The Internal Revenue Service (IRS) has begun drafting program details in “Health Insurance Premium Tax Credit draft regulations, that are intended to help individuals when they buy minimum essential health coverage in 2014. Set to appear in the Federal Register on August 17th, below are some of the details:
- Proposed regulations apply to taxable years ending after December 31, 2013 and would implement sections of PPACA that are supposed to create a new, health insurance exchange distribution system and a refundable premium tax credit that can be used to buy health insurance.
- A hearing is expected to be held on November 17th by the IRS.
- The U.S. Department of Health and Human Services (HHS) released a second draft of regulations regarding exchange eligibility procedures and standards.
- Most legal U.S. residents that had incomes under 100% of the federal poverty level would get free coverage under Medicaid or another government program.
- The new refundable tax credit requires a taxpayer to have an annual household income between 100% and 400% of federal poverty level.
- Exemptions from coverage ownership would require a taxpayer to show that the cost of paying for the minimum level of coverage surpasses 8% of their income. Religious exemptions for organizations are included in the draft regulations.
- An employee eligible for an employer-sponsored plan could buy exchange coverage instead if the individual can show that the plan would cost more than 9.5% of the worker’s household income.
- Under the “safe harbor” regulation, employees are protected for the course of the tax year from paying large tax bills should their situation or eligibility change.
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