80_FR_79214 80 FR 78971 - Minimum Value of Eligible Employer-Sponsored Plans and Other Rules Regarding the Health Insurance Premium Tax Credit

80 FR 78971 - Minimum Value of Eligible Employer-Sponsored Plans and Other Rules Regarding the Health Insurance Premium Tax Credit

DEPARTMENT OF THE TREASURY
Internal Revenue Service

Federal Register Volume 80, Issue 243 (December 18, 2015)

Page Range78971-78977
FR Document2015-31866

This document contains final regulations on the health insurance premium tax credit enacted by the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, as amended by the Medicare and Medicaid Extenders Act of 2010, the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011, and the Department of Defense and Full-Year Continuing Appropriations Act, 2011. These final regulations affect individuals who enroll in qualified health plans through Affordable Insurance Exchanges (Exchanges, sometimes called Marketplaces) and claim the health insurance premium tax credit, and Exchanges that make qualified health plans available to individuals and employers.

Federal Register, Volume 80 Issue 243 (Friday, December 18, 2015)
[Federal Register Volume 80, Number 243 (Friday, December 18, 2015)]
[Rules and Regulations]
[Pages 78971-78977]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-31866]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9745]
RIN 1545-BL43


Minimum Value of Eligible Employer-Sponsored Plans and Other 
Rules Regarding the Health Insurance Premium Tax Credit

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

-----------------------------------------------------------------------

SUMMARY: This document contains final regulations on the health 
insurance premium tax credit enacted by the Patient Protection and 
Affordable Care Act and the Health Care and Education Reconciliation 
Act of 2010, as amended by the Medicare and Medicaid Extenders Act of 
2010, the Comprehensive 1099 Taxpayer Protection and Repayment of 
Exchange Subsidy Overpayments Act of 2011, and the Department of 
Defense and Full-Year Continuing Appropriations Act, 2011. These final 
regulations affect individuals who enroll in qualified health plans 
through Affordable Insurance Exchanges (Exchanges, sometimes called 
Marketplaces) and claim the health insurance premium tax credit, and 
Exchanges that make qualified health plans available to individuals and 
employers.

DATES: Effective Date: These regulations are effective on December 18, 
2015.
    Applicability Dates: For dates of applicability, see Sec. Sec.  
1.36B-1(o) and 1.36B-6(g).

FOR FURTHER INFORMATION CONTACT: For general questions on the premium 
tax credit, Shareen Pflanz, (202) 317-4718; for minimum value, Andrew 
Braden, (202) 317-7006 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

    This document contains final regulations amending the Income Tax 
Regulations (26 CFR part 1) under section 36B of the Internal Revenue 
Code (Code) relating to the health insurance premium tax credit. 
Section 36B was enacted by 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)) (collectively, the Affordable Care Act). Final regulations 
under section 36B (TD 9590) were published on May 23, 2012 (77 FR 
30377) (2012 section 36B final regulations). On May 3, 2013, a notice 
of proposed rulemaking (REG-125398-12) was published in the Federal 
Register (78 FR 25909). Written comments responding to the proposed 
regulations were received. The comments have been considered in 
connection with these final regulations and are available for public 
inspection at www.regulations.gov or on request. No public hearing was 
requested or held. After consideration of all the comments, the 
proposed regulations are adopted, in part, as amended by this Treasury 
decision. Some rules proposed under REG-125398-12 on the minimum value 
of eligible employer-sponsored plans have been reserved and will be 
finalized separately under REG-119850-15. Two paragraphs on minimum 
value have been re-proposed, see REG-143800-14 (80 FR 52678) (2015 
proposed minimum value regulations), are finalized in part, and will be 
finalized in part under REG-143800-14.

Explanation of Revisions and Summary of Comments

1. Definition of Modified Adjusted Gross Income

    Section 36B(d)(2) provides that a taxpayer's household income 
includes the modified adjusted gross income of the taxpayer and the 
members of the taxpayer's tax family who are required to file an income 
tax return. The 2012 section 36B final regulations provide that, in 
computing household income, whether a family member must file a tax 
return is determined without regard to section 1(g)(7). Under section 
1(g)(7), a parent may elect to include a child's gross income in the 
parent's gross income if certain requirements are met.
    The proposed regulations removed ``without regard to section 
1(g)(7)'' from the 2012 section 36B final regulations because that 
language implied that the child's gross income is included in both the 
parent's adjusted gross income and the child's adjusted gross income in 
determining household income. Thus, the proposed regulations clarified 
that when a parent makes an election under section 1(g)(7), household 
income includes the child's gross income included on the parent's 
return only. These final regulations adopt that rule without change and 
clarify that the modified adjusted gross income of a parent who makes 
the section 1(g)(7) election includes the child's modified adjusted 
gross income. Thus, the parent's modified adjusted gross income 
includes not only the child's gross income but also the child's tax-
exempt interest and nontaxable Social Security income, which are 
excluded from gross

[[Page 78972]]

income but included in modified adjusted gross income in computing 
household income. (A parent may not make a section 1(g)(7) election if 
the child has income excluded under section 911, the third type of 
nontaxable income included in modified adjusted gross income.)

2. Wellness Program Incentives

    Under section 36B(c)(2)(C)(i) and Sec.  1.36B-2(c)(3)(v), an 
eligible employer-sponsored plan is affordable for an employee and 
related individuals only if the portion of the annual premium the 
employee must pay for self-only coverage does not exceed the required 
contribution percentage of the taxpayer's household income. Under 
section 36B(c)(2)(C)(ii), an eligible employer-sponsored plan provides 
minimum value only if the plan's share of the total allowed cost of 
benefits is at least 60 percent and, under the 2015 proposed minimum 
value regulations, the plan provides substantial coverage of inpatient 
hospital services and physician services.
    The proposed regulations provide that, for an employee eligible to 
participate in a wellness program, the affordability and minimum value 
of eligible employer-sponsored coverage are determined by assuming that 
each employee fails to satisfy the requirements of a wellness program, 
except the requirements of a nondiscriminatory wellness program related 
to tobacco use. Thus, the affordability and minimum value of a plan 
that charges a higher initial premium or higher cost-sharing for 
tobacco users are determined based on the premium or cost-sharing that 
is charged to non-tobacco users or to tobacco users who complete the 
related wellness program, such as attending smoking cessation classes.
    Identical rules, addressing only an employee's required 
contribution for purposes of determining affordability, were proposed 
in regulations under section 5000A (REG-141036-13, 79 FR 4302, January 
27, 2014) (section 5000A proposed regulations). The preamble to 
regulations finalizing the section 5000A proposed regulations (TD 9705, 
79 FR 70464, November 26, 2014) (section 5000A final regulations) 
discusses the comments received on the proposed regulations under 
section 36B, except comments discussed in the next paragraph, and 
additional comments received on the section 5000A proposed regulations 
(79 FR 70466). Comments discussed in the preamble to the section 5000A 
proposed regulations are not discussed again in this preamble.
    Because the standard for affordability for individuals eligible for 
coverage by reason of a relationship to an employee (related 
individuals) under section 5000A is different than the standard under 
section 36B, the section 5000A final regulations do not address certain 
comments on the treatment of wellness program incentives in determining 
affordability for related individuals. These commenters requested that 
wellness incentives related to tobacco use be treated as unearned for 
related individuals. The commenters expressed concern that treating 
wellness incentives related to tobacco use as earned in all cases 
unfairly penalizes related individuals for an employee's tobacco use. 
However, section 36B(c)(2)(C) provides that the affordability of 
coverage for related individuals under section 36B is based on the cost 
of self-only coverage. Accordingly, the final regulations do not adopt 
this comment.
    Thus, after considering all the comments, these final regulations, 
like the section 5000A final regulations, retain the rules in the 
proposed regulations that wellness incentives unrelated to tobacco use 
are treated as unearned and wellness incentives related to tobacco use 
are treated as earned in determining affordability. For purposes of 
both the section 5000A final regulations and these final regulations, 
nondiscriminatory wellness programs include both participatory and 
health-contingent wellness programs. Both the section 5000A final 
regulations and these final regulations also clarify that (1) a 
wellness incentive that includes any component unrelated to tobacco use 
is treated as unearned (however, as stated in the preamble to the 
section 5000A final regulations, if there is an incentive for 
completing a program unrelated to tobacco use and a separate incentive 
for completing a program related to tobacco use, then the incentive 
related to tobacco use may be treated as earned), and (2) the term 
wellness program incentives has the same meaning as the term reward in 
regulations issued by the Departments of Health and Human Services 
(HHS) and Labor as well as the Treasury Department, see Sec.  54.9802-
1(f), 29 CFR 2590.702(f), and 45 CFR 146.121(f). These final 
regulations also apply the rules described in this section of the 
preamble for purposes of determining minimum value.

3. Employer Contributions to Health Reimbursement Arrangements (HRA)

    The proposed regulations provide that amounts newly made available 
in the current plan year under an HRA that is integrated with eligible 
employer-sponsored coverage and that an employee may use to pay 
premiums are counted toward the employee's required contribution for 
purposes of determining affordability. Amounts newly made available in 
the current plan year under an HRA that is integrated with eligible 
employer-sponsored coverage and that an employee may use only to reduce 
cost-sharing for medical expenses covered by the primary plan count 
toward a plan's minimum value percentage.
    The comments on the proposed regulations are discussed in the 
section 5000A final regulations. After considering all the comments, 
both the section 5000A final regulations and these final regulations 
(1) cross-reference Notice 2013-54 (2013-40 IRB 287, see Sec.  
601.601(d)) for guidance on the requirements for an HRA to be 
integrated with eligible employer-sponsored coverage, (2) clarify that 
amounts newly made available under an HRA reduce an employee's required 
contribution (or, for purposes of section 36B, count towards providing 
minimum value) if the HRA would have been integrated with eligible 
employer-sponsored coverage had the employee enrolled in the primary 
plan, (3) clarify that an HRA is taken into account in determining 
affordability (and minimum value for purposes of section 36B) only if 
the HRA and the primary eligible employer-sponsored coverage are 
offered by the same employer, (4) clarify that HRA contributions are 
taken into account for affordability and not minimum value if an 
employee may use the HRA contributions to pay premiums for the primary 
plan only or to pay cost-sharing or benefits not covered by the primary 
plan in addition to premiums, and (5) clarify that employer 
contributions to an HRA reduce an employee's required contribution (or 
count towards providing minimum value for section 36B purposes) only to 
the extent the amount of the annual contribution is required under the 
terms of the plan or is otherwise determinable within a reasonable time 
before the employee must decide whether to enroll. For more information 
on how contributions to an HRA are taken into account for purposes of 
section 4980H(b) and related reporting under section 6056, see Notice 
2015-87, 2015-52 IRB, released simultaneously with these final 
regulations.
    Additional regulations will finalize other rules on minimum value 
in the proposed regulations.

