxpayer and no dependents, only that taxpayer and one or more dependents of that taxpayer, or only one or more dependents of that taxpayer. - (5) **Examples.** The following examples illustrate the provisions of this [paragraph (b)](#b). In each example the taxpayer enrolls in a higher cost qualified health plan than the applicable benchmark plan: - (c) **Applicability dates.** Paragraphs [(a)(1)(ii)](#a-1-ii), [(a)(3)(iii)](#a-3-iii), (a)(4), Examples 4, 10, 11, 12, 13, 14, and 15, (b)(3), (b)(4), and (b)(5), Examples 9 and 10 apply to taxable years beginning after December 31, 2013. The last sentence of paragraph (a)(1)(ii)(B)(1), paragraph (a)(1)(ii)(B)(2), and [paragraph (a)(1)(ii)(C)](#a-1-ii-C) of this section apply to taxable years ending on or after December 31, 2020. # §1.36B-5. Information reporting by Exchanges. - (a) **In general.** An Exchange must report to the Internal Revenue Service (IRS) information required by [section 36B(f)(3)](/cfr/26/36B.md?p=f-3) and this section relating to individual market qualified health plans in which individuals enroll through the Exchange. No reporting is required under this section for enrollment in plans through the Small Business Health Options Exchange. - (b) **Individual filing a return.** For purposes of this section, the terms tax filer and responsible adult describe the individual who is expected to be the taxpayer filing an income tax return for the year of coverage with respect to individuals enrolling in a qualified health plan. A tax filer is an individual on behalf of whom advance payments of the premium tax credit are made. A responsible adult is an individual on behalf of whom advance payments of the premium tax credit are not made. An individual may be a tax filer or responsible adult whether or not enrolled in coverage. If more than one family (within the meaning of [§ 1.36B-1(d)](/cfr/26/1.36B-1.md?p=d)) enrolls in the same qualified health plan, there is a tax filer or responsible adult for each family. - (c) **Information required to be reported—** - (1) **Information reported annually.** An Exchange must report to the IRS the following information for each qualified health plan— - (i) The name, address, and taxpayer identification number (TIN), or date of birth if a TIN is not available, of the tax filer or responsible adult; - (ii) The name and TIN, or date of birth if a TIN is not available, of a tax filer's spouse; - (iii) The amount of the advance credit payments paid for coverage under the plan each month; - (iv) For plans for which advance credit payments are made, the premium (excluding the premium allocated to benefits in excess of essential health benefits, see [§ 1.36B-3(j)](/cfr/26/1.36B-3.md?p=j)) for the applicable benchmark plan for purposes of computing advance credit payments; - (v) Except as provided in [paragraph (c)(3)(ii)](#c-3-ii) of this section, for plans for which advance credit payments are not made, the premium (excluding the premium allocated to benefits in excess of essential health benefits, see [§ 1.36B-3(j)](/cfr/26/1.36B-3.md?p=j)) for the applicable benchmark plan that would apply to all individuals enrolled in the qualified health plan if advance credit payments were made for the coverage; - (vi) The name and TIN, or date of birth if a TIN is not available, and dates of coverage for each individual covered under the plan; - (vii) The coverage start and end dates of the qualified health plan; - (viii) **The monthly premium for the plan in which the individuals enroll, however—** - (A) The premium allocated to benefits in excess of essential health benefits is excluded, see [§ 1.36B-3(j)](/cfr/26/1.36B-3.md?p=j); - (B) The premium for a stand-alone dental plan allocated to pediatric dental benefits is added, see [§ 1.36B-3(k)](/cfr/26/1.36B-3.md?p=k), but if a family (within the meaning of [§ 1.36B-1(d)](/cfr/26/1.36B-1.md?p=d)) is enrolled in more than one qualified health plan, the pediatric dental premium is added to the premium for only one qualified health plan; and - (C) The amount is not reduced for advance credit payments; - (ix) The name of the qualified health plan issuer; - (x) The Exchange-assigned policy identification number; - (xi) The Exchange's unique identifier; and - (xii) Any other information specified by forms or instructions or in published guidance, see [§ 601.601(d)](/cfr/26/601.601.md?p=d) of this chapter. - (2) **Information reported monthly.** For each calendar month, an Exchange must report to the IRS for each qualified health plan, the information described in [paragraph (c)(1)](#c-1) of this section and the following information— - (i) **For plans for which advance credit payments are made—** - (A) The names, TINs, or dates of birth if no TIN is available, of the individuals enrolled in the qualified health plan who are expected to be the tax filer's dependent; and - (B) **Information on employment (to the extent this information is provided to the Exchange) consisting of—** (1) The name, address, and EIN of each employer of the tax filer, the tax filer's spouse, and each individual covered by the plan; and (2) An indication of whether an employer offered affordable minimum essential coverage that provided minimum value, and, if so, the amount of the employee's required contribution for self-only coverage; - (ii) The unique identifying number the Exchange uses to report data that enables the IRS to associate the data with the proper account from month to month; - (iii) The issuer's employer identification number (EIN); and - (iv) Any other information specified by forms or instructions or in published guidance, see [§ 601.601(d)](/cfr/26/601.601.md?p=d) of this chapter. - (3) **Special rules for information reported—** - (i) **Multiple families enrolled in a single qualified health plan.