Minimum Essential Coverage and Other Rules Regarding the Shared Responsibility Payment for Individuals, 70464-70470 [2014-27998]
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70464
Federal Register / Vol. 79, No. 228 / Wednesday, November 26, 2014 / Rules and Regulations
Security has authority to regulate the
boarding of vessels. The Secretary of
Homeland Security has designated the
Commissioner of U.S. Customs and
Border Protection as the signatory on
this technical amendment.
DEPARTMENT OF THE TREASURY
List of Subjects in 19 CFR Part 4
RIN 1545–BL91
Customs duties and inspection,
Exports, Freight, Harbors, Maritime
carriers, Reporting and recordkeeping
requirements, Vessels.
Minimum Essential Coverage and
Other Rules Regarding the Shared
Responsibility Payment for Individuals
For the reasons stated in the
preamble, part 4 of title 19 of the Code
of Federal Regulations is amended as set
forth below:
PART 4—VESSELS IN FOREIGN AND
DOMESTIC TRADES
1. The general authority citation for
part 4 continues and the specific
authority citation for § 4.1 is revised to
read as follows:
■
Authority: 5 U.S.C. 301; 19 U.S.C. 66,
1431, 1433, 1434, 1624, 2071 note; 46 U.S.C.
70105.
Section 4.1 also issued under 19 U.S.C.
1581(a); 46 U.S.C. 60101; 46 U.S.C. 70105.
*
*
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2. Section 4.1 is amended as follows:
■ a. Revise the section heading;
■ b. Amend paragraphs (a) and (b) by
removing the word ‘‘Customs’’ and
adding in its place ‘‘CBP’’, except where
the word ‘‘Customs’’ is followed by the
word ‘‘territory’’ or ‘‘formality’’, and
where the word ‘‘Customs’’ is followed
by the word ‘‘territory’’ or ‘‘formality’’,
removing the word ‘‘Customs’’ and
adding in its place ‘‘customs’’;
■ c. Revise paragraph (c); and
■ d. Remove paragraphs (e) and (f).
The revision reads as follows:
■
§ 4.1
Boarding of vessels.
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(c) Persons seeking to board an
incoming vessel after it has been
inspected by the quarantine authorities
and taken in charge by a CBP officer
must comply with any applicable Coast
Guard regulations regarding the
Transportation Worker Identification
Credential (TWIC)/personal
identification requirements as
prescribed in 33 CFR 101.105 and
101.514–515.
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Dated: November 20, 2014.
R. Gil Kerlikowske,
Commissioner.
[FR Doc. 2014–28010 Filed 11–25–14; 8:45 am]
BILLING CODE 9111–14–P
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26 CFR Part 1
[TD 9705]
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations.
AGENCY:
Amendments to Regulations
*
Internal Revenue Service
Jkt 235001
This document contains final
regulations relating to the requirement
to maintain minimum essential coverage
enacted by the Patient Protection and
Affordable Care Act and the Health Care
and Education Reconciliation Act of
2010, as amended by the TRICARE
Affirmation Act and Public Law 111–
173 (collectively, the Affordable Care
Act). These final regulations provide
individual taxpayers with guidance
under section 5000A of the Internal
Revenue Code on the requirement to
maintain minimum essential coverage
and rules governing certain types of
exemptions from that requirement.
DATES: Effective Date: These regulations
are effective on November 26, 2014.
Applicability Date: For date of
applicability, see § 1.5000A–5(c).
FOR FURTHER INFORMATION CONTACT: SueJean Kim or John B. Lovelace at (202)
317–7006 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
SUMMARY:
Background
This document contains final
regulations that amend the Income Tax
Regulations (26 CFR part 1) under
section 5000A relating to the individual
shared responsibility provision. Section
5000A was enacted by the Affordable
Care Act. Section 5000A generally
requires individuals to have qualifying
health care coverage (called minimum
essential coverage), qualify for a health
coverage exemption, or make a shared
responsibility payment when filing a
Federal income tax return. On January
27, 2014, a notice of proposed
rulemaking (REG–141036–13) was
published in the Federal Register (79
FR 4302).
Written comments responding to the
notice of proposed rulemaking of
January 27, 2014, were received. The
comments are available for public
inspection at www.regulations.gov or on
request. No public hearing was
requested or held. After considering all
the comments, the proposed regulations
are adopted as revised by this Treasury
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decision. The comments and revisions
are discussed in the preamble.
As described in the Summary of
Comments and Explanation of
Revisions, in related guidance, Notice
2014–76, 2014–50 IRB (available at
www.irs.gov) (see § 601.601(d)), the
Treasury Department and the IRS
provide a comprehensive list of the
hardship exemptions that may be
claimed for 2014 on a Federal income
tax return without obtaining a hardship
exemption certification from a Health
Insurance Marketplace (Marketplace).