[[Page 78973]]

4. Employer Contributions to Cafeteria Plans (Flex Contributions)

    The preamble to the section 5000A proposed regulations requested 
comments on how employer contributions under a section 125 cafeteria 
plan (flex contributions) that employees may not opt to receive as a 
taxable benefit should be taken into account in determining an 
employee's required contribution for purposes of the affordability of 
coverage. The section 5000A final regulations discussed the comments 
received and adopted the rule that an employee's required contribution 
is reduced by employer contributions under a section 125 cafeteria plan 
that (1) may not be taken as a taxable benefit, (2) may be used to pay 
for minimum essential coverage, and (3) may be used only to pay for 
medical care within the meaning of section 213. These final regulations 
adopt this rule for purposes of determining affordability under section 
36B.
    For more information on the effect of flex contributions and other 
similar arrangements on affordability for purposes of sections 36B, 
5000A, and related consequences under section 4980H, see Notice 2015-
87, released simultaneously with these final regulations.

5. Post-Employment Coverage

    Section 1.36B-2(c)(3)(iv) provides that an individual who may 
enroll in continuation coverage required under Federal law or a State 
law that provides comparable continuation coverage is eligible for 
minimum essential coverage only for months that the individual is 
enrolled in the coverage. The proposed regulations provide that this 
rule applies only to former employees and extend the rule to retiree 
coverage. Accordingly, an individual who may enroll in retiree coverage 
is eligible for minimum essential coverage only for the months the 
individual is enrolled in the coverage.
    Commenters opined that the continuation and retiree coverage rules 
should apply to individuals eligible for the coverage by reason of a 
relationship to an employee, for example, the spouse of a retired 
employee. In response to these comments, the final regulations clarify 
that an individual who may enroll in continuation coverage or retiree 
coverage because of a relationship to a former employee is eligible for 
the coverage only for the months the individual is enrolled in the 
coverage.
    Commenters suggested that the rule for continuation coverage should 
apply to current employees eligible for continuation coverage as a 
result of reduced hours. The final regulations do not adopt this 
suggestion. Eligible employer-sponsored coverage for current employees 
does not present the same administrability issues as for former 
employees. Current employees with continuation coverage should be 
subject to the same general rules on eligibility for employer-sponsored 
coverage as other current employees. Although employees may be subject 
to a higher required contribution for continuation coverage than is 
required for other eligible employer-sponsored coverage, for purposes 
of the premium tax credit, employees are eligible for eligible 
employer-sponsored coverage only if the coverage is both affordable and 
provides minimum value. Thus, current employees offered continuation 
coverage, like other current employees, may be eligible for the premium 
tax credit if the coverage offered either is not affordable or does not 
provide minimum value.

6. Newborns, Adopted Children, and Other Individuals Enrolled Midmonth

    Regulations at 45 CFR 155.420(d)(2)(i) require issuers to provide 
coverage to a newborn child enrolled in a qualified health plan 
effective on the date of birth. Under section 36B(c)(2)(A)(i) and Sec.  
1.36B-3(c)(1)(i), a month is a coverage month for an individual only if 
the individual is enrolled in a qualified health plan through an 
Exchange as of the first day of the month. Under Sec.  1.36B-3(d), the 
monthly premium assistance amount is determined, in part, by the 
adjusted monthly premium for the applicable second lowest cost silver 
(benchmark) plan (benchmark plan premium). The proposed regulations 
provide that a child enrolled in a qualified health plan in the month 
of the child's birth, adoption, or placement with the taxpayer for 
adoption or in foster care (birth month) is treated as enrolled as of 
the first day of the month.
    Some commenters interpreted the coverage month rule for newborns as 
requiring that issuers must provide coverage for a newborn as of the 
first day of the month.
    Other commenters noted that applying a new adjusted monthly premium 
as of the first of the month, thus increasing the premium assistance 
amount for the month, is inconsistent with HHS regulations that provide 
that the amount of advance credit payments (which approximates the 
premium assistance amount) does not change until the first day of the 
month following the birth month.
    No changes are made to the final regulations to reflect these 
comments. The rules treat certain individuals as enrolled as of the 
first day of the month for purposes of the premium tax credit to 
conform with the general rules for coverage months but do not require 
issuers to enroll the individuals as of the first day of the month. 
Furthermore, HHS regulations published on July 15, 2013 (78 FR 42321) 
removed the rule providing that advance credit payments do not change 
until the month following a birth or other event for which a midmonth 
enrollment is allowed.
    Under 45 CFR 155.420(b)(2)(i), Exchanges must ensure that a 
taxpayer eligible to enroll an individual in coverage may choose for 
the individual's coverage to be effective as of the individual's date 
of birth, adoption, or placement for adoption or in foster care or as 
of the first day of the following month. Similarly, for individual's 
placed with a taxpayer by court order, 45 CFR 155.420(b)(2)(v) provides 
that Exchanges must allow the individual's coverage to be effective as 
of the date the court order is effective. Accordingly, the final 
regulations provide that an individual is treated as enrolled as of the 
first day of the month of birth, adoption, or placement in adoption or 
foster care if the individual's enrollment is effective as of the date 
of birth, adoption, or placement for adoption or in foster care, or on 
the effective date of a court order. The final regulations use the term 
individual instead of child to align with HHS regulations relating to 
midmonth enrollments.
    The proposed regulations provide that the adjusted monthly premium 
is determined as if all members of the coverage family for that month 
were enrolled in a qualified health plan for the entire month. The 
intent of this rule was to specify that the adjusted monthly premium is 
determined as of the first day of a coverage month and is not prorated 
for midmonth changes in enrollment or eligibility for other minimum 
essential coverage. Accordingly, an individual who enrolls midmonth but 
who is treated as enrolled as of the first day of the month is a member 
of the coverage family (if all other requirements are met) in 
determining the adjusted monthly premium for that month. For other 
coverage family changes, the adjusted monthly premium does not change 
until the following month. The final regulations clarify these rules by 
providing that the term coverage family means the members of a 
taxpayer's family for whom a month is a coverage month (which requires 
being enrolled

[[Page 78974]]

on the first day of the month) and that the adjusted monthly premium is 
determined as of the first day of a coverage month.

7. Partial Months of Coverage

    The proposed regulations provide that the premium assistance amount 
for a coverage month is prorated by the number of days of coverage when 
a qualified health plan is terminated before the last day of a month 
and the issuer reduces or refunds a portion of the monthly premium.
    The proposed rule for computing a prorated premium assistance 
amount has proven to be complex and may be difficult to administer. 
Accordingly, the final regulations provide that the premium assistance 
amount for a termination month is the lesser of (1) the enrollment 
premiums charged (reduced by any amounts that were refunded) and (2) 
the difference between the benchmark plan premium and contribution 
amount for the full month. The final regulations clarify that this 
computation also applies to a month an individual is enrolled in 
coverage 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 Treasury Department and the IRS anticipate publishing 
rules requiring Exchanges to report under section 36B(f)(3) for partial 
months of coverage the amount of enrollment premiums charged and 
advance credit payments made for the days of coverage and the benchmark 
plan premium for a full month of coverage.

Effective/Applicability Date

    These final regulations apply to taxable years ending after 
December 31, 2013.

Special Analyses

    Certain IRS regulations, including this one, are exempt from the 
requirements of Executive Order 12866, as supplemented and reaffirmed 
by Executive Order 13563. Therefore, a regulatory impact assessment is 
not required. Section 553(b) of the Administrative Procedure Act (5 
U.S.C. chapter 5) does not apply to these regulations, and, because the 
regulations do not impose a collection of information requirement on 
small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) 
does not apply. Pursuant to section 7805(f) of the Internal Revenue 
Code, the notice of proposed rulemaking that preceded these final 
regulations was submitted to the Chief Counsel for Advocacy of the 
Small Business Administration for comment on its impact on small 
business. No comments were received.

Drafting Information

    The principal authors of these final regulations are Andrew Braden, 
Arvind Ravichandran, and Stephen J. Toomey of the Office of Associate 
Chief Counsel (Income Tax and Accounting). However, other personnel 
from the IRS and the Treasury Department participated in their 
development.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR part 1 is amended as follows:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 continues to read in 
part as follows:

    Authority: 26 U.S.C. 7805 * * *


0
Par. 2. Section 1.36B-0 is amended by:
0
1. Revising the introductory text.
0
2. Revising the entries for Sec. Sec.  1.36B-2(c)(3)(iv) and 1.36B-
2(c)(3)(v)(A)(4).
0
2. Adding entries for Sec. Sec.  1.36B-2(c)(3)(v)(A)(5) and (6).
0
3. Revising the entries for Sec. Sec.  1.36B-3(c)(2) and (3).
0
4. Adding entries for Sec. Sec.  1.36B-3(c)(4), 1.36B-3(d)(1) and (2), 
1.36B-3(d)(2)(i) and (ii) and 1.36B-6.
    The revisions and additions read as follows:


Sec.  1.36B-0  Table of contents.

    This section lists the captions contained in Sec. Sec.  1.36B-1 
through 1.36B-6.
* * * * *


Sec.  1.36B-2  Eligibility for premium tax credit.

* * * * *
    (c) * * *
    (3) * * *
    (iv) Post-employment coverage.
    (v) * * *
    (A) * * *
    (4) Wellness program incentives.
    (5) Employer contributions to health reimbursement arrangements.
    (6) Employer contributions to cafeteria plans.
* * * * *


Sec.  1.36B-3  Computing the premium assistance credit amount.

* * * * *
    (c) * * *
    (2) Certain individuals enrolled during a month.
    (3) Premiums paid for a taxpayer.
    (4) Examples.
    (d) * * *
    (1) In general.
    (2) Partial month of coverage.
    (i) In general.
    (ii) Examples.
* * * * *


Sec.  1.36B-6  Minimum value.

    (a) In general.
    (b) MV standard population.
    (c) MV percentage.
    (1) In general.
    (2) Wellness program incentives.
    (i) In general.
    (ii) Example.
    (3) Employer contributions to health savings accounts.
    (4) Employer contributions to health reimbursement arrangements.
    (5) Expected spending adjustments for health savings accounts and 
health reimbursement arrangements.
    (d) Methods for determining MV.
    (e) Scope of essential health benefits and adjustment for benefits 
not included in MV Calculator.
    (f) Actuarial certification.
    (1) In general.
    (2) Membership in American Academy of Actuaries.
    (3) Actuarial analysis.
    (4) Use of MV Calculator.
    (g) Effective/applicability date.
    (1) In general.
    (2) Exception.

