Tag Archive for Premium Tax Credits

Premium Tax Credit Problems

Two of three recent federal court rulings held that the premium tax credit (PTC) is only available to individuals obtaining coverage through their state exchange, not the federal exchange. This is a big deal because the PTC serves to help make health insurance affordable to individuals with income between 100% and 400% of the federal poverty line. Also, the majority of states did not create their own exchange, forcing individuals in need of insurance to go to the federal exchange (if they are eligible for a PTC).

Resolution of this big issue likely won’t happen until next year. Meanwhile, the upcoming filing season will involve millions of individuals having to reconcile the PTC they may have received in advance, with their true amount. There is also a lot of complexity for practitioners too. Another key piece of the Affordable Care Act that comes into play in 2014 Read More

Written by | Posted in Individual • Specialty Tax Incentives

Proposed Rules Address Minimum Value Of Health Coverage For Premium Tax Credits

The IRS issued proposed regulations for determining whether an eligible employer-sponsored health plan provides minimum value for purposes of the Sec. 36B health insurance premium tax credit (REG-125398-12). Individuals do not receive the credit if they are eligible for affordable coverage under an eligible employer-sponsored plan that provides minimum value. Employers whose employees receive the health insurance premium tax credit may be liable for the Sec. 4980H “assessable payment.”

When the final regulations for Sec. 36B were issued in May 2012, they did not cover the definition of minimum value; the IRS requested comments on that issue (T.D. 9590, Notice 2012-31). The comments that the IRS received were considered in drafting the proposed rules.

Prop. Regs. Sec. 1.36B-6(a) states that a plan provides minimum value only if the plan’s share of the total allowed costs of benefits provided to an employee is at least 60%.  Minimum value may be calculated using one of four methods: Read More

Written by | Posted in TaxConnections