Overview of Final Regulations on Health Insurance Premium Tax Credit

On May 18, 2012, the Internal Revenue Service (IRS) finalized regulations related to health insurance premium tax credits authorized by the Affordable Care Act (ACA) for certain lower-income individuals who enroll in qualified health plans (QHPs) through Exchanges. The tax credit regulations--companion guidance to the Exchange and Medicaid eligibility regulations--finalize policies on eligibility for premium tax credits; provide additional operational details on the calculation of premium tax credits; and clarify and provide additional scenarios on application of these policies.

In response to comments on the proposed rule suggesting that premium tax credits may not be available to those individuals who enroll through Federally-facilitated Exchanges (FFE), the preamble to the final rule confirms the availability of premium tax credits to individuals who enroll in QHPs through any of the Exchange models – State-based Exchanges, Partnership Exchanges and FFEs.

This brief, prepared by Manatt Health Solutions, provies a walkthrough of the major takeaways from the tax regulations as well as expected future guidance.

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