0
Par. 3. Section 1.36B-1 is amended by revising paragraphs (e)(1)(i), 
(e)(1)(ii)(B), and (n) to read as follows:


Sec.  1.36B-1  Premium tax credit definitions.

* * * * *
    (e) * * *
    (1) * * *
    (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) is made for the taxable year);
    (ii) * * *
    (B) Are required to file a return of tax imposed by section 1 for 
the taxable year.
* * * * *
    (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)) and 45 CFR 147.102(b).
* * * * *

0
Par. 4. Section 1.36B-2 is amended by:
0
1. Revising paragraphs (c)(3)(iv) and (c)(3)(v)(A)(4).
0
2. Adding paragraphs (c)(3)(v)(A)(5) and (6) and (c)(3)(v)(D), Example 
9.
0
3. Revising paragraph (c)(3)(vi).

[[Page 78975]]

    The revisions and additions read as follows:


Sec.  1.36B-2  Eligibility for premium tax credit.

* * * * *
    (c) * * *
    (3) * * *
    (iv) Post-employment coverage. A former employee (including a 
retiree), or an individual related (within the meaning of paragraph 
(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) * * *
    (A) * * *
    (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 
Sec.  54.9802-1(f)(1)(i) of this chapter.
    (5) Employer contributions to health reimbursement arrangements. 
Amounts newly made available for the current plan year under a health 
reimbursement arrangement 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 health reimbursement arrangement would be integrated, as that term 
is used in Notice 2013-54 (2013-40 IRB 287) (see Sec.  601.601(d) of 
this chapter), with an eligible employer-sponsored plan for an employee 
enrolled in the plan. The eligible employer-sponsored plan and the 
health reimbursement arrangement must be offered by the same employer. 
Employer contributions to a health reimbursement arrangement 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, 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.
* * * * *
    (D) * * *

    Example 9. 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 Sec.  1.36B-6 for rules for determining 
whether an eligible employer-sponsored plan provides minimum value.
* * * * *

0
Par. 5. Section 1.36B-3 is amended by:
0
1. Revising paragraph (b)(2).
0
2. Redesignating paragraphs (c)(2) and (3) as paragraphs (c)(3) and (4) 
and adding paragraph (c)(2).
0
3. Revising paragraph (d).
0
4. Adding a sentence to the end of paragraph (e).
0
5. Revising paragraphs (f)(4), (g)(2), and (j)(1) and (3).
0
6. Removing the language ``(d)(1)'' everywhere it appears in paragraphs 
(h), (j), and (k), and adding the language ``(d)(1)(i)'' in its place 
and removing the language ``(d)(2)'' everywhere it appears in 
paragraphs (h) and (j) and adding the language ``(d)(1)(ii)'' in its 
place.
    The revisions and additions read as follows:


Sec.  1.36B-3  Computing the premium assistance credit amount.

* * * * *
    (b) * * *
    (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) * * *
    (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).
* * * * *
    (d) Premium assistance amount--(1) In general. Except as provided 
in paragraph (d)(2) of this section, the premium assistance amount for 
a coverage month is the lesser of--
    (i) 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 
(enrollment premiums); 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) Partial month of coverage--(i) In general. If a qualified 
health plan is terminated before the last day of a month or an 
individual is enrolled in coverage 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 premium assistance 
amount for the month is the lesser of--
    (A) The enrollment premiums for the month (not including any 
amounts that were refunded); or
    (B) The excess of the benchmark plan premium for a full month of 
coverage over the full contribution amount for the month.
    (ii) Examples. The following examples illustrate the rules of this 
paragraph (d)(2).

    Example 1.  (i) Taxpayer R is single and has no dependents. R 
enrolls in a qualified health plan with a monthly premium of $450. 
The difference between R's benchmark plan premium and contribution 
amount for the month is $420. R's premium assistance amount for a 
coverage month with a full month of coverage is $420 (the lesser of 
$450 and $420).
    (ii) The issuer of R's qualified health plan is notified that R 
died on September 20. The

[[Page 78976]]

issuer terminates coverage as of that date and refunds the remaining 
portion of the September enrollment premiums ($150) for R's 
coverage.
    (iii) Under this paragraph (d)(2), R's premium assistance amount 
for September is the lesser of the enrollment premiums for the month 
($300 ($450--$150)) or the difference between the benchmark plan 
premium for a full month of coverage and the full contribution 
amount for the month ($420). R's premium assistance amount for 
September is $300, the lesser of $420 and $300.

    Example 2.  The facts are the same as in Example 1 of this 
paragraph (d)(2)(ii), except that the qualified health plan issuer 
does not refund any enrollment premiums for September. Under this 
paragraph (d)(2), R's premium assistance amount for September is 
$420, the lesser of $450 and $420.
    Example 3.  The facts are the same as in Example 1 of this 
paragraph (d)(2)(ii), except that the difference between R's 
benchmark plan premium and contribution amount for a month is $275. 
Accordingly, R's premium assistance amount for a coverage month with 
a full month of coverage is $275 (the lesser of $450 and $275). 
Under this paragraph (d)(2), R's premium assistance amount for 
September remains $275, the lesser of $300 and $275.

    (e) * * * The adjusted monthly premium for a coverage month is 
determined as of the first day of the month.
    (f) * * *
    (4) Family members residing at different locations. The benchmark 
plan premium determined under paragraphs (f)(1) and (2) of this section 
for family members who live in different States and enroll in separate 
qualified health plans is the sum of the premiums for the applicable 
benchmark plans for each group of family members living in the same 
State.
* * * * *
    (g) * * *
    (2) Applicable percentage table.

------------------------------------------------------------------------
 Household income percentage of Federal       Initial          Final
              poverty line                  percentage      percentage
------------------------------------------------------------------------
Less than 133%..........................             2.0             2.0
At least 133% but less than 150%........             3.0             4.0
At least 150% but less than 200%........             4.0             6.3
At least 200% but less than 250%........             6.3            8.05
At least 250% but less than 300%........            8.05             9.5
At least 300% but not more than 400%....             9.5             9.5
------------------------------------------------------------------------

* * * * *
    (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), 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) or (ii) of this section. Premiums are allocated to 
additional benefits before determining the applicable benchmark plan 
under paragraph (f) of this section.
* * * * *
    (3) Examples. The following examples illustrate the rules of this 
paragraph (j):

    Example 1.  (i) Taxpayer B enrolls in a qualified health plan 
that provides benefits in addition to essential health benefits 
(additional benefits). The monthly premiums for the plan in which B 
enrolls are $370, of which $35 is allocable to additional benefits. 
B's benchmark plan premium (determined after allocating premiums to 
additional benefits for all silver level plans) is $440, of which 
$40 is allocable to additional benefits. B's monthly contribution 
amount, which is the product of B's household income and the 
applicable percentage, is $60.
    (ii) Under this paragraph (j), B's enrollment premiums and the 
benchmark plan premium are reduced by the portion of the premium 
that is allocable to the additional benefits provided under that 
plan. Therefore, B's monthly enrollment premiums are reduced to $335 
($370 - $35) and B's benchmark plan premium is reduced to $400 ($440 
- $40). B's premium assistance amount for a coverage month is $335, 
the lesser of $335 (B's enrollment premiums, reduced by the portion 
of the premium allocable to additional benefits) and $340 (B's 
benchmark plan premium, reduced by the portion of the premium 
allocable to additional benefits ($400), minus B's $60 contribution 
amount).
    Example 2.  The facts are the same as in Example 1 of this 
paragraph (j)(3), except that the plan in which B enrolls provides 
no benefits in addition to the essential health benefits required to 
be provided by the plan. Thus, under paragraph (j) of this section, 
B's benchmark plan premium ($440) is reduced by the portion of the 
premium allocable to additional benefits provided under that plan 
($40). B's enrollment premiums ($370) are not reduced under this 
paragraph (j). B's premium assistance amount for a coverage month is 
$340, the lesser of $370 (B's enrollment premiums) and $340 (B's 
benchmark plan premium, reduced by the portion of the premium 
allocable to additional benefits ($400), minus B's $60 contribution 
amount).
* * * * *

0
Par. 6. Section 1.36B-6 is added to read as follows:


Sec.  1.36B-6  Minimum value.

    (a) In general. An eligible employer-sponsored plan provides 
minimum value (MV) only if--
    (1) The plan's share of the total allowed costs of benefits 
provided to an employee (the MV percentage) is at least 60 percent; and
    (2) [Reserved]
    (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 Sec.  54.9802-
1(f)(1)(i) of this chapter.
    (ii) Example. The following example illustrates the rules of this 
paragraph (c)(2):

    Example.  (i) Employer X offers an eligible employer-sponsored 
plan that reduces the deductible by $300 for employees who do not 
use tobacco products or who complete a smoking cessation course. The 
deductible is 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 his deductible is $3,700. Employee C uses 
tobacco and her deductible is $4,000.
    (ii) Under paragraph (c)(2)(i) of this section, only the 
incentives related to tobacco use are considered in determining the 
plan's MV percentage. 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 deductible for 
determining for the MV percentage for both Employees B and C is 
$3,700. The $200 incentive for completing cholesterol screening is 
disregarded.

    (3) Employer contributions to health savings accounts. Employer

[[Page 78977]]

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 Sec.  601.601(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) of this section, this section applies for 
taxable years ending after December 31, 2013.
    (2) Exception. [Reserved]

0
Par. 7. Section 1.6011-8 is amended by revising paragraph (a) to read 
as follows:


Sec.  1.6011-8  Requirement of income tax return for taxpayers who 
claim the premium tax credit under section 36B.

