The final regulations apply for tax years beginning after December 31, 2013.
Read the final regulations [PDF 83 KB]
Separately, today, Treasury and the IRS released proposed regulations (REG-148500-12) concerning the requirement to maintain minimum essential health insurance coverage, and guidance on liability for a “shared responsibility” payment for failing to maintain minimum essential coverage.
Read the proposed regulations [PDF 196 KB]
Final, proposed regulations
Regulations proposed in August 2011 were finalized in May 2012, but reserved a rule for determining affordability of employer-sponsored coverage for related individuals.
The IRS and Treasury received written comments and held a public hearing concerning this issue, and today’s final regulations adopt the proposed rule “without change.”
Thus, for tax years beginning before January 1, 2015, an eligible employer-sponsored plan is affordable for related individuals if the portion of the annual premium the employee must pay for self-only coverage (the required contribution percentage) does not exceed 9.5% of the taxpayer’s household income.
The affordability test for related individuals is based on the cost of self-only coverage. Section 5000A—which establishes the shared responsibility payment applicable to individuals for failure to maintain minimum essential coverage—addresses affordability for employees in section 5000A(e)(1)(B) and, separately, for related individuals in section 5000A(e)(1)(C).
Today’s proposed regulations under section 5000A provide that for purposes of applying the affordability exemption from the shared responsibility payment in the case of related individuals, the required contribution is based on the premium the employee would pay for employer-sponsored family coverage.
The final and proposed regulations will be published in the Federal Register on Friday, February 1, 2013. Comments concerning the proposed regulations are due 90 days after their publication in the Federal Register. Outlines of topics to be discussed at the public hearing (scheduled for May 29, 2013) are due by May 3, 2013.