In December of 2015, the Internal Revenue Service (IRS) issued final regulations that addressed some of the questions pertaining to whether employer sponsored health insurance meets the Patient Protection and Affordable Care Act minimum value requirements. Amongst a variety of miscellaneous items pertaining to minimum value, the final regulations clarify the impact of a health reimbursement arrangement (HRA) on affordability. The regulations also clarify some of the rules regarding eligibility for the health insurance premium tax credit.
Under the final regulations, the new amounts made available by an employer to an employee in a HRA that can be used to pay health insurance premiums, when the employer also offers qualifying health coverage, will be counted towards affordability. Similarly, if the new amounts are available to an employee in a HRA integrated with qualified employer coverage, and the new amount can only be used to reduce cost-sharing, that new amount will be counted for minimum value purposes.
The health insurance premium tax credit had rules finalized in the same regulations. One rule includes the eligibility of a household that has income from a child. The premium tax credit is based on household income and when a parent includes a child’s income on their income tax return for tax credit eligibility purposes, the amount used is the child’s modified adjusted gross income, not the gross income reported on the child’s tax return.
The final regulations also addressed the impact of wellness incentives on the health insurance premium tax credit. The regulations clarify that wellness incentives that reduce the cost of health insurance premiums to an employee will not be included in the calculation for minimum value or affordability, instead the regulations assume the employee will not qualify for the incentive. This rule has one exception, which is if the incentive is based on tobacco use. If so, the regulations assume that the employee will qualify for the incentive and the incentive can be used in the minimum value and affordability calculation. Thus, only tobacco use wellness incentives can be used in the minimum value and affordability calculation for purposes of premium tax credit eligibility.
Overall, a variety of miscellaneous rules regarding health insurance were finalized in the regulation. The entirety of the IRS regulation can be found at the following link: https://www.federalregister.gov/articles/2015/12/18/2015-31866/minimum-value-of-eligible-employer-sponsored-plans-and-other-rules-regarding-the-health-insurance
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