** An Exchange must report the information specified in paragraphs [(c)(1)](#c-1) and [(c)(2)](#c-2) of this section for each family (within the meaning of [§ 1.36B-1(d)](/cfr/26/1.36B-1.md?p=d)) enrolled in a qualified health plan, including families submitting a single application or enrolled in a single qualified health plan. If advance credit payments are made for coverage under the plan, the enrollment premiums reported to each family under [paragraph (c)(1)(viii)](#c-1-viii) of this section are the premiums allocated to the family under [§ 1.36B-3(h)](/cfr/26/1.36B-3.md?p=h) (allocating enrollment premiums to each taxpayer in proportion to the premiums for each taxpayer's applicable benchmark plan). - (ii) **Alternative to reporting applicable benchmark plan.** An Exchange satisfies the requirement in [paragraph (c)(1)(v)](#c-1-v) of this section if, on or before January 1 of each year after 2014, the Exchange provides a reasonable method that a responsible adult may use to determine the premium (after adjusting for benefits in excess of essential health benefits) for the applicable benchmark plan that applies to the responsible adult's coverage family for the prior calendar year for purposes of determining the premium tax credit on the tax return. - (iii) **Partial month of coverage.** - (A) **In general.** Except as provided in [paragraph (c)(3)(iii)(B)](#c-3-iii-B) of this section, if an individual is enrolled in a qualified health plan after the first day of a month, the amount reported for that month under paragraphs [(c)(1)(iv)](#c-1-iv), [(c)(1)(v)](#c-1-v), and [(c)(1)(viii)](#c-1-viii) of this section is $0. - (B) **Certain mid-month enrollments.** For information reporting that is due on or after January 1, 2019, if an individual's qualified health plan is terminated before the last day of a month, or if an individual is enrolled in coverage after the first day of a month and the coverage is effective on the date of the individual's birth, adoption, or placement for adoption or in foster care, or on the effective date of a court order, the amount reported under paragraphs [(c)(1)(iv)](#c-1-iv) and [(c)(1)(v)](#c-1-v) of this section is the premium for the applicable benchmark plan for a full month of coverage (excluding the premium allocated to benefits in excess of essential health benefits), and the amount reported under [paragraph (c)(1)(viii)](#c-1-viii) of this section is the enrollment premium for the month, reduced by any amounts that were refunded. - (4) **Exemptions.** For each calendar month, an Exchange must report to the IRS the name and TIN, or date of birth if a TIN is not available, of each individual for whom the Exchange has granted an exemption from coverage under [section 5000A(e)](/cfr/26/5000A.md?p=e) and the related regulations, the months for which the exemption is in effect, and the exemption certificate number. - (d) **Time for reporting—** - (1) **Annual reporting.** An Exchange must submit to the IRS the annual report required under [paragraph (c)(1)](#c-1) of this section on or before January 31 of the year following the calendar year of coverage. - (2) **Monthly reporting—** - (i) **In general.** Except as provided in [paragraph (d)(2)(ii)](#d-2-ii) of this section, an Exchange must submit to the IRS the monthly reports required under paragraphs [(c)(2)](#c-2) and [(c)(4)](#c-4) of this section on or before the 15th day following each month of coverage. - (ii) **Initial monthly reporting in 2014.** Exchanges must submit to the IRS the initial monthly report required under paragraphs [(c)(2)](#c-2) and [(c)(4)](#c-4) of this section on a date that the Commissioner may establish in other guidance, see [§ 601.601(d)](/cfr/26/601.601.md?p=d) of this section, but no earlier than June 15, 2014. The initial report must include cumulative information for enrollments for the period January 1, 2014, through the last day of the month preceding the month for submitting the initial monthly report. - (3) **Corrections to information reported.** In general, an Exchange must correct erroneous or outdated monthly-reported information in the next monthly report. If the information must be corrected after the final monthly submission on January 15 following the coverage year, corrections should be submitted by the 15th day of the month following the month in which the incorrect information is identified. However, no monthly report correction is permitted after April 15 following the year of coverage. Errors on the annual report must be corrected and reported to the IRS and to the individual recipient identified in [paragraph (f)](#f) of this section as soon as possible. - (e) **Electronic reporting.