    (a) Requirement of return. A taxpayer for whom advance payments of 
the premium tax credit under section 36B are made in a taxable year 
must file an income tax return for that taxable year on or before the 
due date for the return (including extensions of time for filing).
* * * * *

John Dalrymple,
Deputy Commissioner for Services and Enforcement.
    Approved: December 11, 2015
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2015-31866 Filed 12-16-15; 4:15 pm]
 BILLING CODE 4830-01-P



                                                                    Federal Register / Vol. 80, No. 243 / Friday, December 18, 2015 / Rules and Regulations                                                                     78971

                                                  DATES:  Withdrawal of approval is                              Administration, 7519 Standish Pl.,                                49007 has requested that FDA withdraw
                                                  effective December 31, 2015.                                   Rockville, MD 20855, 240–402–5761,                                approval of the following NADAs that
                                                                                                                 sujaya.dessai@fda.hhs.gov.                                        provide for the use of nitarsone in
                                                  FOR FURTHER INFORMATION CONTACT:
                                                                                                                                                                                   medicated feed for chickens and turkeys
                                                  Sujaya Dessai, Center for Veterinary                           SUPPLEMENTARY INFORMATION:    Zoetis                              because the products are no longer
                                                  Medicine (HFV–212), Food and Drug                              Inc., 333 Portage St., Kalamazoo, MI                              manufactured or marketed:

                                                                                                                                                                                                                              21 CFR
                                                       File No.                                                                         Product name                                                                          Section

                                                  007–616 ............   HISTOSTAT 50 (nitarsone) Type A Medicated Article ........................................................................................             558.369
                                                  141–088 ............   HISTOSTAT 50 (nitarsone)/BMD (bacitracin methylene disalicylate) ..................................................................                    558.369
                                                  141–132 ............   HISTOSTAT 50/ALBAC (bacitracin zinc) .............................................................................................................     558.369



                                                     Therefore, under authority delegated                        2011. These final regulations affect                              value of eligible employer-sponsored
                                                  to the Commissioner of Food and Drugs                          individuals who enroll in qualified                               plans have been reserved and will be
                                                  and redelegated to the Center for                              health plans through Affordable                                   finalized separately under REG–
                                                  Veterinary Medicine, and in accordance                         Insurance Exchanges (Exchanges,                                   119850–15. Two paragraphs on
                                                  with 21 CFR 514.116 Notice of                                  sometimes called Marketplaces) and                                minimum value have been re-proposed,
                                                  withdrawal of approval of application,                         claim the health insurance premium tax                            see REG–143800–14 (80 FR 52678)
                                                  notice is given that approval of NADAs                         credit, and Exchanges that make                                   (2015 proposed minimum value
                                                  007–616, 141–088, and 141–132, and all                         qualified health plans available to                               regulations), are finalized in part, and
                                                  supplements and amendments thereto,                            individuals and employers.                                        will be finalized in part under REG–
                                                  is hereby withdrawn, effective                                 DATES: Effective Date: These regulations                          143800–14.
                                                  December 31, 2015.                                             are effective on December 18, 2015.
                                                                                                                                                                                   Explanation of Revisions and Summary
                                                     Elsewhere in this issue of the Federal                        Applicability Dates: For dates of
                                                                                                                 applicability, see §§ 1.36B–1(o) and                              of Comments
                                                  Register, FDA is amending the animal
                                                  drug regulations to reflect the voluntary                      1.36B–6(g).                                                       1. Definition of Modified Adjusted Gross
                                                  withdrawal of approval of these                                FOR FURTHER INFORMATION CONTACT: For                              Income
                                                  applications.                                                  general questions on the premium tax
                                                                                                                                                                                      Section 36B(d)(2) provides that a
                                                    Dated: December 11, 2015.                                    credit, Shareen Pflanz, (202) 317–4718;
                                                                                                                                                                                   taxpayer’s household income includes
                                                  Bernadette Dunham,                                             for minimum value, Andrew Braden,
                                                                                                                                                                                   the modified adjusted gross income of
                                                                                                                 (202) 317–7006 (not toll-free numbers).
                                                  Director, Center for Veterinary Medicine.                                                                                        the taxpayer and the members of the
                                                                                                                 SUPPLEMENTARY INFORMATION:
                                                  [FR Doc. 2015–31828 Filed 12–17–15; 8:45 am]                                                                                     taxpayer’s tax family who are required
                                                  BILLING CODE 4164–01–P                                         Background                                                        to file an income tax return. The 2012
                                                                                                                    This document contains final                                   section 36B final regulations provide
                                                                                                                 regulations amending the Income Tax                               that, in computing household income,
                                                  DEPARTMENT OF THE TREASURY                                     Regulations (26 CFR part 1) under                                 whether a family member must file a tax
                                                                                                                 section 36B of the Internal Revenue                               return is determined without regard to
                                                  Internal Revenue Service                                       Code (Code) relating to the health                                section 1(g)(7). Under section 1(g)(7), a
                                                                                                                 insurance premium tax credit. Section                             parent may elect to include a child’s
                                                  26 CFR Part 1                                                  36B was enacted by the Patient                                    gross income in the parent’s gross
                                                                                                                 Protection and Affordable Care Act,                               income if certain requirements are met.
                                                  [TD 9745]
                                                                                                                 Public Law 111–148 (124 Stat. 119                                    The proposed regulations removed
                                                  RIN 1545–BL43                                                  (2010)), and the Health Care and                                  ‘‘without regard to section 1(g)(7)’’ from
                                                                                                                 Education Reconciliation Act of 2010,                             the 2012 section 36B final regulations
                                                  Minimum Value of Eligible Employer-                                                                                              because that language implied that the
                                                  Sponsored Plans and Other Rules                                Public Law 111–152 (124 Stat. 1029
                                                                                                                 (2010)) (collectively, the Affordable Care                        child’s gross income is included in both
                                                  Regarding the Health Insurance                                                                                                   the parent’s adjusted gross income and
                                                  Premium Tax Credit                                             Act). Final regulations under section
                                                                                                                 36B (TD 9590) were published on May                               the child’s adjusted gross income in
                                                  AGENCY:  Internal Revenue Service (IRS),                       23, 2012 (77 FR 30377) (2012 section                              determining household income. Thus,
                                                  Treasury.                                                      36B final regulations). On May 3, 2013,                           the proposed regulations clarified that
                                                  ACTION: Final regulations.                                     a notice of proposed rulemaking (REG–                             when a parent makes an election under
                                                                                                                 125398–12) was published in the                                   section 1(g)(7), household income
                                                  SUMMARY:  This document contains final                         Federal Register (78 FR 25909). Written                           includes the child’s gross income
                                                  regulations on the health insurance                            comments responding to the proposed                               included on the parent’s return only.
                                                  premium tax credit enacted by the                              regulations were received. The                                    These final regulations adopt that rule
                                                  Patient Protection and Affordable Care                         comments have been considered in                                  without change and clarify that the
                                                  Act and the Health Care and Education                          connection with these final regulations                           modified adjusted gross income of a
asabaliauskas on DSK5VPTVN1PROD with RULES




                                                  Reconciliation Act of 2010, as amended                         and are available for public inspection                           parent who makes the section 1(g)(7)
                                                  by the Medicare and Medicaid                                   at www.regulations.gov or on request.                             election includes the child’s modified
                                                  Extenders Act of 2010, the                                     No public hearing was requested or                                adjusted gross income. Thus, the
                                                  Comprehensive 1099 Taxpayer                                    held. After consideration of all the                              parent’s modified adjusted gross income
                                                  Protection and Repayment of Exchange                           comments, the proposed regulations are                            includes not only the child’s gross
                                                  Subsidy Overpayments Act of 2011, and                          adopted, in part, as amended by this                              income but also the child’s tax-exempt
                                                  the Department of Defense and Full-                            Treasury decision. Some rules proposed                            interest and nontaxable Social Security
                                                  Year Continuing Appropriations Act,                            under REG–125398–12 on the minimum                                income, which are excluded from gross


                                             VerDate Sep<11>2014    17:22 Dec 17, 2015     Jkt 238001     PO 00000     Frm 00013      Fmt 4700    Sfmt 4700     E:\FR\FM\18DER1.SGM          18DER1


                                                  78972            Federal Register / Vol. 80, No. 243 / Friday, December 18, 2015 / Rules and Regulations

                                                  income but included in modified                            Because the standard for affordability             integrated with eligible employer-
                                                  adjusted gross income in computing                      for individuals eligible for coverage by              sponsored coverage and that an
                                                  household income. (A parent may not                     reason of a relationship to an employee               employee may use to pay premiums are
                                                  make a section 1(g)(7) election if the                  (related individuals) under section                   counted toward the employee’s required
                                                  child has income excluded under                         5000A is different than the standard                  contribution for purposes of
                                                  section 911, the third type of nontaxable               under section 36B, the section 5000A                  determining affordability. Amounts
                                                  income included in modified adjusted                    final regulations do not address certain              newly made available in the current
                                                  gross income.)                                          comments on the treatment of wellness                 plan year under an HRA that is
                                                                                                          program incentives in determining                     integrated with eligible employer-
                                                  2. Wellness Program Incentives                          affordability for related individuals.                sponsored coverage and that an
                                                     Under section 36B(c)(2)(C)(i) and                    These commenters requested that                       employee may use only to reduce cost-
                                                  § 1.36B–2(c)(3)(v), an eligible employer-               wellness incentives related to tobacco                sharing for medical expenses covered by
                                                  sponsored plan is affordable for an                     use be treated as unearned for related
                                                                                                                                                                the primary plan count toward a plan’s
                                                  employee and related individuals only                   individuals. The commenters expressed
                                                                                                                                                                minimum value percentage.
                                                  if the portion of the annual premium the                concern that treating wellness
                                                  employee must pay for self-only                         incentives related to tobacco use as                     The comments on the proposed
                                                  coverage does not exceed the required                   earned in all cases unfairly penalizes                regulations are discussed in the section
                                                  contribution percentage of the                          related individuals for an employee’s                 5000A final regulations. After
                                                  taxpayer’s household income. Under                      tobacco use. However, section                         considering all the comments, both the
                                                  section 36B(c)(2)(C)(ii), an eligible                   36B(c)(2)(C) provides that the                        section 5000A final regulations and
                                                  employer-sponsored plan provides                        affordability of coverage for related                 these final regulations (1) cross-
                                                  minimum value only if the plan’s share                  individuals under section 36B is based                reference Notice 2013–54 (2013–40 IRB
                                                  of the total allowed cost of benefits is at             on the cost of self-only coverage.                    287, see § 601.601(d)) for guidance on
                                                  least 60 percent and, under the 2015                    Accordingly, the final regulations do not             the requirements for an HRA to be
                                                  proposed minimum value regulations,                     adopt this comment.                                   integrated with eligible employer-
                                                  the plan provides substantial coverage                     Thus, after considering all the                    sponsored coverage, (2) clarify that
                                                  of inpatient hospital services and                      comments, these final regulations, like               amounts newly made available under an
                                                  physician services.                                     the section 5000A final regulations,                  HRA reduce an employee’s required
                                                                                                          retain the rules in the proposed                      contribution (or, for purposes of section
                                                     The proposed regulations provide
                                                                                                          regulations that wellness incentives
                                                  that, for an employee eligible to                                                                             36B, count towards providing minimum
                                                                                                          unrelated to tobacco use are treated as
                                                  participate in a wellness program, the                                                                        value) if the HRA would have been
                                                                                                          unearned and wellness incentives
                                                  affordability and minimum value of                                                                            integrated with eligible employer-
                                                                                                          related to tobacco use are treated as
                                                  eligible employer-sponsored coverage                                                                          sponsored coverage had the employee
                                                                                                          earned in determining affordability. For
                                                  are determined by assuming that each                                                                          enrolled in the primary plan, (3) clarify
                                                                                                          purposes of both the section 5000A final
                                                  employee fails to satisfy the                                                                                 that an HRA is taken into account in
                                                                                                          regulations and these final regulations,
                                                  requirements of a wellness program,                                                                           determining affordability (and
                                                                                                          nondiscriminatory wellness programs
                                                  except the requirements of a                                                                                  minimum value for purposes of section
                                                                                                          include both participatory and health-
                                                  nondiscriminatory wellness program                      contingent wellness programs. Both the                36B) only if the HRA and the primary
                                                  related to tobacco use. Thus, the                       section 5000A final regulations and                   eligible employer-sponsored coverage
                                                  affordability and minimum value of a                    these final regulations also clarify that             are offered by the same employer, (4)
                                                  plan that charges a higher initial                      (1) a wellness incentive that includes                clarify that HRA contributions are taken
                                                  premium or higher cost-sharing for                      any component unrelated to tobacco use                into account for affordability and not
                                                  tobacco users are determined based on                   is treated as unearned (however, as                   minimum value if an employee may use
                                                  the premium or cost-sharing that is                     stated in the preamble to the section                 the HRA contributions to pay premiums
                                                  charged to non-tobacco users or to                      5000A final regulations, if there is an               for the primary plan only or to pay cost-
                                                  tobacco users who complete the related                  incentive for completing a program                    sharing or benefits not covered by the
                                                  wellness program, such as attending                     unrelated to tobacco use and a separate               primary plan in addition to premiums,
                                                  smoking cessation classes.                              incentive for completing a program                    and (5) clarify that employer
                                                     Identical rules, addressing only an                  related to tobacco use, then the                      contributions to an HRA reduce an
                                                  employee’s required contribution for                    incentive related to tobacco use may be               employee’s required contribution (or
                                                  purposes of determining affordability,                  treated as earned), and (2) the term                  count towards providing minimum
                                                  were proposed in regulations under                      wellness program incentives has the                   value for section 36B purposes) only to
                                                  section 5000A (REG–141036–13, 79 FR                     same meaning as the term reward in                    the extent the amount of the annual
                                                  4302, January 27, 2014) (section 5000A                  regulations issued by the Departments                 contribution is required under the terms
                                                  proposed regulations). The preamble to                  of Health and Human Services (HHS)                    of the plan or is otherwise determinable
                                                  regulations finalizing the section 5000A                and Labor as well as the Treasury                     within a reasonable time before the
                                                  proposed regulations (TD 9705, 79 FR                    Department, see § 54.9802–1(f), 29 CFR                employee must decide whether to
                                                  70464, November 26, 2014) (section                      2590.702(f), and 45 CFR 146.121(f).                   enroll. For more information on how
                                                  5000A final regulations) discusses the                  These final regulations also apply the                contributions to an HRA are taken into
                                                  comments received on the proposed                       rules described in this section of the                account for purposes of section
asabaliauskas on DSK5VPTVN1PROD with RULES




