Daily Tax Update - December 14, 2016: Treasury, IRS Issue Final Regulations on Health Insurance Premium Tax Credit

Treasury, IRS Issue Final Regulations on Health Insurance Premium Tax Credit:  Today, the IRS and Treasury issued final regulations (TD 9804) relating to the health insurance premium tax credit under section 36B.  The final regulations affect 1) individuals who enroll in qualified health plans through Health Insurance Exchanges (Exchanges) and claim the premium tax credit, and 2) Exchanges that make qualified health plans available to individuals and employers.  The final regulations adopt, in part, proposed regulations published in July and become effective December 19. 

The final regulations expand the intentional or reckless disregard for the facts exception to the section 36B safe harbor for household income below 100% of the federal poverty level.  The preamble to the final regulations clarifies that the intentional or reckless disregard for the facts exception applies only when the taxpayer knowingly provides inaccurate information to the Exchange or makes little or no effort to determine whether the information provided is accurate under a reasonable person standard. 

The proposed regulations contained rules on the effect of payments made available under opt-out arrangements on an employee’s required contribution for purposes of eligibility for the premium tax credit.  The final regulations do not address this issue and indicate that Treasury and the IRS continue to examine the issues raised by opt-out arrangements.