Affordable Care Act

<div class="Section1"><em>Editor&rsquo;s Note:</em>&nbsp;The ACA individual mandate was repealed for tax years beginning after 2018. However, certain taxpayers may now be impacted by state-level mandates that mirror the ACA mandate.<div class="Section1"><br /> <br /> A taxpayer is treated as having minimum essential health coverage for the month if covered for at least one day during that month.&nbsp;Therefore, if the coverage gap is less than one month, the taxpayer will not be treated as having a gap in coverage and will not be subject to the shared responsibility penalty.<a href="#_ftn1" name="_ftnref1">¹</a><br /> <br /> Further, an individual will not be subject to the shared responsibility penalty if the gap in coverage lasts for less than three months (<em><em>see</em></em> Q <a href="javascript:void(0)" class="accordion-cross-reference" id="8847">8847</a>). However, this exemption applies only to the first three-month gap in the tax year. If the taxpayer has more than one three-month coverage gap in the same tax year, he or she will be subject to the shared responsibility penalty with respect to the second coverage gap.<a href="#_ftn2" name="_ftnref2">²</a><br /> <br /> </div><div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp; <em><em>See</em></em> IRS Questions and Answers on the Individual Shared Responsibility Provision, available at: https://www.irs.gov/affordable-care-act/individuals-and-families/questions-and-answers-on-the-individual-shared-responsibility-provision (last accessed September 28, 2024).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.&nbsp; IRC &sect;&nbsp;5000A(e)(4).<br /> <br /> </div></div><br />

<div class="Section1">Generally, the regulations provide that when determining whether employer-sponsored health coverage is affordable to an employee (so as to determine premium tax credit eligibility), the employee's required contribution to coverage is considered, and includes the amount by which the employee's salary would be reduced to enroll in the coverage.<a href="#_ftn1" name="_ftnref1">¹</a></div><br /> <div class="Section1"><br /> <br /> IRS has proposed regulations address the impact of an offer of additional compensation in lieu of health coverage under a group health plan (known as "opt out" payments) on premium tax credit eligibility. The proposed regulations provide that if the opt out arrangement is unconditional, the amount made available pursuant to the arrangement increases the employee's required contribution for premium tax credit eligibility purposes.<a href="#_ftn2" name="_ftnref2">²</a> This rule recognizes that the promise of additional compensation in exchange for foregoing health coverage is analogous to a salary reduction made in order to obtain coverage.<br /> <br /> However, the regulations provide that amounts made available under a conditional opt out arrangement that is an "eligible opt out arrangement" are disregarded. An eligible opt out arrangement is one under which the employee's right to payment is conditioned on (1) the employee declining to enroll in employer-sponsored coverage, and (2) the employee providing reasonable evidence that he or she, and any dependents, will have coverage other than coverage obtained in the individual market (for example, a spouse's employer-sponsored coverage) for the year in question.<br /> <br /> An employee's attestation that he or she has alternative coverage is considered reasonable evidence. An eligible opt out arrangement fails to be eligible, however, if the employer knows, or has reason to know, that the employee does not have the alternative coverage. The employer must obtain this reasonable evidence no less often than each year to which the eligible opt out arrangement applies (i.e., as part of the annual open enrollment process).<a href="#_ftn3" name="_ftnref3">³</a><br /> <br /> </div><br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%" /><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.  Treas. Reg. §§ 1.36B-2(c)(3)(v), 1.5000A-3(e)(3)(ii)(A).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.  <em><em>See</em></em> Notice 2015-87, 2015-52 IRB 889, Prop. Treas. Reg. § 1.36B-2.<br /> <br /> <a href="#_ftnref3" name="_ftn3">3</a>.  81 FR 44561.<br /> <br /> </div>