                                                  regulations under section 36B, except                   preamble for purposes of determining
                                                  comments discussed in the next                                                                                4980H(b) and related reporting under
                                                                                                          minimum value.                                        section 6056, see Notice 2015–87, 2015–
                                                  paragraph, and additional comments
                                                  received on the section 5000A proposed                  3. Employer Contributions to Health                   52 IRB, released simultaneously with
                                                  regulations (79 FR 70466). Comments                     Reimbursement Arrangements (HRA)                      these final regulations.
                                                  discussed in the preamble to the section                   The proposed regulations provide that                 Additional regulations will finalize
                                                  5000A proposed regulations are not                      amounts newly made available in the                   other rules on minimum value in the
                                                  discussed again in this preamble.                       current plan year under an HRA that is                proposed regulations.


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                                                                   Federal Register / Vol. 80, No. 243 / Friday, December 18, 2015 / Rules and Regulations                                          78973

                                                  4. Employer Contributions to Cafeteria                  to current employees eligible for                        No changes are made to the final
                                                  Plans (Flex Contributions)                              continuation coverage as a result of                  regulations to reflect these comments.
                                                     The preamble to the section 5000A                    reduced hours. The final regulations do               The rules treat certain individuals as
                                                  proposed regulations requested                          not adopt this suggestion. Eligible                   enrolled as of the first day of the month
                                                  comments on how employer                                employer-sponsored coverage for                       for purposes of the premium tax credit
                                                  contributions under a section 125                       current employees does not present the                to conform with the general rules for
                                                  cafeteria plan (flex contributions) that                same administrability issues as for                   coverage months but do not require
                                                                                                          former employees. Current employees                   issuers to enroll the individuals as of
                                                  employees may not opt to receive as a
                                                                                                          with continuation coverage should be                  the first day of the month. Furthermore,
                                                  taxable benefit should be taken into
                                                                                                          subject to the same general rules on                  HHS regulations published on July 15,
                                                  account in determining an employee’s
                                                                                                          eligibility for employer-sponsored                    2013 (78 FR 42321) removed the rule
                                                  required contribution for purposes of
                                                                                                          coverage as other current employees.                  providing that advance credit payments
                                                  the affordability of coverage. The
                                                                                                          Although employees may be subject to                  do not change until the month following
                                                  section 5000A final regulations
                                                                                                          a higher required contribution for                    a birth or other event for which a
                                                  discussed the comments received and
                                                                                                          continuation coverage than is required                midmonth enrollment is allowed.
                                                  adopted the rule that an employee’s                                                                              Under 45 CFR 155.420(b)(2)(i),
                                                                                                          for other eligible employer-sponsored
                                                  required contribution is reduced by                                                                           Exchanges must ensure that a taxpayer
                                                                                                          coverage, for purposes of the premium
                                                  employer contributions under a section                  tax credit, employees are eligible for                eligible to enroll an individual in
                                                  125 cafeteria plan that (1) may not be                  eligible employer-sponsored coverage                  coverage may choose for the
                                                  taken as a taxable benefit, (2) may be                  only if the coverage is both affordable               individual’s coverage to be effective as
                                                  used to pay for minimum essential                       and provides minimum value. Thus,                     of the individual’s date of birth,
                                                  coverage, and (3) may be used only to                   current employees offered continuation                adoption, or placement for adoption or
                                                  pay for medical care within the meaning                 coverage, like other current employees,               in foster care or as of the first day of the
                                                  of section 213. These final regulations                 may be eligible for the premium tax                   following month. Similarly, for
                                                  adopt this rule for purposes of                         credit if the coverage offered either is              individual’s placed with a taxpayer by
                                                  determining affordability under section                 not affordable or does not provide                    court order, 45 CFR 155.420(b)(2)(v)
                                                  36B.                                                    minimum value.                                        provides that Exchanges must allow the
                                                     For more information on the effect of                                                                      individual’s coverage to be effective as
                                                  flex contributions and other similar                    6. Newborns, Adopted Children, and                    of the date the court order is effective.
                                                  arrangements on affordability for                       Other Individuals Enrolled Midmonth                   Accordingly, the final regulations
                                                  purposes of sections 36B, 5000A, and                       Regulations at 45 CFR 155.420(d)(2)(i)             provide that an individual is treated as
                                                  related consequences under section                      require issuers to provide coverage to a              enrolled as of the first day of the month
                                                  4980H, see Notice 2015–87, released                     newborn child enrolled in a qualified                 of birth, adoption, or placement in
                                                  simultaneously with these final                         health plan effective on the date of                  adoption or foster care if the
                                                  regulations.                                            birth. Under section 36B(c)(2)(A)(i) and              individual’s enrollment is effective as of
                                                  5. Post-Employment Coverage                             § 1.36B–3(c)(1)(i), a month is a coverage             the date of birth, adoption, or placement
                                                                                                          month for an individual only if the                   for adoption or in foster care, or on the
                                                     Section 1.36B–2(c)(3)(iv) provides                   individual is enrolled in a qualified                 effective date of a court order. The final
                                                  that an individual who may enroll in                    health plan through an Exchange as of                 regulations use the term individual
                                                  continuation coverage required under                    the first day of the month. Under                     instead of child to align with HHS
                                                  Federal law or a State law that provides                § 1.36B–3(d), the monthly premium                     regulations relating to midmonth
                                                  comparable continuation coverage is                     assistance amount is determined, in                   enrollments.
                                                  eligible for minimum essential coverage                 part, by the adjusted monthly premium                    The proposed regulations provide that
                                                  only for months that the individual is                  for the applicable second lowest cost                 the adjusted monthly premium is
                                                  enrolled in the coverage. The proposed                  silver (benchmark) plan (benchmark                    determined as if all members of the
                                                  regulations provide that this rule                      plan premium). The proposed                           coverage family for that month were
                                                  applies only to former employees and                    regulations provide that a child enrolled             enrolled in a qualified health plan for
                                                  extend the rule to retiree coverage.                    in a qualified health plan in the month               the entire month. The intent of this rule
                                                  Accordingly, an individual who may                      of the child’s birth, adoption, or                    was to specify that the adjusted monthly
                                                  enroll in retiree coverage is eligible for              placement with the taxpayer for                       premium is determined as of the first
                                                  minimum essential coverage only for                     adoption or in foster care (birth month)              day of a coverage month and is not
                                                  the months the individual is enrolled in                is treated as enrolled as of the first day            prorated for midmonth changes in
                                                  the coverage.                                           of the month.                                         enrollment or eligibility for other
                                                     Commenters opined that the                              Some commenters interpreted the                    minimum essential coverage.
                                                  continuation and retiree coverage rules                 coverage month rule for newborns as                   Accordingly, an individual who enrolls
                                                  should apply to individuals eligible for                requiring that issuers must provide                   midmonth but who is treated as
                                                  the coverage by reason of a relationship                coverage for a newborn as of the first                enrolled as of the first day of the month
                                                  to an employee, for example, the spouse                 day of the month.                                     is a member of the coverage family (if
                                                  of a retired employee. In response to                      Other commenters noted that                        all other requirements are met) in
                                                  these comments, the final regulations                   applying a new adjusted monthly                       determining the adjusted monthly
                                                  clarify that an individual who may                      premium as of the first of the month,                 premium for that month. For other
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                                                  enroll in continuation coverage or                      thus increasing the premium assistance                coverage family changes, the adjusted
                                                  retiree coverage because of a                           amount for the month, is inconsistent                 monthly premium does not change until
                                                  relationship to a former employee is                    with HHS regulations that provide that                the following month. The final
                                                  eligible for the coverage only for the                  the amount of advance credit payments                 regulations clarify these rules by
                                                  months the individual is enrolled in the                (which approximates the premium                       providing that the term coverage family
                                                  coverage.                                               assistance amount) does not change                    means the members of a taxpayer’s
                                                     Commenters suggested that the rule                   until the first day of the month                      family for whom a month is a coverage
                                                  for continuation coverage should apply                  following the birth month.                            month (which requires being enrolled


