The IRS issued proposed regulations for determining whether an eligible employer-sponsored health plan provides minimum value for purposes of the Sec. 36B health insurance premium tax credit (REG-125398-12). Individuals do not receive the credit if they are eligible for affordable coverage under an eligible employer-sponsored plan that provides minimum value. Employers whose employees receive the health insurance premium tax credit may be liable for the Sec. 4980H "assessable payment."
When the final regulations for Sec. 36B were issued in May 2012, they did not cover the definition of minimum value; the IRS requested comments on that issue (T.D. 9590; Notice 2012-31). The comments the IRS received were considered in drafting the proposed rules.
Prop. Regs. Sec. 1.36B-6(a) states that a plan provides minimum value only if the plan's share of the total allowed costs of benefits provided to an employee is at least 60%. Minimum value may be calculated using one of four methods: (1) the minimum value calculator provided by the IRS and the Department of Health and Human Services (HHS) (calculated with adjustments provided in the regulations); (2) one of the safe harbors established by the IRS and HHS (generally plans that provide certain benefits within specified co-pay, deductible, and cost-sharing limits); (3) actuarial certification for nonstandard plans; or (4) for plans in the small group market (employers with a maximum of 100 employees or, in years before 2016, in states that elect, 50 employees), conforming with a level of coverage defined in 45 C.F.R. Section 156.140(b) (bronze, silver, gold, or platinum).
The proposed regulations also explain how wellness incentives (where a premium or other cost is reduced to encourage certain behaviors) are included in calculating minimum value. If the...