IRS Proposes Regulations on Minimum Value for Individuals Enrolled in Health Plans

The IRS released an advance copy of a proposed rule relating to the health insurance tax credit enacted by the Patient Protection and Affordable Care Act of 2010 (P.L. 111-148) and the Health Care Reconciliation Act of 2010 (P.L. 111-152) (collectively, PPACA). The proposed regulations affect individuals who enroll in qualified health plans through affordable insurance exchanges and claim the premium tax credit, as well as exchanges that make qualified health plans to individuals and employers.

In drafting the proposed rule, the IRS considered comments requested in response to a final rule (77 FR 30377) published May 23, 2012, and Notice 2012-31 (2012-20 IRB 910).

Pursuant to PPACA, beginning in 2014, eligible individuals who purchase insurance under a qualified health plan are eligible for a tax credit under sec. 36B of the Internal Revenue Code. They generally may not receive a premium tax credit if they are eligible for affordable coverage under an employer-sponsored plan that provides minimum value.

The rule proposes to provide that minimum value is based on the anticipated spending for a standard population. Further, the plan’s share of costs for minimum value purposes is determined without regard to reduced cost-sharing available under a nondiscriminatory wellness program, except for programs designed to prevent or reduce tobacco use. Similarly, the proposed regulations provide that the affordability of an employer-sponsored plan is determined by assuming that each employee fails to satisfy the requirements of a wellness program, except the requirements of a wellness program related to tobacco use.