<div class="Section1"><em>Editor&rsquo;s Note:</em>&nbsp;The ACA individual mandate was repealed for tax years beginning after 2018. However, certain taxpayers may now be impacted by state-level mandates that mirror the ACA mandate.<div class="Section1"><br /> <br /> In general, yes. However, a taxpayer may be exempt if he or she qualifies for the foreign earned income exclusion under IRC Section&nbsp;911.&nbsp;Therefore, if a U.S. citizen who is living abroad has not been physically present in the U.S. for at least 330 full days within a twelve-month period, the individual will be treated as having obtained minimum essential coverage for that twelve month period. Further, U.S. citizens who are bona fide residents of foreign countries for an entire tax year will be treated as having obtained minimum essential coverage for the year.<a href="#_ftn1" name="_ftnref1">¹</a><br /> <br /> U.S. citizens who do not meet the tests outlined above are required to maintain minimum essential health coverage (which can include group health coverage provided by a foreign employer), qualify for an otherwise applicable exemption (<em><em>see</em></em> Q <a href="javascript:void(0)" class="accordion-cross-reference" id="8847">8847</a>) or make the shared responsibility payment.<br /> <br /> </div><div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp; IRC &sect;&nbsp;911(d),&nbsp;TD 9632.<br /> <br /> </div></div><br />

<div class="Section1">Household income is a taxpayer's modified adjusted gross income (MAGI, <em><em>see</em></em> below) plus the aggregate modified adjusted gross income of any other individual who was both (1) taken into account in determining the taxpayer's family size for purposes of determining qualification for the credit and (2) required to file a federal tax return for the tax year in question.<a href="#_ftn1" name="_ftnref1">¹</a> Because the taxpayer's family size is determined by counting any individual whom the taxpayer was entitled to claim as a dependent for the tax year,<a href="#_ftn2" name="_ftnref2">²</a> it is essentially the case that any income of the taxpayer's dependents who are required to file a return for the year is included in calculating the taxpayer's MAGI.</div><br /> <div class="Section1"><br /> <br /> A taxpayer's MAGI is the adjusted gross income shown on the taxpayer's federal income tax return for the year plus any excluded foreign income, nontaxable Social Security benefits and tax-exempt interest accrued or received during the tax year.<a href="#_ftn3" name="_ftnref3">³</a> Supplemental Social Security income is not included in a taxpayer's MAGI.<a href="#_ftn4" name="_ftnref4">⁴</a><br /> <br /> </div><br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%" /><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.  IRC § 36B(d)(2).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.  IRC § 36B(d)(1).<br /> <br /> <a href="#_ftnref3" name="_ftn3">3</a>.  IRC § 36B(d)(2)(B).<br /> <br /> <a href="#_ftnref4" name="_ftn4">4</a>.  IRS Questions and Answers on the Premium Tax Credit, available at: http://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/Questions-and-Answers-on-the-Premium-Tax-Credit (last accessed September 28, 2024).<br /> <br /> </div>

<div class="Section1"><em>Editor's Note: </em>The 2017 tax reform legislation repealed the Affordable Care Act individual mandate that required individuals to purchase health insurance or pay a penalty for tax years beginning after December 31, 2018. The employer mandate and reporting requirements were not repealed.</div><br /> <div class="Section1"><br /> <br /> An individual who may have been exempt from the ACA individual penalty provisions could often obtain a certificate of exemption from the health insurance exchanges. With respect to the religious and hardship exemptions, this was the only method of claiming the exemption. Individuals claiming the exemption based upon membership in an Indian tribe or incarceration could either obtain a certificate of exemption from the exchanges or claim the exemption on the federal tax return when the return was filed in the subsequent tax year. Exemptions for lack of affordable coverage, a short coverage gap, and certain hardships were required to be claimed on the taxpayer's federal income tax return.<br /> <br /> Individuals who were exempt from the shared responsibility provision because their income for the year fell below the filing threshold, so that they were not required to file a federal tax return for the year, did not need to take any action in order to obtain the exemption.<a href="#_ftn1" name="_ftnref1">¹</a><br /> <br /> The IRS has also provided a list of the hardship exemptions that a taxpayer was entitled to claim without first obtaining a hardship exemption certification from the health insurance exchanges.