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                                                  78974            Federal Register / Vol. 80, No. 243 / Friday, December 18, 2015 / Rules and Regulations

                                                  on the first day of the month) and that                 comment on its impact on small                          (3) Premiums paid for a taxpayer.
                                                  the adjusted monthly premium is                         business. No comments were received.                    (4) Examples.
                                                  determined as of the first day of a                                                                             (d) * * *
                                                                                                          Drafting Information                                    (1) In general.
                                                  coverage month.
                                                                                                             The principal authors of these final                 (2) Partial month of coverage.
                                                  7. Partial Months of Coverage                           regulations are Andrew Braden, Arvind                   (i) In general.
                                                     The proposed regulations provide that                Ravichandran, and Stephen J. Toomey                     (ii) Examples.
                                                  the premium assistance amount for a                     of the Office of Associate Chief Counsel              *      *    *     *    *
                                                  coverage month is prorated by the                       (Income Tax and Accounting). However,
                                                  number of days of coverage when a                       other personnel from the IRS and the                  § 1.36B–6    Minimum value.
                                                  qualified health plan is terminated                     Treasury Department participated in                     (a) In general.
                                                  before the last day of a month and the                  their development.                                      (b) MV standard population.
                                                  issuer reduces or refunds a portion of                                                                          (c) MV percentage.
                                                  the monthly premium.                                    List of Subjects in 26 CFR Part 1
                                                                                                                                                                  (1) In general.
                                                     The proposed rule for computing a                      Income taxes, Reporting and                           (2) Wellness program incentives.
                                                  prorated premium assistance amount                      recordkeeping requirements.                             (i) In general.
                                                  has proven to be complex and may be                                                                             (ii) Example.
                                                  difficult to administer. Accordingly, the               Adoption of Amendments to the
                                                                                                          Regulations                                             (3) Employer contributions to health
                                                  final regulations provide that the                                                                            savings accounts.
                                                  premium assistance amount for a                           Accordingly, 26 CFR part 1 is                         (4) Employer contributions to health
                                                  termination month is the lesser of (1)                  amended as follows:                                   reimbursement arrangements.
                                                  the enrollment premiums charged                                                                                 (5) Expected spending adjustments for
                                                  (reduced by any amounts that were                       PART 1—INCOME TAXES
                                                                                                                                                                health savings accounts and health
                                                  refunded) and (2) the difference                        ■ Paragraph 1. The authority citation                 reimbursement arrangements.
                                                  between the benchmark plan premium                      for part 1 continues to read in part as                 (d) Methods for determining MV.
                                                  and contribution amount for the full                    follows:                                                (e) Scope of essential health benefits
                                                  month. The final regulations clarify that                                                                     and adjustment for benefits not
                                                  this computation also applies to a                          Authority: 26 U.S.C. 7805 * * *
                                                                                                                                                                included in MV Calculator.
                                                  month an individual is enrolled in                      ■ Par. 2. Section 1.36B–0 is amended                    (f) Actuarial certification.
                                                  coverage effective on the date of the                   by:                                                     (1) In general.
                                                  individual’s birth, adoption, or                        ■ 1. Revising the introductory text.                    (2) Membership in American
                                                  placement for adoption or in foster care,               ■ 2. Revising the entries for §§ 1.36B–               Academy of Actuaries.
                                                  or on the effective date of a court order.              2(c)(3)(iv) and 1.36B–2(c)(3)(v)(A)(4).                 (3) Actuarial analysis.
                                                  The Treasury Department and the IRS                     ■ 2. Adding entries for §§ 1.36B–                       (4) Use of MV Calculator.
                                                  anticipate publishing rules requiring                   2(c)(3)(v)(A)(5) and (6).                               (g) Effective/applicability date.
                                                  Exchanges to report under section                       ■ 3. Revising the entries for §§ 1.36B–                 (1) In general.
                                                  36B(f)(3) for partial months of coverage                3(c)(2) and (3).                                        (2) Exception.
                                                  the amount of enrollment premiums                       ■ 4. Adding entries for §§ 1.36B–3(c)(4),
                                                                                                                                                                ■ Par. 3. Section 1.36B–1 is amended by
                                                  charged and advance credit payments                     1.36B–3(d)(1) and (2), 1.36B–3(d)(2)(i)
                                                                                                          and (ii) and 1.36B–6.                                 revising paragraphs (e)(1)(i), (e)(1)(ii)(B),
                                                  made for the days of coverage and the                                                                         and (n) to read as follows:
                                                  benchmark plan premium for a full                         The revisions and additions read as
                                                  month of coverage.                                      follows:                                              § 1.36B–1    Premium tax credit definitions.
                                                  Effective/Applicability Date                            § 1.36B–0    Table of contents.                       *       *    *    *     *
                                                                                                             This section lists the captions                       (e) * * *
                                                    These final regulations apply to                                                                               (1) * * *
                                                  taxable years ending after December 31,                 contained in §§ 1.36B–1 through 1.36B–
                                                                                                          6.                                                       (i) A taxpayer’s modified adjusted
                                                  2013.                                                                                                         gross income (including the modified
                                                                                                          *     *     *     *     *
                                                  Special Analyses                                                                                              adjusted gross income of a child for
                                                                                                          § 1.36B–2    Eligibility for premium tax              whom an election under section 1(g)(7)
                                                    Certain IRS regulations, including this
                                                                                                          credit.                                               is made for the taxable year);
                                                  one, are exempt from the requirements
                                                                                                          *     *     *    *   *                                   (ii) * * *
                                                  of Executive Order 12866, as
                                                                                                            (c) * * *                                              (B) Are required to file a return of tax
                                                  supplemented and reaffirmed by
                                                                                                            (3) * * *                                           imposed by section 1 for the taxable
                                                  Executive Order 13563. Therefore, a
                                                                                                            (iv) Post-employment coverage.                      year.
                                                  regulatory impact assessment is not
                                                                                                            (v) * * *                                           *       *    *    *     *
                                                  required. Section 553(b) of the                           (A) * * *
                                                  Administrative Procedure Act (5 U.S.C.                                                                           (n) Rating area. The term rating area
                                                                                                            (4) Wellness program incentives.                    has the same meaning as used in section
                                                  chapter 5) does not apply to these                        (5) Employer contributions to health
                                                  regulations, and, because the regulations                                                                     2701(a)(2) of the Public Health Service
                                                                                                          reimbursement arrangements.                           Act (42 U.S.C. 300gg(a)(2)) and 45 CFR
                                                  do not impose a collection of                             (6) Employer contributions to
                                                  information requirement on small                                                                              147.102(b).
                                                                                                          cafeteria plans.
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                                                  entities, the Regulatory Flexibility Act                                                                      *       *    *    *     *
                                                                                                          *     *     *    *   *
                                                  (5 U.S.C. chapter 6) does not apply.                                                                          ■ Par. 4. Section 1.36B–2 is amended
                                                  Pursuant to section 7805(f) of the                      § 1.36B–3 Computing the premium                       by:
                                                  Internal Revenue Code, the notice of                    assistance credit amount.                             ■ 1. Revising paragraphs (c)(3)(iv) and
                                                  proposed rulemaking that preceded                       *     *     *    *    *                               (c)(3)(v)(A)(4).
                                                  these final regulations was submitted to                  (c) * * *                                           ■ 2. Adding paragraphs (c)(3)(v)(A)(5)
                                                  the Chief Counsel for Advocacy of the                     (2) Certain individuals enrolled                    and (6) and (c)(3)(v)(D), Example 9.
                                                  Small Business Administration for                       during a month.                                       ■ 3. Revising paragraph (c)(3)(vi).



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                                                                   Federal Register / Vol. 80, No. 243 / Friday, December 18, 2015 / Rules and Regulations                                            78975