** An Exchange must submit the reports to the IRS required under this section in electronic format. The information reported monthly will be submitted to the IRS through the Department of Health and Human Services. - (f) **Annual statement to be furnished to individuals—** - (1) **In general.** An Exchange must furnish to each tax filer or responsible adult (the recipient for purposes of paragraphs [(f)](#f) and [(g)](#g) of this section) a written statement showing— - (i) The name and address of the recipient and - (ii) **The information described in paragraph (c)(1) of this section for the previous calendar year.** - (2) **Form of statements.** A statement required under this [paragraph (f)](#f) may be made by furnishing to the recipient identified in the annual report either a copy of the report filed with the IRS or a substitute statement. A substitute statement must include the information required to be shown on the report filed with the IRS and must comply with requirements in published guidance (see [§ 601.601(d)(2)](/cfr/26/601.601.md?p=d-2) of this chapter) relating to substitute statements. A reporting entity may use an IRS truncated taxpayer identification number as the identification number for an individual in lieu of the identification number appearing on the corresponding information report filed with the IRS. - (3) **Time and manner for furnishing statements.** An Exchange must furnish the statements required under this [paragraph (f)](#f) on or before January 31 of the year following the calendar year of coverage. If mailed, the statement must be sent to the recipient's last known permanent address or, if no permanent address is known, to the recipient's temporary address. For purposes of this [paragraph (f)(3)](#f-3), an Exchange's first class mailing to the last known permanent address, or if no permanent address is known, the temporary address, discharges the Exchange's requirement to furnish the statement. An Exchange may furnish the statement electronically in accordance with [paragraph (g)](#g) of this section. - (g) **Electronic furnishing of statements—** - (1) **In general.** An Exchange required to furnish a statement under [paragraph (f)](#f) of this section may furnish the statement to the recipient in an electronic format in lieu of a paper format. An Exchange that meets the requirements of [paragraphs (g)(2) through (g)(7)](#g-2..g-7) of this section is treated as furnishing the statement in a timely manner. - (2) **Consent—** - (i) **In general.** A recipient must have affirmatively consented to receive the statement in an electronic format. The consent may be made electronically in any manner that reasonably demonstrates that the recipient is able to access the statement in the electronic format in which it will be furnished. Alternatively, the consent may be made in a paper document that is confirmed electronically. - (ii) **Withdrawal of consent.** The consent requirement of this [paragraph (g)(2)](#g-2) is not satisfied if the recipient withdraws the consent and the withdrawal takes effect before the statement is furnished. An Exchange may provide that the withdrawal of consent takes effect either on the date the Exchange receives it or on another date no more than 60 days later. The Exchange may provide that a request by the recipient for a paper statement will be treated as a withdrawal of consent to receive the statement in an electronic format. If the Exchange furnishes a statement after the withdrawal of consent takes effect, the recipient has not consented to receive the statement in electronic format. - (iii) **Change in hardware or software requirements.** If a change in the hardware or software required to access the statement creates a material risk that a recipient will not be able to access a statement, an Exchange must, prior to changing the hardware or software, notify the recipient. The notice must describe the revised hardware and software required to access the statement and inform the recipient that a new consent to receive the statement in the revised electronic format must be provided to the Exchange. After implementing the revised hardware and software, the Exchange must obtain a new consent or confirmation of consent from the recipient to receive the statement electronically. - (iv) **Examples.** The following examples illustrate the rules of this [paragraph (g)(2)](#g-2): - (3) **Required disclosures—** - (i) **In general.** Prior to, or at the time of, a recipient's consent, an Exchange must provide to the recipient a clear and conspicuous disclosure statement containing each of the disclosures described in [paragraphs (g)(3)(ii) through (g)(3)(viii)](#g-3-ii..g-3-viii) of this section. - (ii) **Paper statement.** An Exchange must inform the recipient that the statement will be furnished on paper if the recipient does not consent to receive it electronically. - (iii) **Scope and duration of consent.** An Exchange must inform the recipient of the scope and duration of the consent. For example, the Exchange must inform the recipient whether the consent applies to each statement required to be furnished after the consent is given until it is withdrawn or only to the first statement required to be furnished following the consent. - (iv) **Post-consent request for a paper statement.