Summary of Comments and
Explanation of Revisions
I. Minimum Essential Coverage
A. Coverage for the Medically Needy
The proposed regulations provide that
certain categories of Medicaid coverage
authorized under Title XIX of the Social
Security Act (42 U.S.C. 1396 and
following sections) that are not required
to be comprehensive are not generally
government-sponsored minimum
essential coverage under section
5000A(f)(1). Specifically, under the
proposed regulations, coverage offered
to individuals with high medical
expenses who would be eligible for
Medicaid but for their income level
(medically needy individuals) (see
section 1902(a)(10)(C) of the Social
Security Act (42 U.S.C. 1936a(a)(10)(C)))
generally is not minimum essential
coverage. Commenters agreed that
Medicaid coverage for medically needy
individuals that is not comprehensive
should not be minimum essential
coverage. The final regulations retain
the rule in proposed regulations that
Medicaid coverage for medically needy
individuals is not governmentsponsored minimum essential coverage
under section 5000A(f)(1)(A).
The preamble to the proposed
regulations explains that although
Medicaid coverage offered to medically
needy individuals generally is not
minimum essential coverage, the
Secretary of Health and Human
Services, in coordination with the
Secretary of the Treasury, may in
appropriate circumstances designate
certain coverage for medically needy
individuals as minimum essential
coverage pursuant to section
5000A(f)(1)(E). Some commenters
suggested that the determination of
whether a particular state’s program for
medically needy individuals is
comprehensive, and therefore should be
recognized as minimum essential
coverage, should be based on whether
the program offers the essential health
benefits required by the Affordable Care
Act for coverage in the individual and
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group health insurance markets. The
determination of whether coverage is
designated as minimum essential
coverage under section 5000A(f)(1)(E) is
under the jurisdiction of the Department
of Health and Human Services (HHS).
On November 7, 2014, the HHS
provided guidance on the
considerations that it intends to apply
in recognizing Medicaid coverage for
medically needy individuals as
minimum essential coverage. HHS
Centers for Medicare & Medicaid
Services, Minimum Essential Coverage
(SHO #14–002) (Nov. 7, 2014) (available
at www.medicaid.gov/federal-policyguidance/downloads/sho-14-002.pdf).
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B. Section 1115 Demonstration Projects
The proposed regulations provide that
coverage authorized under section
1115(a)(2) of the Social Security Act (42
U.S.C. 1315(a)(2)) is generally not
minimum essential coverage. One
commenter recommended that the
citation be changed to refer to section
1115(a) of the Social Security Act (42
U.S.C. 1315(a)(1)), because
demonstration projects authorized
under section 1115(a)(1) may limit the
benefits available to individuals whose
coverage is authorized under the
approved state plan and limited-benefit
coverage should not be treated as
minimum essential coverage.
A section 1115 demonstration project
authorized under section 1115(a)(1) of
the Social Security Act may provide
only limited benefits. Accordingly, the
final regulations adopt the commenter’s
recommendation and provide that
coverage authorized under section
1115(a) of the Social Security Act is not
government-sponsored minimum
essential coverage under section
5000A(f)(1)(A).
The preamble to the proposed
regulations explains that certain
coverage under a section 1115
demonstration project may be
recognized as minimum essential
coverage by the Secretary of HHS, in
coordination with the Secretary of the
Treasury, under section 5000A(f)(1)(E).
On November 7, 2014, HHS released
guidance on the considerations it will
apply in recognizing a section 1115
demonstration project as minimum
essential coverage under section
5000A(f)(1)(E). HHS Centers for
Medicare & Medicaid Services,
Minimum Essential Coverage (SHO
#14–002) (Nov. 7, 2014) (available at
www.medicaid.gov/federal-policyguidance/downloads/sho-14-002.pdf).
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II. Exemption for Individuals Who
Cannot Afford Coverage
A. Employer Contributions to a
Cafeteria Plan (Flex Contributions)
The preamble to the proposed
regulations requests comments on the
treatment for purposes of section 5000A
of employer contributions under a
section 125 cafeteria plan to the extent
employees may not opt to receive the
employer contribution as a taxable
benefit. Specifically, the preamble to the
proposed regulations requests
comments about how these
contributions should be taken into
account for purposes of determining the
affordability of coverage.
As described in this preamble after
consideration of the comments received,
the final regulations provide that, for
purposes of determining the
affordability of coverage, the required
contribution is reduced by any
contributions made by an employer
under a section 125 cafeteria plan that
(1) may not be taken as a taxable benefit,
(2) may be used to pay for minimum
essential coverage, and (3) may be used
only to pay for medical care within the
meaning of section 213 (such
contributions are referred to in this
preamble as health flex contributions).
One commenter suggested that the
value of any benefit provided under a
cafeteria plan should be included in the
taxpayer’s household income for
purposes of determining eligibility for
the exemption for unaffordable
coverage, regardless of whether the
benefit is taxable. The commenter noted
that taxable benefits are included in an
employee’s household income, thereby
increasing the likelihood that coverage
offered by an employer will be
affordable. Reasoning that a nontaxable
benefit similarly provides an employee
with a financial benefit, the
commentator argued that nontaxable
contributions should be considered
available to purchase minimum
essential coverage to eliminate any
possible employee incentive under
section 5000A for choosing a taxable or
nontaxable benefit.