                                                    The revisions and additions read as                   employee must decide whether to enroll                § 1.36B–3 Computing the premium
                                                  follows:                                                in the eligible employer-sponsored plan.              assistance credit amount.
                                                                                                            (6) Employer contributions to                       *       *    *    *      *
                                                  § 1.36B–2    Eligibility for premium tax                cafeteria plans. Amounts made                            (b) * * *
                                                  credit.
                                                                                                          available for the current plan year under                (2) The term coverage family means,
                                                  *      *     *    *     *                               a cafeteria plan, within the meaning of               in each month, the members of a
                                                     (c) * * *                                            section 125, reduce an employee’s or a                taxpayer’s family for whom the month
                                                     (3) * * *                                            related individual’s required                         is a coverage month.
                                                     (iv) Post-employment coverage. A                     contribution if—                                         (c) * * *
                                                  former employee (including a retiree), or                 (i) The employee may not opt to                        (2) Certain individuals enrolled
                                                  an individual related (within the                       receive the amount as a taxable benefit;              during a month. If an individual enrolls
                                                  meaning of paragraph (c)(3)(i) of this                    (ii) The employee may use the amount                in a qualified health plan and the
                                                  section) to a former employee, who may                  to pay for minimum essential coverage;                enrollment is effective on the date of the
                                                  enroll in eligible employer-sponsored                   and                                                   individual’s birth, adoption, or
                                                  coverage or in continuation coverage                      (iii) The employee may use the                      placement for adoption or in foster care,
                                                  required under Federal law or a State                   amount exclusively to pay for medical                 or on the effective date of a court order,
                                                  law that provides comparable                            care, within the meaning of section 213.              the individual is treated as enrolled as
                                                  continuation coverage is eligible for                   *      *    *     *    *                              of the first day of that month for
                                                  minimum essential coverage under this                     (D) * * *                                           purposes of this paragraph (c).
                                                  coverage only for months that the
                                                  former employee or related individual is                   Example 9. Wellness program incentives.            *       *    *    *      *
                                                                                                          (i) Employer X offers an eligible employer-              (d) Premium assistance amount—(1)
                                                  enrolled in the coverage.                               sponsored plan with a nondiscriminatory
                                                     (v) * * *                                                                                                  In general. Except as provided in
                                                                                                          wellness program that reduces premiums by             paragraph (d)(2) of this section, the
                                                     (A) * * *                                            $300 for employees who do not use tobacco
                                                     (4) Wellness program incentives.                     products or who complete a smoking
                                                                                                                                                                premium assistance amount for a
                                                  Nondiscriminatory wellness program                      cessation course. Premiums are reduced by             coverage month is the lesser of—
                                                  incentives offered by an eligible                       $200 if an employee completes cholesterol                (i) The premiums for the month for
                                                  employer-sponsored plan that affect                     screening within the first six months of the          one or more qualified health plans in
                                                  premiums are treated as earned in                       plan year. Employee B does not use tobacco            which a taxpayer or a member of the
                                                  determining an employee’s required                      and the cost of his premiums is $3,700.               taxpayer’s family enrolls (enrollment
                                                                                                          Employee C uses tobacco and the cost of her           premiums); or
                                                  contribution for purposes of                            premiums is $4,000.
                                                  affordability of an eligible employer-                                                                           (ii) The excess of the adjusted
                                                                                                             (ii) Under paragraph (c)(3)(v)(A)(4) of this
                                                  sponsored plan to the extent the                                                                              monthly premium for the applicable
                                                                                                          section, only the incentives related to tobacco
                                                  incentives relate exclusively to tobacco                use are counted toward the premium amount             benchmark plan (benchmark plan
                                                  use. Wellness program incentives that                   used to determine the affordability of X’s            premium) over 1/12 of the product of a
                                                  do not relate to tobacco use or that                    plan. C is treated as having earned the $300          taxpayer’s household income and the
                                                  include a component unrelated to                        incentive for attending a smoking cessation           applicable percentage for the taxable
                                                  tobacco use are treated as not earned for               course regardless of whether C actually               year (the taxpayer’s contribution
                                                                                                          attends the course. Thus, the required                amount).
                                                  this purpose. For purposes of this                      contribution for determining affordability for
                                                  section, the term wellness program                                                                               (2) Partial month of coverage—(i) In
                                                                                                          both Employee B and Employee C is $3,700.             general. If a qualified health plan is
                                                  incentive has the same meaning as the                   The $200 incentive for completing
                                                  term reward in § 54.9802–1(f)(1)(i) of                  cholesterol screening is treated as not earned        terminated before the last day of a
                                                  this chapter.                                           and does not reduce their required                    month or an individual is enrolled in
                                                     (5) Employer contributions to health                 contribution.                                         coverage effective on the date of the
                                                  reimbursement arrangements. Amounts                                                                           individual’s birth, adoption, or
                                                                                                             (vi) Minimum value. See § 1.36B–6 for
                                                  newly made available for the current                                                                          placement for adoption or in foster care,
                                                                                                          rules for determining whether an
                                                  plan year under a health reimbursement                                                                        or on the effective date of a court order,
                                                                                                          eligible employer-sponsored plan
                                                  arrangement that an employee may use                                                                          the premium assistance amount for the
                                                                                                          provides minimum value.
                                                  to pay premiums, or may use to pay                                                                            month is the lesser of—
                                                                                                          *      *       *     *     *                             (A) The enrollment premiums for the
                                                  cost-sharing or benefits not covered by
                                                                                                          ■ Par. 5. Section 1.36B–3 is amended                  month (not including any amounts that
                                                  the primary plan in addition to
                                                  premiums, reduce the employee’s                         by:                                                   were refunded); or
                                                                                                          ■ 1. Revising paragraph (b)(2).                          (B) The excess of the benchmark plan
                                                  required contribution if the health                     ■ 2. Redesignating paragraphs (c)(2) and
                                                  reimbursement arrangement would be                                                                            premium for a full month of coverage
                                                                                                          (3) as paragraphs (c)(3) and (4) and                  over the full contribution amount for the
                                                  integrated, as that term is used in Notice              adding paragraph (c)(2).
                                                  2013–54 (2013–40 IRB 287) (see                                                                                month.
                                                                                                          ■ 3. Revising paragraph (d).
                                                  § 601.601(d) of this chapter), with an                                                                           (ii) Examples. The following
                                                                                                          ■ 4. Adding a sentence to the end of
                                                  eligible employer-sponsored plan for an                                                                       examples illustrate the rules of this
                                                                                                          paragraph (e).
                                                  employee enrolled in the plan. The                                                                            paragraph (d)(2).
                                                                                                          ■ 5. Revising paragraphs (f)(4), (g)(2),
                                                  eligible employer-sponsored plan and                    and (j)(1) and (3).                                      Example 1. (i) Taxpayer R is single and
                                                  the health reimbursement arrangement                    ■ 6. Removing the language ‘‘(d)(1)’’                 has no dependents. R enrolls in a qualified
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                                                  must be offered by the same employer.                   everywhere it appears in paragraphs (h),              health plan with a monthly premium of $450.
                                                  Employer contributions to a health                      (j), and (k), and adding the language                 The difference between R’s benchmark plan
                                                  reimbursement arrangement reduce an                                                                           premium and contribution amount for the
                                                                                                          ‘‘(d)(1)(i)’’ in its place and removing the           month is $420. R’s premium assistance
                                                  employee’s required contribution only                   language ‘‘(d)(2)’’ everywhere it appears             amount for a coverage month with a full
                                                  to the extent the amount of the annual                  in paragraphs (h) and (j) and adding the              month of coverage is $420 (the lesser of $450
                                                  contribution is required under the terms                language ‘‘(d)(1)(ii)’’ in its place.                 and $420).
                                                  of the plan or otherwise determinable                      The revisions and additions read as                   (ii) The issuer of R’s qualified health plan
                                                  within a reasonable time before the                     follows:                                              is notified that R died on September 20. The



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                                                  78976                  Federal Register / Vol. 80, No. 243 / Friday, December 18, 2015 / Rules and Regulations

                                                  issuer terminates coverage as of that date and                           September. Under this paragraph (d)(2), R’s                               determined as of the first day of the
                                                  refunds the remaining portion of the                                     premium assistance amount for September is                                month.
                                                  September enrollment premiums ($150) for                                 $420, the lesser of $450 and $420.                                           (f) * * *
                                                  R’s coverage.                                                               Example 3. The facts are the same as in
                                                     (iii) Under this paragraph (d)(2), R’s
                                                                                                                                                                                                        (4) Family members residing at
                                                                                                                           Example 1 of this paragraph (d)(2)(ii), except                            different locations. The benchmark plan
                                                  premium assistance amount for September is                               that the difference between R’s benchmark
                                                  the lesser of the enrollment premiums for the                                                                                                      premium determined under paragraphs
                                                                                                                           plan premium and contribution amount for a                                (f)(1) and (2) of this section for family
                                                  month ($300 ($450—$150)) or the difference
                                                  between the benchmark plan premium for a                                 month is $275. Accordingly, R’s premium                                   members who live in different States
                                                  full month of coverage and the full                                      assistance amount for a coverage month with                               and enroll in separate qualified health
                                                  contribution amount for the month ($420).                                a full month of coverage is $275 (the lesser                              plans is the sum of the premiums for the
                                                  R’s premium assistance amount for                                        of $450 and $275). Under this paragraph
                                                                                                                                                                                                     applicable benchmark plans for each
                                                  September is $300, the lesser of $420 and                                (d)(2), R’s premium assistance amount for
                                                  $300.
                                                                                                                                                                                                     group of family members living in the
                                                                                                                           September remains $275, the lesser of $300
                                                                                                                                                                                                     same State.
                                                     Example 2. The facts are the same as in                               and $275.
                                                  Example 1 of this paragraph (d)(2)(ii), except                                                                                                     *      *     *     *     *
                                                  that the qualified health plan issuer does not                             (e) * * * The adjusted monthly                                             (g) * * *
                                                  refund any enrollment premiums for                                       premium for a coverage month is                                              (2) Applicable percentage table.

                                                                                                                                                                                                                              Initial       Final
                                                                                            Household income percentage of Federal poverty line                                                                            percentage    percentage

                                                  Less than 133% .......................................................................................................................................................           2.0           2.0
                                                  At least 133% but less than 150% ..........................................................................................................................                      3.0           4.0
                                                  At least 150% but less than 200% ..........................................................................................................................                      4.0           6.3
                                                  At least 200% but less than 250% ..........................................................................................................................                      6.3          8.05
                                                  At least 250% but less than 300% ..........................................................................................................................                     8.05           9.5
                                                  At least 300% but not more than 400% ..................................................................................................................                          9.5           9.5



