Welcome to the Illinois Health Matters Blog

What health reform means for the people of Illinois

A blog by IllinoisHealthMatters.org

Tuesday, February 19, 2013

IRS Issues Guidance on Health Insurance Premium Tax Credit - Clarification

The IRS issued a final regulations on when an employer-sponsored plan is considered "affordable" for an individual related to the employee for purposes of eligibility for a premium tax credit. Under Health Care Reform, employees may be eligible for a premium tax credit to purchase health insurance through the future health insurance exchanges if, among other reasons, the employer plan is deemed unaffordable.

The final regulations clarify that for taxable years beginning before January 1, 2015, an eligible employer-sponsored plan is affordable for related individuals if the portion of the annual premium the employee must pay for self-only coverage does not exceed 9.5% of the taxpayer's household income.

An employer plan will be affordable for family members if the cost of self-only coverage does not exceed 9.5% of the employee's household income. In other words, for purposes of whether family members are eligible for tax credits, the affordability of family coverage is not taken into account; all that matters is that the cost of self-only coverage is affordable to the employee

For purposes of applying the affordability exemption from the individual mandate in the case of related individuals, the required contribution is based on the premium the employee would pay for employer-sponsored family coverage.

For an employee eligible under an employer plan, affordability (for individual mandate exemption purposes) will be based on whether the cost of self-only coverage exceeds 8% of the employee's household income. For a related individual (such as a spouse or child), however, affordability for this purpose will be based on whether the cost of family coverage exceeds 8% of household income. Under these rules, members of an employee's family may qualify for an individual mandate exemption, even though the offer of affordable employer coverage to the employee would require the employee to enroll or risk paying a penalty.

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

For a copy of the final regulations, please click here.

This post originally appeared on February 5, 2013, on the Robert Slayton & Associates, Inc. blog. By Larry Grudzien, Attorney-At-Law

8 comments:

  1. Tax law is complicated, but those who hire good tax attorney can save much money. Your articles are very helpful for those who eager to understand taxation issues. I think, that there are lots of tax lawyers you may advice to people. All of them can submit contacts to Attorney Directory, for example to the section of Illinois tax attorneys they also can promote legal services by publishing blog posts and legal news on Attorney Online.

    ReplyDelete
  2. With health care coverage and insurance, this possibility can be avoided, as the medical bills are paid through the insurance company.
    health insurance exchange

    ReplyDelete
  3. Nice post. I read total Post. It’s really nice. Thank you for sharing.........

    Religare Health Insurance

    ReplyDelete
  4. Thanks for sharing. Tax laws can definitely be confusing because most of the terms are jargon that only a lawyer or tax professional could understand. That's why I don't do my own taxes, I seek irs tax help from experienced professionals.

    ReplyDelete
  5. Hi...................
    I have visited your post and found some information which is very important for me.So, please keep posting.


    Tax Lawyer

    ReplyDelete
  6. This comment has been removed by the author.

    ReplyDelete
  7. Great post on IRS insurance guidelines here. Just wanted to mention that if anyone is looking for the best home insurance information I would recommend taking a look at the Marchionne Insurance website. These guys are the authority when it comes to insurance in Malden MA and the surrounding areas.

    - Jacks

    ReplyDelete