<a href="#_ftn2" name="_ftnref2">²</a> The hardship exemptions outlined in this notice were available if two or more members of a family had a combined cost of employer-provided health coverage that was deemed unaffordable, a taxpayer's gross income was below the applicable threshold for filing a tax return, or a taxpayer applied for minimum essential health coverage during the periods described in the notice, or applied for coverage and could not complete the process.<br /> <br /> Further, the taxpayer was not required to obtain prior certification if (1) the taxpayer applied for coverage under the Children's Health Insurance Program and was found eligible, but had a gap in coverage before the program's effective date, (2) the taxpayer was eligible for services through an Indian healthcare provider or (3) the taxpayer resided in a state that did not expand Medicaid coverage and that taxpayer's household income was below 138 percent of the applicable poverty line. Taxpayers seeking to claim a hardship exemption that was not outlined by the IRS in Notice 2014-76 were still permitted to apply for an exemption through the health insurance marketplace.<br /> <br /> <hr /><br /> <br /> <strong>Planning Point:</strong> The IRS announced that all taxpayers who qualify for a hardship exemption under 45 CFR 155.605(d)(1) may claim the exemption without first obtaining a hardship exemption certification from the health insurance marketplace. These hardship exemptions include (1) financial or domestic circumstances, including unexpected natural or human-caused events, that cause an unexpected and significant increase in essential expenses that prevented the individual from obtaining qualifying health insurance, (2) situations where the cost of qualifying health insurance would cause the individual to experience a serious deprivation of food, shelter, clothing or other necessities, and (3) other circumstances that prevent an individual from obtaining coverage under a qualified health plan. This expansion is designed to provide added flexibility from the individual health insurance mandate for the 2018 tax year.<a href="#_ftn3" name="_ftnref3">³</a><br /> <br /> <hr /><br /> <br /> </div><br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%" /><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.  IRS Q&amp;A on the Individual Shared Responsibility Provision, available at: http://www.irs.gov/uac/Questions-and-Answers-on-the-Individual-Shared-Responsibility-Provision (last accessed September 28, 2024).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.  Notice 2014-76, 2014-50 IRB 946.<br /> <br /> <a href="#_ftnref3" name="_ftn3">3</a>.  Notice 2019-05.<br /> <br /> </div>

<div class="Section1"><em>Editor&rsquo;s Note:&nbsp;</em>The 2017 tax reform legislation repealed the Affordable Care Act individual mandate that required individuals to purchase health insurance or pay a penalty for tax years beginning after December&nbsp;31, 2018.&nbsp;The employer mandate and reporting requirements were not repealed.<div class="Section1"><br /> <br /> Yes, in some instances. Whether a taxpayer who was otherwise exempt from the shared responsibility penalty remained eligible to claim the premium assistance tax credit depended upon the type of exemption that applied. According to IRS guidance, taxpayers who were exempt because they are incarcerated or not lawfully present in the U.S. are not eligible to claim the premium tax credit.&nbsp;This is the case, however, because these exempt individuals are not permitted to enroll in a health plan through the health insurance exchanges. Individuals who were exempt for other reasons, such as because a religious exemption or affordability exemption applied, would remain eligible to claim the premium tax credit if they otherwise met the requirements for eligibility.<a href="#_ftn1" name="_ftnref1">¹</a><br /> <br /> <em><em>See</em></em> Q <a href="javascript:void(0)" class="accordion-cross-reference" id="8847">8847</a> for a detailed discussion of the various exemptions. <em><em>See</em></em> Q <a href="javascript:void(0)" class="accordion-cross-reference" id="8849">8849</a> for a discussion of the qualification requirements for determining whether a taxpayer is generally eligible to claim the premium tax credit.<br /> <br /> </div><div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp;&nbsp; <em><em>See</em></em> IRS Questions and Answers on the Individual Shared Responsibility Provision, available at: http://www.irs.gov/uac/Questions-and-Answers-on-the-Individual-Shared-Responsibility-Provision (last accessed September 28, 2024).<br /> <br /> </div></div><br />