                                                  *      *      *    *     *                                               coverage month is $335, the lesser of $335                                program incentives offered by an
                                                     (j) Additional benefits—(1) In general.                               (B’s enrollment premiums, reduced by the                                  eligible employer-sponsored plan that
                                                  If a qualified health plan offers benefits                               portion of the premium allocable to                                       affect deductibles, copayments, or other
                                                  in addition to the essential health                                      additional benefits) and $340 (B’s benchmark
                                                                                                                           plan premium, reduced by the portion of the
                                                                                                                                                                                                     cost-sharing are treated as earned in
                                                  benefits a qualified health plan must                                    premium allocable to additional benefits                                  determining the plan’s MV percentage if
                                                  provide under section 1302 of the                                        ($400), minus B’s $60 contribution amount).                               the incentives relate exclusively to
                                                  Affordable Care Act (42 U.S.C. 18022),                                     Example 2. The facts are the same as in                                 tobacco use. Wellness program
                                                  or a State requires a qualified health                                   Example 1 of this paragraph (j)(3), except that                           incentives that do not relate to tobacco
                                                  plan to cover benefits in addition to                                    the plan in which B enrolls provides no                                   use or that include a component
                                                  these essential health benefits, the                                     benefits in addition to the essential health                              unrelated to tobacco use are treated as
                                                  portion of the premium for the plan                                      benefits required to be provided by the plan.
                                                                                                                                                                                                     not earned for this purpose. For
                                                                                                                           Thus, under paragraph (j) of this section, B’s
                                                  properly allocable to the additional                                                                                                               purposes of this section, the term
                                                                                                                           benchmark plan premium ($440) is reduced
                                                  benefits is excluded from the monthly                                    by the portion of the premium allocable to                                wellness program incentive has the
                                                  premiums under paragraph (d)(1)(i) or                                    additional benefits provided under that plan                              same meaning as the term reward in
                                                  (ii) of this section. Premiums are                                       ($40). B’s enrollment premiums ($370) are                                 § 54.9802–1(f)(1)(i) of this chapter.
                                                  allocated to additional benefits before                                  not reduced under this paragraph (j). B’s                                    (ii) Example. The following example
                                                  determining the applicable benchmark                                     premium assistance amount for a coverage                                  illustrates the rules of this paragraph
                                                  plan under paragraph (f) of this section.                                month is $340, the lesser of $370 (B’s                                    (c)(2):
                                                                                                                           enrollment premiums) and $340 (B’s
                                                  *      *      *    *     *                                               benchmark plan premium, reduced by the                                       Example. (i) Employer X offers an eligible
                                                     (3) Examples. The following examples                                  portion of the premium allocable to                                       employer-sponsored plan that reduces the
                                                  illustrate the rules of this paragraph (j):                              additional benefits ($400), minus B’s $60                                 deductible by $300 for employees who do not
                                                     Example 1. (i) Taxpayer B enrolls in a                                contribution amount).                                                     use tobacco products or who complete a
                                                  qualified health plan that provides benefits                             *     *     *    *     *                                                  smoking cessation course. The deductible is
                                                  in addition to essential health benefits                                                                                                           reduced by $200 if an employee completes
                                                                                                                           ■ Par. 6. Section 1.36B–6 is added to                                     cholesterol screening within the first six
                                                  (additional benefits). The monthly premiums
                                                  for the plan in which B enrolls are $370, of                             read as follows:                                                          months of the plan year. Employee B does
                                                  which $35 is allocable to additional benefits.                                                                                                     not use tobacco and his deductible is $3,700.
                                                                                                                           § 1.36B–6          Minimum value.
                                                  B’s benchmark plan premium (determined                                                                                                             Employee C uses tobacco and her deductible
                                                  after allocating premiums to additional                                    (a) In general. An eligible employer-                                   is $4,000.
                                                  benefits for all silver level plans) is $440, of                         sponsored plan provides minimum                                              (ii) Under paragraph (c)(2)(i) of this
                                                  which $40 is allocable to additional benefits.                           value (MV) only if—                                                       section, only the incentives related to tobacco
                                                  B’s monthly contribution amount, which is                                   (1) The plan’s share of the total                                      use are considered in determining the plan’s
                                                  the product of B’s household income and the                              allowed costs of benefits provided to an                                  MV percentage. C is treated as having earned
                                                  applicable percentage, is $60.                                           employee (the MV percentage) is at least                                  the $300 incentive for attending a smoking
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                                                     (ii) Under this paragraph (j), B’s enrollment                         60 percent; and                                                           cessation course regardless of whether C
                                                  premiums and the benchmark plan premium                                     (2) [Reserved]                                                         actually attends the course. Thus, the
                                                  are reduced by the portion of the premium                                                                                                          deductible for determining for the MV
                                                  that is allocable to the additional benefits
                                                                                                                              (b) MV standard population.
                                                                                                                                                                                                     percentage for both Employees B and C is
                                                  provided under that plan. Therefore, B’s                                 [Reserved]
                                                                                                                                                                                                     $3,700. The $200 incentive for completing
                                                  monthly enrollment premiums are reduced to                                  (c) MV percentage—(1) In general.
                                                                                                                                                                                                     cholesterol screening is disregarded.
                                                  $335 ($370 ¥ $35) and B’s benchmark plan                                 [Reserved]
                                                  premium is reduced to $400 ($440 ¥ $40).                                    (2) Wellness program incentives—(i)                                      (3) Employer contributions to health
                                                  B’s premium assistance amount for a                                      In general. Nondiscriminatory wellness                                    savings accounts. Employer


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                                                                   Federal Register / Vol. 80, No. 243 / Friday, December 18, 2015 / Rules and Regulations                                         78977

                                                  contributions for the current plan year                 on or before the due date for the return              Federal Register notice, as well as news
                                                  to health savings accounts that are                     (including extensions of time for filing).            releases and other relevant information,
                                                  offered with an eligible employer-                      *     *    *     *    *                               also are available at OSHA’s Web page
                                                  sponsored plan are taken into account                                                                         at http://www.osha.gov.
                                                  for that plan year towards the plan’s MV                John Dalrymple,
                                                  percentage.                                             Deputy Commissioner for Services and                  FOR FURTHER INFORMATION CONTACT:    For
                                                     (4) Employer contributions to health                 Enforcement.                                          press inquiries: Francis Meilinger,
                                                  reimbursement arrangements. Amounts                       Approved: December 11, 2015                         Director, OSHA Office of
                                                  newly made available for the current                    Mark J. Mazur,                                        Communications, Room N–3647, U.S.
                                                  plan year under a health reimbursement                  Assistant Secretary of the Treasury (Tax              Department of Labor, 200 Constitution
                                                  arrangement that would be integrated                    Policy).                                              Avenue NW., Washington, DC 20210;
                                                  within the meaning of Notice 2013–54                    [FR Doc. 2015–31866 Filed 12–16–15; 4:15 pm]          telephone: (202) 693–1999; email:
                                                  (2013–40 IRB 287), see § 601.601(d) of                  BILLING CODE 4830–01–P                                meilinger.francis2@dol.gov.
                                                  this chapter, with an eligible employer-                                                                         For general and technical
                                                  sponsored plan for an employee                                                                                information: Douglas J. Kalinowski,
                                                  enrolled in the plan are taken into                     DEPARTMENT OF LABOR                                   Director, OSHA Directorate of
                                                  account for that plan year towards the                                                                        Cooperative and State Programs, Room
                                                  plan’s MV percentage if the amounts                     Occupational Safety and Health                        N–3700, U.S. Department of Labor, 200
                                                  may be used to reduce only cost-sharing                 Administration                                        Constitution Avenue NW., Washington,
                                                  for covered medical expenses. A health                                                                        DC 20210; telephone: (202) 693–2200;
                                                  reimbursement arrangement counts                        29 CFR Parts 1902, 1903, 1904, 1952,                  email: kalinowski.doug@dol.gov.
                                                  toward a plan’s MV percentage only if                   1953, 1954, 1955, and 1956
                                                  the health reimbursement arrangement                                                                          SUPPLEMENTARY INFORMATION:
                                                  and the eligible employer-sponsored                     [Docket No. OSHA–2014–0009]                           Confirmation of the effective date: On
                                                  plan are offered by the same employer.                  RIN 1218–AC76                                         August 18, 2015, OSHA published a
                                                  Employer contributions to a health                                                                            direct final rule in the Federal Register
                                                  reimbursement arrangement count for a                   Streamlining of Provisions on State                   amending OSHA regulations to remove
                                                  plan year towards the plan’s MV                         Plans for Occupational Safety and                     the detailed descriptions of State Plan
                                                  percentage only to the extent the                       Health                                                coverage, purely historical data, and
                                                  amount of the annual contribution is                                                                          other unnecessarily codified
                                                  required under the terms of the plan or                 AGENCY:   Occupational Safety and Health
                                                                                                          Administration (OSHA), Department of                  information. In addition, this document
                                                  otherwise determinable within a                                                                               moved most of the general provisions of
                                                  reasonable time before the employee                     Labor.
                                                                                                          ACTION: Final rule; confirmation of
                                                                                                                                                                subpart A of part 1952 into part 1902,
                                                  must decide whether to enroll in the                                                                          where the general regulations on State
                                                  eligible employer-sponsored plan.                       effective date; approval of collections of
                                                                                                          information under the Paperwork                       Plan criteria are found. It also amended
                                                     (5) Expected spending adjustments for
                                                                                                          Reduction Act of 1995.                                several other OSHA regulations to
                                                  health savings accounts and health
                                                                                                                                                                delete references to part 1952, which
                                                  reimbursement arrangements.
                                                                                                          SUMMARY:    On August 18, 2015 OSHA                   will no longer apply. A companion
                                                  [Reserved]
                                                                                                          published in the Federal Register a                   proposed rule was also published on
                                                     (d) Methods for determining MV.
                                                                                                          direct final rule that streamlined                    that date.
                                                  [Reserved]
                                                                                                          provisions on State Plans. OSHA stated                   In the direct final rule, OSHA stated
                                                     (e) Scope of essential health benefits
                                                                                                          in that document that it would
                                                  and adjustment for benefits not                                                                               that it would publish a Federal Register
                                                                                                          withdraw the companion proposed rule
                                                  included in MV Calculator. [Reserved]                                                                         document confirming the effective date
                                                                                                          and confirm the effective date of the
                                                     (f) Actuarial certification. [Reserved]              final rule if the Agency received no                  of the direct final rule and withdraw the
                                                     (1) In general. [Reserved]                           significant adverse comments on the                   proposed rule if it received no
                                                     (2) Membership in American                           direct final rule or the proposal. Since              significant adverse comments on the
                                                  Academy of Actuaries. [Reserved]                        OSHA received no comments on the                      direct final rule or the proposal. OSHA
                                                     (3) Actuarial analysis. [Reserved]                   direct final rule or the proposal, the                received no comments on the direct
                                                     (4) Use of MV Calculator. [Reserved]                 Agency now confirms that the direct                   final rule or the proposed rule.
                                                     (g) Effective/applicability date—in                  final rule became effective as a final rule           Accordingly, OSHA is confirming the
                                                  general. (1) Except as provided in                      on October 19, 2015. The proposed rule                effective date of the direct final rule and
                                                  paragraph (g)(2) of this section, this                  and the direct final rule also requested              the proposed rule is withdrawn.
                                                  section applies for taxable years ending                comments on the collections of                           Approval of collections of
                                                  after December 31, 2013.                                information contained in State Plan                   information: The proposed rule and the
                                                     (2) Exception. [Reserved]                            regulations under the Paperwork                       direct final rule also contained a request
                                                  ■ Par. 7. Section 1.6011–8 is amended                   Reduction Act of 1995. The Office of                  for comments on an Information
                                                  by revising paragraph (a) to read as                    Management and Budget (OMB)                           Collection Request under the Paperwork
                                                  follows:                                                approved those collections of                         Reduction Act of 1995 (PRA), which
                                                                                                          information.
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                                                  § 1.6011–8 Requirement of income tax                                                                          covers all collections of information in
                                                  return for taxpayers who claim the premium              DATES:  The effective date for the direct             OSHA State Plan regulations. OMB
                                                  tax credit under section 36B.                           final rule that published on August 18,               received no comments. OMB has
                                                    (a) Requirement of return. A taxpayer                 2015 (80 FR49897) is confirmed as                     approved the revised collections of
                                                  for whom advance payments of the                        October 19, 2015.                                     information and is retaining OMB
                                                  premium tax credit under section 36B                    ADDRESSES: Electronic copies of this                  control number 1218–0247 for these
                                                  are made in a taxable year must file an                 Federal Register notice are available at              requirements. The expiration date for
                                                  income tax return for that taxable year                 http://www.regulations.gov. This                      the approval is April 30, 2016.


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Document Created: 2015-12-18 01:38:14
Document Modified: 2015-12-18 01:38:14
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionRules and Regulations
ActionFinal regulations.
ContactFor general questions on the premium tax credit, Shareen Pflanz, (202) 317-4718; for minimum value, Andrew Braden, (202) 317-7006 (not toll-free numbers).
FR Citation80 FR 78971 
RIN Number1545-BL43
CFR AssociatedIncome Taxes and Reporting and Recordkeeping Requirements

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