The suggestion to include employer
contributions to a cafeteria plan in an
employee’s household income is
inconsistent with the definition of
household income in section
5000A(c)(4)(B) and the increase to
household income for the purposes of
determining affordability provided in
section 5000A(e)(1)(A). Household
income as defined in section
5000A(c)(4)(B), while specifically
including certain amounts otherwise
excluded from gross income such as taxexempt interest, does not include
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amounts excluded from gross income
under section 125. Section
5000A(e)(1)(A) provides that, for
purposes of determining the
affordability of coverage, household
income is increased by any portion of
the required contribution paid through
a salary reduction arrangement. Health
flex contributions that can be received
under a cafeteria plan, however, are not
made pursuant to a salary reduction
arrangement. Section 5000A does not
direct that household income include
all amounts excluded from gross income
pursuant to a cafeteria plan.
Accordingly, the final regulations do not
incorporate the suggestion to include all
benefits provided under a cafeteria plan
in the taxpayer’s household income.
Another commenter recommended
that contributions under a cafeteria plan
should be taken into account in
determining the employee’s required
contribution if the contributions could
be used to purchase minimum essential
coverage, regardless of whether the
contributions could be used to purchase
other benefits. The commenter
suggested that a contrary rule could
potentially cause employers to limit
employee choice by structuring cafeteria
plans so that contributions can be used
only to pay for minimum essential
coverage.
Section 5000A(e)(1)(B) defines an
employee’s required contribution by
reference to the portion of the annual
premium that would be paid by the
employee if the employee purchased
coverage. The statute does not require
an employee to treat amounts provided
pursuant to a cafeteria plan as
reductions to the employee’s required
contribution. If an employee may use
nontaxable employer contributions to a
cafeteria plan to pay for minimum
essential coverage and only to pay for
medical expenses, then that represents a
real reduction in the cost to the
employee of purchasing minimum
essential coverage. In such a case, it is
appropriate to treat the amounts as a
reduction in the employee’s required
contribution. However, if an employee’s
use of nontaxable employer
contributions to a cafeteria plan is not
limited to medical expenses, then it
cannot be assumed that the employee
will use the contribution for purchasing
minimum essential coverage.
Accordingly, the final regulations
provide that health flex contributions
made available for the current plan year
are taken into account for purposes of
determining an individual’s required
contribution. As a result, health flex
contributions reduce an employee’s, or
related individual’s, required
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contribution for employer-sponsored
coverage.
B. Health Reimbursement Arrangements
The proposed regulations provide that
amounts newly made available in the
current plan year under a health
reimbursement arrangement (HRA) that
is integrated with an eligible employersponsored plan are taken into account
in determining the employee’s or related
individual’s required contribution if an
employee may use them to pay the
employee’s share of premiums for
coverage under the plan. No comments
were received on this proposed rule.
However, this preamble addresses
comments received in response to an
identical rule provided in proposed
regulations under section 36B (REG–
125398–12, 78 FR 25909) (section 36B
proposed regulations) published on May
3, 2013.
Commenters requested guidance on
the requirements for an HRA to be
integrated with eligible employersponsored coverage. Notice 2013–54
(2013–40 IRB 287) (see § 601.601(d)),
and for this purpose identical guidance
issued by the Department of Labor and
with which HHS concurred provides,
however, that an HRA is integrated with
another group health plan only if,
among other things, an employee enrolls
in the other group health plan. Because
an employee who enrolls in eligible
employer-sponsored coverage is not
eligible for the premium tax credit
subsidy, whether or not the eligible
employer-sponsored coverage is
affordable, requiring an HRA to be
integrated with a primary group health
plan for purposes of determining
affordability would be meaningless.
Therefore, the final regulations crossreference Notice 2013–54 and clarify
that amounts newly made available
under an HRA count toward an
employee’s required contribution if the
HRA would have been integrated with
an eligible employer-sponsored plan if
the employee had enrolled in the
primary plan.
Notice 2013–54 also provides that
under certain circumstances an HRA
offered by an employer may be
integrated with a group health plan
offered by a different employer, for
example a plan offered by the employer
of an employee’s spouse. Notice 2013–
54 indicated, however, that an HRA
could not be integrated with a plan
offered by another employer for
purposes of determining affordability
and minimum value under section 36B.
Accordingly, the final regulations
provide that, for purposes of
determining an individual’s required
contribution, an HRA is taken into
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account only if the HRA and the
primary eligible employer-sponsored
coverage are offered by the same
employer.
Commenters suggested that HRAs
should be considered integrated with
any plan that provides minimum
essential coverage, whether that plan is
an employer plan or a plan purchased
through a Marketplace. As explained in
Notice 2013–54, the combination of an
HRA and a plan purchased through a
Marketplace may raise significant issues
under the market reforms applicable to
the group insurance market. For this
reason, as well as to reduce complexity
through consistent rules, the Treasury
Department and the IRS have concluded
that the rules for determining when an
HRA is considered integrated with
another group health plan for purposes
of section 5000A should be consistent
with the rules applicable for purposes of
application of the market reforms, and
the final regulations, therefore, crossreference Notice 2013–54. The rules
addressed in Notice 2013–54 are under
the jurisdiction of the Departments of
Labor and HHS as well as the Treasury
Department and the IRS and are,
therefore, outside the scope of these
regulations.