<div class="Section1">When a taxpayer applies for health coverage through an exchange, the exchange itself estimates the amount of credit that the taxpayer may be eligible to claim.&nbsp;The taxpayer then determines whether to apply the credit in advance (meaning that it is sent directly to the insurance company in order to offset premium payments) or retroactively (meaning that the taxpayer claims the premium credit on the federal tax return for the year).<a href="#_ftn1" name="_ftnref1">¹</a><div class="Section1"><br /> <br /> A taxpayer who receives a premium tax credit is required to file a federal tax return for the year in order to claim the credit.&nbsp;This is true even if the taxpayer would not otherwise be required to file a return because income does not exceed the applicable filing threshold (<em><em>see</em></em> Q <a href="javascript:void(0)" class="accordion-cross-reference" id="8501">8501</a>) for the tax year.<a href="#_ftn2" name="_ftnref2">²</a><br /> <br /> On this return, the taxpayer must report the amount of premiums paid and any advance premium tax credit payments that have been forwarded to the insurance company on the taxpayer&rsquo;s behalf. If the taxpayer enrolls in a health insurance plan through the exchanges, the exchange will send the taxpayer a document that shows the amount of the taxpayer&rsquo;s annual premiums and any advance credit payments by January&nbsp;31 of the year following the year of coverage.<a href="#_ftn3" name="_ftnref3">³</a><br /> <br /> </div><div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp; <em><em>See</em></em> IRS Questions and Answers on the Premium&nbsp;Tax Credit, available at: http://irs.gov/affordable-care-act/individuals-and-families/questions-and-answers-on-the-premium-tax-credit (last accessed September 28, 2024).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.&nbsp; IRS Pub. 5120 (rev. 2/2018).<br /> <br /> <a href="#_ftnref3" name="_ftn3">3</a>.&nbsp; <em><em>See</em></em> IRS Questions and Answers on the Premium&nbsp;Tax Credit, available at: http://irs.gov/affordable-care-act/individuals-and-families/questions-and-answers-on-the-premium-tax-credit (last accessed September 28, 2024).<br /> <br /> </div></div><br />

<div class="Section1">The amount of the allowable premium assistance tax credit varies based upon a taxpayer&rsquo;s annual household income and family size. If either the household income level or family size change throughout the tax year, the taxpayer&rsquo;s allowable credit will increase or decrease accordingly.&nbsp;This becomes important when a taxpayer has chosen to take the premium tax credit in advance (where the credit is paid directly to the insurance company to reduce premiums), rather than retroactively (where the credit is claimed on the taxpayer&rsquo;s federal income tax return for the year).<a href="#_ftn1" name="_ftnref1">¹</a><div class="Section1"><br /> <br /> If the actual allowable credit is less than the advance credit claimed, the difference will be deducted from the taxpayer&rsquo;s overpayment (tax refund) or added to the amount that the taxpayer owes to the IRS if no tax refund is forthcoming. If the actual allowable credit is more than the advance credit claimed, the reverse is true, so that the difference will be added to the taxpayer&rsquo;s refund or subtracted from the balance due to the IRS.<a href="#_ftn2" name="_ftnref2">²</a><br /> <br /> The IRS has released guidance that advises taxpayers to notify the health insurance exchanges if any changes in circumstances have occurred that will alter the amount of the allowable credit in order to reduce the significance of the difference between the advance credit and actual allowable credit.<a href="#_ftn3" name="_ftnref3">³</a> Changes in circumstances that can give rise to such a difference include the following:<br /> <ol><br /> <li>Increases or decreases in household income</li><br /> <li>Marriage</li><br /> <li>Divorce</li><br /> <li>Birth or adoption of a child</li><br /> <li>Gaining or losing eligibility for government or employer-sponsored health insurance<a href="#_ftn4" name="_ftnref4">⁴</a></li><br /> </ol><br /> <em><em>See</em></em> Q <a href="javascript:void(0)" class="accordion-cross-reference" id="8850">8850</a> for a discussion of how household income is calculated for purposes of the premium assistance tax credit.