Guidance Affects ACA’s Premium Tax Credit & Individual Mandate Provisions
Consistent with prior guidance, the Internal Revenue Service (IRS) has announced adjustments to the required contribution percentages that will be used in 2018 to determine whether an individual is eligible for a premium tax credit and an affordability exemption from the individual shared responsibility provisions (the “individual mandate”).
Premium Tax Credit Eligibility
An individual may be eligible for a premium tax credit to purchase health coverage through the Health Insurance Marketplace (Exchange) if, among other things, he or she is not able to get affordable coverage through an eligible employer plan that provides minimum value. For this purpose, an employer-sponsored plan will be considered affordable for plan years beginning in 2018 if the portion of the annual premium an employee must pay for self-only coverage does not exceed 9.56% of his or her household income.
Individual Mandate Affordability Exemption
The individual mandate requires every individual to have minimum essential health coverage for each month, qualify for an exemption, or make a payment when filing his or her federal income tax return. One such exemption applies when the individual cannot afford coverage because the minimum amount he or she must pay for the premiums is more than a designated percentage of the individual’s household income. For plan years beginning in 2018, the designated percentage will be 8.05%.
Click here to read the IRS announcement.
Check out our Premium Tax Credit for Individuals and Individual Mandate (Individual Shared Responsibility) sections for additional information regarding eligibility.
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Please Note: The information and materials herein are provided for general information purposes only and are not intended to constitute legal or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy. In accordance with IRS Circular 230, this communication is not intended or written to be used, and cannot be used as or considered a ‘covered opinion’ or other written tax advice and should not be relied upon for any purpose other than its intended purpose.
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