** An Exchange must inform the recipient of any procedure for obtaining a paper copy of the recipient's statement after giving the consent described in [paragraph (g)(2)(i)](#g-2-i) of this section and whether a request for a paper statement will be treated as a withdrawal of consent. - (v) **Withdrawal of consent.** An Exchange must inform the recipient that— - (A) The recipient may withdraw consent by writing (electronically or on paper) to the person or department whose name, mailing address, telephone number, and email address is provided in the disclosure statement; - (B) An Exchange will confirm the withdrawal and the date on which it takes effect in writing (either electronically or on paper); and - (C) A withdrawal of consent does not apply to a statement that was furnished electronically in the manner described in this [paragraph (g)](#g) before the date on which the withdrawal of consent takes effect. - (vi) **Notice of termination.** An Exchange must inform the recipient of the conditions under which the Exchange will cease furnishing statements electronically to the recipient. - (vii) **Updating information.** An Exchange must inform the recipient of the procedures for updating the information needed to contact the recipient and notify the recipient of any change in the Exchange's contact information. - (viii) **Hardware and software requirements.** An Exchange must provide the recipient with a description of the hardware and software required to access, print, and retain the statement, and the date when the statement will no longer be available on the Web site. The Exchange must advise the recipient that the statement may be required to be printed and attached to a Federal, State, or local income tax return. - (4) **Format.** The electronic version of the statement must contain all required information and comply with applicable published guidance (see [§ 601.601(d)](/cfr/26/601.601.md?p=d) of this chapter) relating to substitute statements to recipients. - (5) **Notice—** - (i) **In general.** If a statement is furnished on a Web site, the Exchange must notify the recipient. The notice may be delivered by mail, electronic mail, or in person. The notice must provide instructions on how to access and print the statement and include the following statement in capital letters, “IMPORTANT TAX RETURN DOCUMENT AVAILABLE.” If the notice is provided by electronic mail, this statement must be on the subject line of the electronic mail. - (ii) **Undeliverable electronic address.** If an electronic notice described in [paragraph (g)(5)(i)](#g-5-i) of this section is returned as undeliverable, and the Exchange cannot obtain the correct electronic address from the Exchange's records or from the recipient, the Exchange must furnish the notice by mail or in person within 30 days after the electronic notice is returned. - (iii) **Corrected statement.** An Exchange must furnish a corrected statement to the recipient electronically if the original statement was furnished electronically. If the original statement was furnished through a Web site posting, the Exchange must notify the recipient that it has posted the corrected statement on the Web site in the manner described in [paragraph (g)(5)(i)](#g-5-i) of this section within 30 days of the posting. The corrected statement or the notice must be furnished by mail or in person if— - (A) An electronic notice of the Web site posting of an original statement or the corrected statement was returned as undeliverable; and - (B) **The recipient has not provided a new email address.** - (6) **Access period.** Statements furnished on a Web site must be retained on the Web site through October 15 of the year following the calendar year to which the statements relate (or the first business day after October 15, if October 15 falls on a Saturday, Sunday, or legal holiday). The furnisher must maintain access to corrected statements that are posted on the Web site through October 15 of the year following the calendar year to which the statements relate (or the first business day after October 15, if October 15 falls on a Saturday, Sunday, or legal holiday) or the date 90 days after the corrected forms are posted, whichever is later. - (7) **Paper statements after withdrawal of consent.** An Exchange must furnish a paper statement if a recipient withdraws consent to receive a statement electronically and the withdrawal takes effect before the statement is furnished. A paper statement furnished under this [paragraph (g)(7)](#g-7) after the statement due date is timely if furnished within 30 days after the date the Exchange receives the withdrawal of consent. - (h) **Effective/applicability date.** Except for the last sentence of [paragraph (c)(3)(i)](#c-3-i) of this section and [paragraph (c)(3)(iii)](#c-3-iii) of this section, this section applies to taxable years ending after December 31, 2013. The last sentence of [paragraph (c)(3)(i)](#c-3-i) of this section and [paragraph (c)(3)(iii)](#c-3-iii) of this section apply to taxable years beginning after December 31, 2018. [Paragraph (c)(3)](#c-3) of § 1.36B-5 as contained in [26 CFR part](/cfr/26.md) I edition revised as of April 1, 2016, applies to information reporting for taxable years ending after December 31, 2013, and beginning before January 1, 2019. # §1.36B-6. Minimum value. - (a) **In general—** - (1) **Employees.