<br /> <br /> </div><div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp; <em><em>See</em></em> IRS Pub. 5121 (rev. 1/2016).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.&nbsp; Treas. Reg. &sect;&nbsp;1.36B-4(a).<br /> <br /> <a href="#_ftnref3" name="_ftn3">3</a>.&nbsp; IRS Pub. 5120 (rev. 2/2018).<br /> <br /> <a href="#_ftnref4" name="_ftn4">4</a>.&nbsp; <em><em>See</em></em> IRS Questions and Answers on the Premium&nbsp;Tax Credit, available at: https://www.irs.gov/affordable-care-act/individuals-and-families/questions-and-answers-on-the-premium-tax-credit (last accessed September 28, 2024).<br /> <br /> </div></div><br />

<p><em>Editor's Note:</em> The ARPA expanded the premium tax credit rules to provide a more generous ACA benefit for 2021 and 2022. The Inflation Reduction Act of 2022 extended those expanded rules through 2025. </p><p>Under the preexisting ACA rules, the premium tax credit was only available to taxpayers with household income between 100 percent and 400 precent of the federal poverty line. ARPA generally eliminated the upper income limit and increased the amount of the premium tax credit (by decreasing the percentage of household income that individuals are required to contribute to their health insurance coverage). Under the ARPA, the percentage rates ranged from zero to 8.5 percent of household income (down from between 2.07 percent and 9.83 percent in 2021 under prior law) regardless of how much a family earns. In other words, even taxpayers with household income that exceeds 400 percent of the federal poverty line may be eligible for a credit if their cost of coverage exceeds 8.5 percent of income in 2021-2025. The enhanced credit was generally available for taxpayers who submit a health insurance exchange application and select a plan on or after April 1, 2021. Taxpayers who had previously enrolled in exchange coverage could reselect their plan to qualify for the increased tax credits effective May 1, 2021. </p><p>The premium assistance tax credit is a subsidy that can be claimed by certain low- to-moderate income taxpayers in order to offset the cost of health insurance coverage. In order to be eligible to claim the premium assistance tax credit, a taxpayer must meet all of the following requirements:<a href="#_ftn1">¹</a></p><ol id="rte-4a4a0300-11a0-11f1-b921-f14512d1bd84" start="1"><li>The taxpayer must purchase health insurance through the health insurance marketplace (also known as the health insurance exchanges).</li><li>The taxpayer must have income that falls within certain ranges (see Q <a href="javascript:void(0)">8850</a>).</li><li>The taxpayer must not be able to obtain affordable coverage through an employer-provided health plan that provides minimum value (see Q <a href="javascript:void(0)">8883</a> for a discussion of what constitutes "affordable coverage" and Q <a href="javascript:void(0)">8885</a> for a discussion of plans that provide "minimum value").</li></ol><p> <strong>Planning Point:</strong> In 2022, the IRS proposed regulations that would change the ACA rules governing premium tax credit eligibility to provide that the affordability of employer-sponsored coverage for the employee's family would be based on the amount the employee would be required to pay to cover both the employee and eligible family members, rather than the individual employee alone. Under the existing rules, if the self-only coverage is "affordable" for the employee, coverage is also deemed affordable for a spouse and dependents (meaning that the spouse and dependents would not qualify for the premium tax credit). Under the new rule, family members would be disqualified only if the cost of family coverage is less than the annual affordability threshold. "Family coverage" under the new rule means any employer plan that covers related individuals other than the employee (including self-plus-one plans). The regulations would also create a separate minimum value rule for family members, so that they would not lose premium tax credit eligibility if the employer plan did not provide minimum value to the family members (regardless of its cost). The regulations are effective for tax years beginning in 2023 and beyond. </p><ol id="rte-4a4a0301-11a0-11f1-b921-f14512d1bd84" start="1"><li>The taxpayer must be ineligible for government-sponsored health care programs, such as Medicaid and Medicare.