Under the section 36B proposed
regulations, HRA amounts that may be
used to pay premiums or to pay both
premiums and cost-sharing are counted
toward affordability. A commenter
suggested that HRA amounts should not
count toward affordability unless the
amounts may be used only for
premiums. The commenter observed
that counting HRA amounts that may be
used either for premiums or cost-sharing
in determining affordability could lead
to double counting for affordability and
minimum value purposes under section
36B.
The final regulations clarify that, in
general, HRA contributions count
toward affordability, and not minimum
value, if an employee may use the HRA
contributions to pay premiums for the
primary plan only, or to pay costsharing or benefits not covered by the
primary plan in addition to premiums.
Under the section 36B proposed
regulations, HRA amounts that may be
used only for cost-sharing are counted
for purposes of minimum value and not
for affordability. Accordingly, HRA
contributions that can be used only to
pay for cost-sharing do not count toward
affordability. The Treasury Department
and the IRS anticipate that the section
36B proposed regulations addressing
HRA contributions and minimum value
will be adopted in section 36B final
regulations and, thus, HRA
contributions that can be used for
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premiums and cost-sharing will only
count for affordability and there will be
no double counting of these
contributions.
Commenters suggested that employers
should be permitted to treat HRA
contributions as made in particular
months during a year, which could
affect their potential liability under the
employer shared responsibility
requirement of section 4980H.
Employees who enroll in eligible
employer-sponsored coverage may not
claim the premium tax credit for their
coverage in a qualified health plan and
must be able to determine the amount
of their annual required contribution
before deciding whether to enroll in
eligible employer-sponsored coverage.
Accordingly, the final regulations clarify
that employer contributions to an HRA
count towards an employee’s required
contribution only to the extent the
amount of the annual contribution is
required under the terms of the plan or
is otherwise determinable within a
reasonable time before the employee
must decide whether to enroll. The
Treasury Department and the IRS
anticipate adopting the same rule when
the section 36B proposed regulations are
finalized.
A commenter argued that health
insurance issuers should not be required
to determine if employers are making
contributions to an HRA or HSA or
otherwise determine limitations
employers place on the use of funds in
an HRA or HSA. Neither the proposed
regulations under sections 36B or 5000A
nor the final regulations impose these
requirements on health insurance
issuers.
A commenter stated that stand-alone
HRAs for pre-Medicare eligible retirees
should not be considered minimum
essential coverage under certain
circumstances. The final regulations do
not address this issue, which is outside
the scope of the regulations.
C. Wellness Program Incentives
The proposed regulations provide
that, in determining whether coverage
under an eligible employer-sponsored
plan is affordable for purposes of the
affordability exemption in section
5000A(e)(1), nondiscriminatory
wellness program incentives are treated
as earned only if the incentives relate to
tobacco use. For this purpose, a
nondiscriminatory wellness program is
a wellness program that does not violate
the wellness plan regulations whether
the program is participatory or outcome
based. See § 54.9802–1(f), 29 CFR
2590.702(f), and 45 CFR 146.121(f) for
regulations governing wellness program
incentives issued by the Departments of
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Labor and HHS, and the Treasury
Department and the IRS (tri-agency
regulations). The section 36B proposed
regulations include an identical rule for
counting wellness program incentives in
determining an individual’s required
contribution. Comments were received
on both the rule in the proposed
regulations and the identical rule in the
section 36B proposed regulations. Both
sets of comments were considered in the
development of these final regulations.
The proposed regulations provide that
the affordability of eligible employersponsored coverage is determined by
assuming that each employee fails to
satisfy the requirements of a wellness
program, except the requirements of a
nondiscriminatory wellness program
related to tobacco use. Thus, the
affordability of coverage that requires a
higher initial premium for tobacco users
is determined based on the premium
that is charged to non-tobacco users or
to tobacco users who complete the
related wellness program, such as
attending smoking cessation classes.
Some commenters requested that all
wellness incentives, including those
related to tobacco use, be treated as
unearned when determining the
affordability and minimum value of an
offer of eligible employer-sponsored
coverage. These commenters asserted
that wellness incentives could be used
to discriminate based on health status or
that certain individuals would be
unable to complete the wellness
program and earn the wellness
incentives.
Other commenters requested that all
wellness incentives, including those
related to tobacco use, be treated as
earned when determining the
affordability and minimum value of an
offer of eligible employer-sponsored
coverage. These commenters asserted
that wellness incentives are an effective
way of encouraging healthy lifestyle
adjustments and reducing health costs
and that the consumer protections in the
tri-agency regulations that were
finalized on June 3, 2013 (TD 9620, 78
FR 33158), ensure that wellness
incentives will not be used to
discriminate based on health status or
burdens to employees. Some of these
commenters advised, however, that if
the final regulations do not treat all
wellness incentives as unearned, they
favor the proposed rule as a reasonable
alternative.
