Islamists, ex-PM reach out to rivals after Egypt vote

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Health Reform Talk: Health Insurance Premium Tax Credit Guidance ...

In regulations to be published in the May 23 Federal Register, the Internal Revenue Service provides guidance for individuals who enroll in qualified health plans through American Health Benefit Exchanges and claim the health insurance premium tax credit and for affordable insurance Exchanges that provide qualified health plans to individuals and employers. The regulations are effective on May 23, 2012, and apply to tax years ending after Dec. 31, 2013. These final regulations clarify the proposed regulations issued on Aug. 17, 2011.

Beginning in 2014, under the Patient Protection and Affordable Care Act, individuals and small businesses will be able to purchase private health insurance through state-based competitive marketplaces called American Health Benefit Exchanges. Exchanges are intended to offer competition and choice. Insurance companies will compete for business on a level playing field, driving down costs. Consumers will have a choice of health plans to fit their needs and Exchanges will give individuals and small businesses the same purchasing power as big businesses.

The ACA allows a refundable premium tax credit to help individuals and families afford health insurance coverage by reducing a taxpayer's out-of-pocket premiumfor a?qualified health plan.
To be eligible for a premium tax credit, an individual must be an applicable taxpayer defined as a taxpayer:

1. with household income for the taxable year between 100% and 400% of the federal poverty line (FPL) for the taxpayer's family size;

2. who may not be claimed as a dependent by another taxpayer; and

3. who files a joint return if married.

Among other issues, these flatest inal regulations clarify the definition of family and household income. Household income does not include the modified adjusted gross income of a family member who is required to file a tax return solely to report tax imposed under code sections other than Code Sec. 1 (federal income tax on taxable income), such as the early distribution penalty under Code Sec. 72(q) or self-employment tax under Code Sec. 1401. However, modified adjusted gross income does include Social Security benefits not included in gross income under Code Sec. 86 as required by The 3 Percent Withholding Repeal and Job Creation Act (P.L. 112-56).

In addition, the final regulations clarify that the higher federal poverty line applies if married taxpayers reside in separate states with different federal poverty guidelines, or if a taxpayer resides in states with different federal poverty lines during the year.

If an individual fails to complete the requirements for benefits under a government-sponsored program by the last day of the third full calendar month following the eligibility event, that individual will be eligible for coverage on the first day of the fourth calendar month, the final regulations state. The three-month time period does not include the time needed for a government agency to process an application. The IRS expects to publish additional guidance clarifying when or if an individual becomes ?eligible for government-sponsored minimum essential coverage? (such as Medicaid) when the eligibility for that coverage is due to a particular illness or condition, for example, blindness or disability.

If, after an individual enrolls in a qualified health plan, new or different employer-sponsored coverage becomes available, the individual must notify the exchange and get a new determination to extend the affordability safe harbor. The affordability safe harbor applies only until available employer-sponsored coverage changes and the employee affirmatively provides information allowing an exchange to determine that employer-sponsored coverage is unaffordable. The final regulations also clarify that an employee is not eligible for coverage under the employer?s plan during a waiting period.

An employee is not enrolled in an eligible employer-sponsored plan if: (1) the employee is automatically enrolled in the plan, and (2) terminates the coverage before a specified date. Thus, an individual who is automatically enrolled in a plan that is unaffordable or that does not provide minimum value and who terminates that coverage by the specified date will not be treated as eligible for minimum essential coverage under the employer-sponsored plan for the period during which the individual was automatically enrolled. Accordingly, the individual will not be precluded by the automatic enrollment from inclusion in the taxpayer?s coverage family for computing the premium tax credit for that period.

The applicable benchmark plan for family coverage is the plan that applies to the members of the taxpayer?s coverage family. The final regulations clarify that the coverage family includes only those members of the taxpayer?s family who are not eligible for other minimum essential coverage and enroll in a qualified health plan.

Comments on the final regulations will be accepted until August 22.

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