</li></ol><p>Planning Point:</strong> IRS proposed regulations clarify that Medicaid coverage that is limited to COVID-19 testing and diagnostic services under section 6004(a)(3) of the Families First Coronavirus Response Act (FFCRA) does not constitute "minimum essential coverage" under a government-sponsored program.<a href="#_ftn2">²</a></p><ol id="rte-4a4a0302-11a0-11f1-b921-f14512d1bd84" start="1"><li>Generally, a taxpayer who is married must file a joint return (though exceptions exist for certain victims of domestic violence).<a href="#_ftn3">³</a></li><li>No other person may claim a dependency exemption with respect to the taxpayer for the tax year.</li></ol><hr></hr><strong>Planning Point:</strong> IRS final regulations confirmed that the reduction of the personal exemption to zero dollars between 2018 and 2026 does not impact a taxpayer's ability to claim the premium tax credit. Under the regulations, taxpayers are treated as though they claimed a personal exemption deduction if the taxpayer files a federal income tax return and does not qualify as a dependent of another taxpayer. Taxpayers are also considered to have claimed a personal exemption deduction for any other qualifying dependent, as long as the taxpayer lists the dependent's name and taxpayer identification number on their Form 1040 for the year.</p><p>Individuals with household income (<em><em>see</em></em> Q <a href="javascript:void(0)">8850</a>) that falls between 100 and 400 percent of the poverty line (as adjusted based on family size) may be eligible for the premium tax credit. The federal poverty guidelines that exist as of the first day of the annual open enrollment period are used to determine whether an individual is eligible for the credit, so that the 2024 guidelines are used to determine a taxpayer's credit for 2025.<a href="#_ftn4">⁴</a><br/> <br/>In 2026, the federal poverty guidelines for the 48 contiguous states (including Washington, D.C.) that determine eligibility in 2027 are:</p><ul id="rte-4a4a2a10-11a0-11f1-b921-f14512d1bd84"><li>$15,960 (100 percent) to $63,840 (400 percent) for an individual;</li><li>$21,640 (100 percent) to $86,560 (400 percent) for a family of two;</li><li>$27,320 (100 percent) to $109,280 (400 percent) for a family of three; and</li><li>$33,000 (100 percent) to $132,000 (400 percent) for a family of four.</li></ul><p>In 2025, the federal poverty guidelines for the 48 contiguous states (including Washington, D.C.) that determine eligibility in 2026 are:</p><ul id="rte-4a4a2a11-11a0-11f1-b921-f14512d1bd84"><li>$15,650 (100 percent) to $62,600 (400 percent) for an individual;</li><li>$21,150 (100 percent) to $84,600 (400 percent) for a family of two;</li><li>$26,650 (100 percent) to $106,600 (400 percent) for a family of three; and</li><li>$32,150 (100 percent) to $128,600 (400 percent) for a family of four.</li></ul><p>In 2024, the federal poverty guidelines for the 48 contiguous states (including Washington, D.C.) that determine eligibility in 2025 are:</p><ul id="rte-4a4a2a12-11a0-11f1-b921-f14512d1bd84"><li>$15,060 (100 percent) to $60,240 (400 percent) for an individual;</li><li>$20,440 (100 percent) to $81,760 (400 percent) for a family of two;</li><li>$25,820 (100 percent) to $103,280 (400 percent) for a family of three; and</li><li>$31,200 (100 percent) to $124,800 (400 percent) for a family of four.</li></ul><p>In 2023, the federal poverty guidelines for the 48 contiguous states (including Washington, D.C.) that determine eligibility in 2024 are:</p><ul id="rte-4a4a2a13-11a0-11f1-b921-f14512d1bd84"><li>$14,580 (100 percent) to $58,320 (400 percent) for an individual;</li><li>$19,720 (100 percent) to $78,880 (400 percent) for a family of two;</li><li>$24,860 (100 percent) to $99,440 (400 percent) for a family of three; and</li><li>$30,000 (100 percent) to $120,000 (400 percent) for a family of four</li></ul><p>The federal poverty line is modified for taxpayers living in Alaska and Hawaii. If a taxpayer's primary residence during the tax year changes to a state with a different federal poverty line, or if married taxpayers reside in states with different federal poverty lines, the poverty line that applies is the higher of the two guidelines.<a href="#_ftn6">⁶</a> Proposed regulations provide that if a taxpayer's household income is below 100 percent of the federal poverty line, so that he or she would generally be eligible to claim the premium tax credit, eligibility will be lost if the taxpayer intentionally or recklessly disregards the facts and provides incorrect information regarding household income to the exchanges.