After consideration of these
comments, the final regulations retain
the rules in the proposed regulations
that wellness incentives unrelated to
tobacco use are treated as unearned and
wellness incentives related to tobacco
use are treated as earned in determining
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affordability. These rules are consistent
with policies related to tobacco use
reflected in the Affordable Care Act,
such as allowing issuers to charge
higher premiums based on tobacco use.
The Treasury Department and the IRS
anticipate adopting the same rules when
the section 36B proposed regulations are
finalized.
Commenters requested guidance on
whether a wellness incentive is treated
as earned or unearned when an
employee must complete a wellness
program related to tobacco use and a
program unrelated to tobacco use to
receive an incentive. The final
regulations clarify that a wellness
incentive that includes any component
unrelated to tobacco use is treated as
unearned. If, however, there is an
incentive for completing a program
unrelated to tobacco use and a separate
incentive for completing a program
related to tobacco use, then the
incentive related to tobacco use may be
treated as earned.
A commenter requested clarification
that programs that provide a discount or
rebate and programs that impose a
surcharge both provide wellness
program incentives under the final
regulations. Another commenter asked
that the final regulations clarify that
nondiscriminatory wellness programs
include both participatory and healthcontingent wellness programs. The final
regulations clarify that the term wellness
program incentives has the same
meaning as the term reward in the triagency regulations. Thus, programs that
provide a discount or rebate, programs
that impose a surcharge, and
participatory and health-contingent
wellness programs are wellness program
incentives under the final regulations.
III. Hardship Exemptions
Under section 5000A(e)(5), an
individual is exempt from section
5000A if the individual has an
exemption certification issued by the
Marketplace stating that HHS has
determined that the individual suffered
a hardship with respect to the ability to
obtain minimum essential coverage. The
proposed regulations provide that,
under certain circumstances, a taxpayer
may claim a hardship exemption on a
Federal income tax return without first
obtaining a hardship exemption
certification from a Marketplace.
Specifically, the proposed regulations
provide that an individual may claim a
hardship exemption on the Federal
income tax return if they are specifically
described in 45 CFR 155.605(g)(3)
(relating to individuals with gross
income below the filing threshold) or 45
CFR 155.605(g)(5) (relating to employed
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70467
and related individuals whose
combined cost of employer-sponsored
coverage exceeds the required
contribution percentage), or if the
individual is described HHS guidance
released on October 28, 2013 (relating to
individuals who enrolled in a plan
through a Marketplace before the close
of the open enrollment period in 2014
but had a gap in coverage before the
coverage was effective).
Finally, the proposed regulations
provide that a taxpayer may claim a
hardship exemption on a Federal
income tax return in any situation that
is (1) described in published guidance
issued by HHS permitting an individual
to claim the exemption on a Federal
income tax return, and (2) described in
published guidance issued by the IRS
that allows an individual to claim the
exemption on a Federal income tax
return without obtaining a hardship
exemption certification.
Commenters requested that taxpayers
be allowed to claim other hardship
exemptions without obtaining hardship
exemption certifications. Specifically,
commenters requested that taxpayers
eligible for the hardship exemption
described in 45 CFR 155.605(g)(6), for
an Indian eligible for services through
Indian Health Service (IHS) or through
an Indian health care provider, be
allowed to claim the exemption without
obtaining a hardship exemption
certification from a Marketplace. HHS
issued guidance on September 18, 2014,
that addresses this comment. In
particular, the HHS guidance identified
the hardship situation described in 45
CFR 155.605(g)(6) and indicated that an
exemption for that hardship may be
claimed on a Federal income tax return
pursuant to guidance issued by the
Treasury Department and the IRS. See
HHS Centers for Medicare & Medicaid
Services, Shared Responsibility
Guidance—Exemption for Individuals
Eligible for Services through an Indian
Health Care Provider (Sept. 18, 2014)
(available at https://www.cms.gov/CCIIO/
Resources/Fact-Sheets-and-FAQs/
Downloads/guidance-exemptioncertain-AIAN.pdf).
Commenters also requested that a
taxpayer be allowed to claim a hardship
exemption without obtaining a hardship
exemption certification if he or she is
eligible for the hardship exemption
described in 45 CFR 155.605(g)(4),
which applies to an individual who is
determined ineligible for Medicaid for
one or more months during a benefit
year solely because the individual
resides in a state that has not expanded
Medicaid under section 2001(a) of the
Affordable Care Act. HHS issued
guidance on November 21, 2014,
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addressing this comment. In particular,
the HHS guidance provides that an
individual is eligible for a hardship
exemption for the taxable year if at any
time during 2014 the individual resided
in a state that did not expand Medicaid
coverage and the individual’s household
income, within the meaning of section
36B, is below 138 percent of the
applicable federal poverty level for the
individual’s family size. See HHS
Centers for Medicare & Medicaid
Services, Guidance on Hardship
Exemptions for Persons Meeting Certain
Criteria (Nov. 21, 2014) (available at
www.cms.gov).