** An eligible employer-sponsored plan provides minimum value (MV) for an employee of the employer offering the coverage only if— - (i) The plan's MV percentage, as defined in [paragraph (c)](#c) of this section, is at least 60 percent based on the plan's share of the total allowed costs of benefits provided to the employee; and - (ii) **The plan provides substantial coverage of inpatient hospital services and physician services.** - (2) **Related individuals—** - (i) **In general.** An eligible employer-sponsored plan provides MV for an individual who may enroll in the plan because of a relationship to an employee of the employer offering the coverage (a related individual) only if— - (A) The plan's MV percentage, as defined in [paragraph (c)](#c) of this section, is at least 60 percent based on the plan's share of the total allowed costs of benefits provided to the related individual; and - (B) **The plan provides substantial coverage of inpatient hospital services and physician services.** - (ii) **Plans providing MV to employees.** If an eligible employer-sponsored plan provides MV to an employee under [paragraph (a)(1)](#a-1) of this section, the plan also provides MV for related individuals if— - (A) The scope of benefits is the same for the employee and related individuals; and - (B) Cost sharing (including deductibles, co-payments, coinsurance, and out-of-pocket maximums) under the plan is the same for the employee and related individuals under the tier of coverage that would, if elected, include the employee and all related individuals (disregarding any differences in deductibles or out-of-pocket maximums that are attributable to a different tier of coverage, such as self plus one versus family coverage). - (b) **MV standard population.** [Reserved] - (c) **MV percentage—** - (1) **In general.** [Reserved] - (2) **Wellness program incentives—** - (i) **In general.** Nondiscriminatory wellness program incentives offered by an eligible employer-sponsored plan that affect deductibles, copayments, or other cost-sharing are treated as earned in determining the plan's MV percentage if the incentives relate exclusively to tobacco use. Wellness program incentives that do not relate to tobacco use or that include a component unrelated to tobacco use are treated as not earned for this purpose. For purposes of this section, the term wellness program incentive has the same meaning as the term reward in [§ 54.9802-1(f)(1)(i)](/cfr/26/54.9802-1.md?p=f-1-i) of this chapter. - (ii) **Example.** The following example illustrates the rules of this [paragraph (c)(2)](#c-2): - (3) **Employer contributions to health savings accounts.** Employer contributions for the current plan year to health savings accounts that are offered with an eligible employer-sponsored plan are taken into account for that plan year towards the plan's MV percentage. - (4) **Employer contributions to health reimbursement arrangements.** Amounts newly made available for the current plan year under a health reimbursement arrangement that would be integrated within the meaning of Notice 2013-54 (2013-40 IRB 287), see [§ 601.601(d)](/cfr/26/601.601.md?p=d) of this chapter, with an eligible employer-sponsored plan for an employee enrolled in the plan are taken into account for that plan year towards the plan's MV percentage if the amounts may be used to reduce only cost-sharing for covered medical expenses. A health reimbursement arrangement counts toward a plan's MV percentage only if the health reimbursement arrangement and the eligible employer-sponsored plan are offered by the same employer. Employer contributions to a health reimbursement arrangement count for a plan year towards the plan's MV percentage only to the extent the amount of the annual contribution is required under the terms of the plan or otherwise determinable within a reasonable time before the employee must decide whether to enroll in the eligible employer-sponsored plan. - (5) **Expected spending adjustments for health savings accounts and health reimbursement arrangements.** [Reserved] - (d) **Methods for determining MV.** [Reserved] - (e) **Scope of essential health benefits and adjustment for benefits not included in MV Calculator.** [Reserved] - (f) **Actuarial certification.** [Reserved] - (1) **In general.** [Reserved] - (2) **Membership in American Academy of Actuaries.** [Reserved] - (3) **Actuarial analysis.** [Reserved] - (4) **Use of MV Calculator.** [Reserved] - (g) **Effective/applicability date—in general.** - (1) Except as provided in [paragraph (g)(2)](#g-2) of this section, this section applies for taxable years ending after December 31, 2013. - (2) **Exceptions.** - (i) [Paragraph (a)(1)(ii)](#a-1-ii) of this section applies for plan years beginning after November 3, 2014; and - (ii) [Paragraph (a)(2)](#a-2) of this section applies to taxable years beginning after December 31, 2022.