<a href="#_ftn7">⁷</a><br/> <br/>If a retired individual is offered health coverage, he or she may decline the offer of coverage and remain eligible for premium tax credit assistance if he or she is otherwise eligible based on household income. As discussed above, an active employee does not qualify for premium tax credit assistance if he or she is offered employer-sponsored health coverage that is affordable and provides minimum value, even if the employee declines the offer of coverage. A retiree is not considered to be eligible for employer-sponsored coverage unless he or she actually enrolls in the health plan. Further, family members of the retiree who are eligible to enroll in the health plan are not considered eligible for coverage unless they actually enroll in the plan.<a href="#_ftn8">⁸</a><br/> <br/>The U.S. Supreme Court, in <em>King v. Burwell</em>, held that the premium tax credits are available to all individuals who purchase insurance through an exchange, even if the individual purchased insurance through an exchange established by the federal government.<a href="#_ftn9">⁹</a></p><hr align="left" size="1" width="33%"></hr></p><p> <a href="#_ftnref1">1</a>. IRC § 36B. </p><p> <a href="#_ftnref2">2</a>. Prop. Treas. Reg. § 1.5000A-2(b)(2). </p><p> <a href="#_ftnref3">3</a>. Notice 2014-23, 2014-16 IRB 942. </p><p> <a href="#_ftnref4">4</a>. IRC § 36B(d)(5). </p><p> <a href="#_ftnref5">5</a>. See the 2023 Department of Health &amp; Human Services website for the federal poverty guidelines that apply for families larger than four and the figures for Alaska and Hawaii, available at: <a href="https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines">https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines</a> (last accessed September 28, 2024). </p><p> <a href="#_ftnref6">6</a>. Treas. Reg. § 1.36B-1(h). </p><p> <a href="#_ftnref7">7</a>. Prop. Treas. Reg. § 1.36B-2(b)(6)(ii). </p><p> <a href="#_ftnref8">8</a>. TD 9745. </p><p> <a href="#_ftnref9">9</a>. 135 S. Ct. 2480 (2015). </p>

<div class="Section1">Generally, no. According to IRS guidance, a taxpayer is not eligible to receive a premium assistance tax credit even if enrolled in an employer-sponsored plan that is unaffordable or fails to provide minimum value.<a href="#_ftn1" name="_ftnref1">¹</a></div><br /> <div class="Section1"><br /> <br /> However, proposed regulations provide that if an individual declines to enroll in employer-sponsored coverage for the year, and does not have an opportunity to enroll in that coverage for one or more succeeding plan years, the individual is treated as ineligible for coverage in the years for which there is no enrollment opportunity (so that he or she will be eligible to claim the premium tax credit). Further, enrollment in an employer-sponsored plan that provides only excepted benefits will not disqualify an individual from receiving the premium tax credit because the individual must also be eligible for minimum essential health coverage (a plan providing only excepted benefits does not qualify as minimum essential coverage).<a href="#_ftn2" name="_ftnref2">²</a><br /> <br /> Note that if an individual is receiving advance payment of the premium tax credit, he or she will be responsible for notifying the exchange if and when the individual becomes eligible to receive coverage from another source (such as an employer, or through a government sponsored program). Circumstances may exist where the individual notifies the exchange after the time that the exchange can discontinue the advance credit payment for the next month. In this case, the individual will be treated as eligible for the alternative coverage no earlier than the first day of the second month beginning after the month that the individual may enroll in the alternative coverage.<a href="#_ftn3" name="_ftnref3">³</a><br /> <br /> </div><br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%" /><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.  <em><em>See</em></em> IRS Questions and Answers on the Premium Tax Credit, available at: http://irs.gov/affordable-care-act/individuals-and-families/questions-and-answers-on-the-premium-tax-credit (last accessed September 28, 2024).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.  Prop. Treas. Reg. § 1.36B-2(c)(3)(iii)(A).<br /> <br /> <a href="#_ftnref3" name="_ftn3">3</a>.  Preamble to Proposed Regulations, REG-109086-15.<br /> <br /> </div>