To consolidate the list of
circumstances described in the
proposed regulations with any
additional circumstances that have been
or will be identified, § 1.5000A–
3(h)(3)(i) of the final regulations
removes the references to specific
hardship circumstances and instead
provides that a taxpayer may claim a
hardship exemption on a Federal
income tax return without obtaining an
exemption certification for any month
that includes a day on which the
taxpayer satisfies the requirements of a
hardship for which HHS, and the
Treasury Department and the IRS, issue
published guidance. Notice 2014–76,
2014–50 IRB (available at www.irs.gov)
(see § 601.601(d)), released concurrently
with these regulations, provides a
comprehensive list of all hardship
exemptions that may be claimed on a
Federal income tax return without
obtaining a hardship exemption
certification. The list of hardship
exemptions that may be claimed on a
Federal income tax return without
obtaining a hardship exemption
certification includes the following: (a)
The hardship exemptions described in
45 CFR 155.605(g)(3) and (g)(5); (b) the
hardship exemption described in HHS
guidance issued October 28, 2013,
relating to individuals enrolled in
Marketplace coverage on or before
March 31, 2014; (c) the hardship
exemption described in HHS guidance
released on March 26, 2014, relating to
individuals ‘‘in line’’ to enroll in
coverage through the Marketplace on
March 31, 2013; (d) the hardship
exemption described in HHS guidance
released on March 31, 2014, relating to
individuals who applied for CHIP
during the 2014 open enrollment period
and were found eligible; (e) the
hardship exemption described in HHS
guidance released on May 2, 2014,
relating to individuals who enrolled
outside the Marketplace in minimum
essential coverage that is effective on or
before May 1, 2014; (f) the hardship
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16:25 Nov 25, 2014
Jkt 235001
exemption described in HHS guidance
issued September 18, 2014, relating to
individuals eligible for services through
an Indian health care provider; and (g)
the hardship exemption described in
HHS guidance issued November 21,
2014, relating to individuals with
specified household incomes who
reside in a state that did not expand
Medicaid.
Commenters requested that the IRS, in
conjunction with HHS, adopt additional
hardship exemptions to address specific
situations. Other commenters requested
that the transition relief provided in
Notice 2014–10, 2014–9 IRB 605, for
individuals enrolled in limited benefit
Medicaid programs that are not
minimum essential coverage be
extended to 2015. Some commenters
specifically requested that no additional
transition relief be provided.
Authority to define circumstances
giving rise to a hardship exemption, as
well as authority to grant hardship
exemptions in individual cases, resides
with HHS. In guidance released on
November 7, 2014, HHS described
additional circumstances that
Marketplaces may use when
determining what constitutes a hardship
effective January 1, 2015. HHS Centers
for Medicare & Medicaid Services,
Minimum Essential Coverage (SHO
#14–002) (Nov. 7, 2014) (available at
www.medicaid.gov/federal-policyguidance/downloads/sho-14-002.pdf).
The additional circumstances include
enrollment in Medicaid coverage for
pregnant women and for medically
needy individuals that is not minimum
essential coverage. HHS provides
additional guidance on the hardship
exemption in regulations. See Patient
Protection and Affordable Care Act:
Exchange Functions: Eligibility for
Exemptions; Miscellaneous Minimum
Essential Coverage Provisions, 78 FR
39494 (codified at 45 CFR part 155).
Special Analyses
It has been determined that this
Treasury decision is not a significant
regulatory action as defined in
Executive Order 12866, as
supplemented by Executive Order
13563. Therefore, a regulatory
assessment is not required. Section
553(b) of the Administrative Procedure
Act (5 U.S.C. chapter 5) does not apply
to these regulations, and, because the
regulations do not impose a collection
of information requirement on small
entities, the Regulatory Flexibility Act
(5 U.S.C. chapter 6) does not apply.
Pursuant to section 7805(f), the notice of
proposed rulemaking that preceded
these final regulations was submitted to
the Chief Counsel for Advocacy of the
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Fmt 4700
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Small Business Administration for
comment on its impact on small
business, and no comments were
received.
Drafting Information
The principal authors of these final
regulations are Sue-Jean Kim and John
B. Lovelace of the Office of Associate
Chief Counsel (Income Tax and
Accounting). Other personnel from the
Treasury Department and the IRS
participated in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 1 is
amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 continues to read in part as
follows:
■
Authority: 26 U.S.C. 7805 * * *
Par 2. An undesignated center
heading is added immediately following
§ 1.1563–4 to read as follows:
■
Individual Shared Responsibility
Payment for Not Maintaining Minimum
Essential Coverage
Par. 3. Section 1.5000A–0 is amended
by:
■ 1. Revising the entry for § 1.5000A–
2(b)(2).
■ 2. Removing the entries for
§ 1.5000A–2(b)(2)(i), (b)(2)(ii), and
(b)(2)(iii).
