HEALTH CARE AFFORDABILITY TEST FOR FAMILIES
November 29, 2022 - Douglas Myser
Health care affordability test for families. The IRS in regulation 114339-21, issued final regulations for the affordability test for families, which were the same as the Final Regulations they passed in April of ii2022. It is an affordability test for employer sponsored minimum essential coverage for the Section 36B premium tax credit, which has to consider the cost of covering an employer's family members in addition to that of the employee. This fixes the problem with the 2013 regulations that based the affordability on employee only coverage regardless of the fact the coverage was intended for the employee's family as well. When issued initially, the IRS and Treasury stated they were limited to a particular reading of the statute involved, which was used due to what was described as minimal coverage, as interpreted by the Congress ruling in its legislation. Health care affordability test for families.
That all changed when in 2021, and order by President Biden moved the Treasury to review regulations and agency actions for consistency with the 2010 Patient Protection and Affordable Care Act, which had sections 36B and 5000A, which ultimately changed the view of both the IRS and Treasury. The review led them to propose a solution, which was determining eligibility for a premium tax credit, the affordability of an employer coverage for related individuals in an employer's family is determined based on the cost of coverage the employee and those individuals, not only the employee.
This ruling came down to the recognition that although an employee's required contribution to the cost of the coverage, it also has a special rule that includes related individuals, that being the family members of the covered employee. Knowing which health care deductions you are able to take on a tax return, is part of a good Tax Resolution Services strategy. The IRS and Treasury had an open period for comments by the public, and the large percentage related to it being needed, as employees did not have the ability to include family members on their own.