■ 3. Revising the entries for § 1.5000A–
3(e)(4)(ii)(C) and (e)(4)(ii)(D).
■ 4. Adding a new entry for § 1.5000A–
3(e)(4)(ii)(E).
■ 5. Revising the entry for § 1.5000A–
3(h)(3).
The revisions and addition read as
follows.
■
§ 1.5000A–0
*
*
Table of contents.
*
§ 1.5000A–2
*
*
Minimum essential coverage.
*
*
*
*
*
(b) * * *
(2) Certain health care coverage not
minimum essential coverage under a
government-sponsored program.
*
*
*
*
*
§ 1.5000A–3
*
Exempt individuals.
*
*
*
*
(e) * * *
(4) * * *
(ii) * * *
(C) Wellness program incentives.
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26NOR1
Federal Register / Vol. 79, No. 228 / Wednesday, November 26, 2014 / Rules and Regulations
(D) Credit allowable under section
36B.
(E) Required contribution for part-year
period.
*
*
*
*
*
(h) * * *
(3) Hardship exemption without
hardship exemption certification.
*
*
*
*
*
■ Par. 4. Section 1.5000A–2 is amended
by:
■ 1. Revising paragraphs (b)(1)(ii) and
(b)(2).
■ 2. Removing the language ‘‘health
insurance’’ in paragraph (g).
The revisions read as follows:
§ 1.5000A–2
Minimum essential coverage.
mstockstill on DSK4VPTVN1PROD with RULES
*
*
*
*
*
(b) * * *
(1) * * *
(ii) Medicaid. The Medicaid program
under Title XIX of the Social Security
Act (42 U.S.C. 1396 and following
sections);
*
*
*
*
*
(2) Certain health care coverage not
minimum essential coverage under a
government-sponsored program.
Government-sponsored program does
not mean any of the following:
(i) Optional coverage of family
planning services under section
1902(a)(10)(A)(ii)(XXI) of the Social
Security Act (42 U.S.C.
1396a(a)(10)(A)(ii)(XXI));
(ii) Optional coverage of tuberculosisrelated services under section
1902(a)(10)(A)(ii)(XII) of the Social
Security Act (42 U.S.C.
1396a(a)(10)(A)(ii)(XII));
(iii) Coverage of pregnancy-related
services under section
1902(a)(10)(A)(i)(IV) and
(a)(10)(A)(ii)(IX) of the Social Security
Act (42 U.S.C. 1396a(a)(10)(A)(i)(IV),
(a)(10)(A)(ii)(IX));
(iv) Coverage limited to treatment of
emergency medical conditions in
accordance with 8 U.S.C. 1611(b)(1)(A),
as authorized by section 1903(v) of the
Social Security Act (42 U.S.C. 1396b(v));
(v) Coverage for medically needy
individuals under section 1902(a)(10)(C)
of the Social Security Act (42 U.S.C.
1396a(a)(10)(C)) and 42 CFR 435.300
and following sections;
(vi) Coverage authorized under
section 1115(a) of the Social Security
Act (42 U.S.C. 1315(a));
(vii) Coverage under section 1079(a),
1086(c)(1), or 1086(d)(1) of title 10,
U.S.C., that is solely limited to space
available care in a facility of the
uniformed services for individuals
excluded from TRICARE coverage for
care from private sector providers; and
(viii) Coverage under sections 1074a
and 1074b of title 10, U.S.C., for an
VerDate Sep<11>2014
16:25 Nov 25, 2014
Jkt 235001
injury, illness, or disease incurred or
aggravated in the line of duty for
individuals who are not on active duty.
*
*
*
*
*
■ Par. 5. Section 1.5000A–3 is amended
by:
■ 1. Revising paragraph (e)(3)(ii)(D).
■ 2. Redesignating paragraph (e)(3)(ii)(E)
as (e)(3)(ii)(F), revising newly
redesignated paragraph (e)(3)(ii)(F), and
adding a new paragraph (e)(3)(ii)(E).
■ 3. Redesignating paragraphs
(e)(4)(ii)(C) and (e)(4)(ii)(D) as
(e)(4)(ii)(D) and (e)(4)(ii)(E),
respectively, and adding and reserving a
new paragraph (e)(4)(ii)(C).
■ 4. Revising paragraphs (h)(1) and
(h)(3).
The revisions and additions read as
follows:
§ 1.5000A–3
Exempt individuals.
*
*
*
*
*
(e) * * *
(3) * * *
(ii) * * *
(D) Employer contributions to health
reimbursement arrangements. Amounts
newly made available for the current
plan year under a health reimbursement
arrangement that an employee may use
to pay premiums, or may use to pay
cost-sharing or benefits not covered by
the primary plan in addition to
premiums, are counted toward the
employee’s required contribution if the
health reimbursement arrangement
would be integrated, as that term is used
in Notice 2013–54 (2013–40 IRB 287) or
in any successor published guidance
(see § 601.601(d) of this chapter), with
an eligible employer-sponsored plan for
an employee enrolled in the plan. The
eligible employer-sponsored plan and
the health reimbursement arrangement
must be offered by the same employer.
Employer contributions to a health
reimbursement arrangement count
toward an employee’s required
contribution only to the extent the
amount of the annual contribution is
required under the terms of the plan or
otherwise determinable within a
reasonable time before the employee
must decide whether to enroll in the
eligible employer-sponsored plan.
(E) Employer contributions to
cafeteria plans. Amounts made
available for the current plan year under
a cafeteria plan, within the meaning of
section 125, are taken into account in
determining an employee’s or a related
individual’s required contribution if:
(1) The employee may not opt to
receive the amount as a taxable benefit;
(2) The employee may use the amount
to pay for minimum essential coverage;
and
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Frm 00043
Fmt 4700
Sfmt 4700
70469
(3) The employee may use the amount
exclusively to pay for medical care,
within the meaning of section 213.
(F) Wellness program incentives.
Nondiscriminatory wellness program
incentives, within the meaning of
§ 54.9802–1(f) of this chapter, offered by
an eligible employer-sponsored plan
that affect premiums are treated as
earned in determining an employee’s
required contribution for purposes of
affordability of an eligible employersponsored plan to the extent the
incentives relate exclusively to tobacco
use. Wellness program incentives that
do not relate to tobacco use or that
include a component unrelated to
tobacco use are treated as not earned for
this purpose. For purposes of this
section, the term wellness program
incentive has the same meaning as the
term reward in § 54.9802–1(f)(1)(i) of
this chapter.
*
*
*
*
*
(4) * * *
(ii) * * *
(C) Wellness programs incentives.
[Reserved]
*
*
*
*
*
(h) Individuals with hardship
exemption certification—(1) In general.
Except as provided in paragraph (h)(3)
of this section, an individual is an
exempt individual for a month that
includes a day on which the individual
has in effect a hardship exemption
certification described in paragraph
(h)(2) of this section.
*
*
*
*
*
(3) Hardship exemption without
hardship exemption certification. An
individual may claim an exemption
without obtaining a hardship exemption
certification described in paragraph
(h)(2) of this section for any month that
includes a day on which the individual
meets the requirements of any hardship
for which:
(i) The Secretary of HHS issues
guidance of general applicability
describing the hardship and indicating
that an exemption for such hardship can
be claimed on a Federal income tax
return pursuant to guidance published
by the Secretary; and
(ii) The Secretary issues published
guidance of general applicability, see
§ 601.601(d)(2) of this chapter, allowing
an individual to claim the hardship
exemption on a return without
obtaining a hardship exemption from an
Exchange.
*
*
*
*
*
■ Par. 6. Section 1.5000A–4 is amended
by revising paragraph (a) introductory
text and paragraph (a)(1) to read as
follows:
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70470
Federal Register / Vol. 79, No. 228 / Wednesday, November 26, 2014 / Rules and Regulations
§ 1.5000A–4 Computation of shared
responsibility payment.
(a) In general. For each taxable year,
the shared responsibility payment
imposed on a taxpayer in accordance
with § 1.5000A–1(c) is the lesser of—
(1) The sum of the monthly penalty
amounts; or
*
*
*
*
*
John Dalrymple,
Deputy Commissioner for Services and
Enforcement.
Approved: November 20, 2014.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax
Policy).
[FR Doc. 2014–27998 Filed 11–21–14; 4:15 pm]
BILLING CODE 4830–01–P
ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Part 52
[EPA–R03–OAR–2014–0475; FRL–9919–66–
Region 3]
Approval and Promulgation of Air
Quality Implementation Plans;
Pennsylvania; Allegheny County’s
Adoption of Control Techniques
Guidelines for Four Industry
Categories for Control of Volatile
Organic Compound Emissions
Environmental Protection
Agency (EPA).
ACTION: Final rule.
AGENCY:
The Environmental Protection
Agency (EPA) is conditionally
approving a State Implementation Plan
(SIP) revision submitted by the
Commonwealth of Pennsylvania on
behalf of the Allegheny County Health
Department (ACHD). This SIP revision
includes amendments to the ACHD
Rules and Regulations, Article XXI, Air
Pollution Control, and meets the
requirement to adopt Reasonably
Available Control Technology (RACT)
for sources covered by EPA’s Control
Techniques Guidelines (CTG) standards
for the following categories:
Miscellaneous metal and/or plastic parts
surface coating processes, automobile
and light-duty truck assembly coatings,
miscellaneous industrial adhesives, and
fiberglass boat manufacturing materials.
Upon review of the submittal, EPA
found that the average monomer volatile
organic compound (VOC) content limits
were referenced but not included in the
regulation for fiberglass boat
manufacturing materials. ACHD has
committed to revising the regulation
and submitting the table of VOC content
limits for fiberglass boat manufacturing
mstockstill on DSK4VPTVN1PROD with RULES
SUMMARY:
VerDate Sep<11>2014
16:25 Nov 25, 2014
Jkt 235001
II. Summary of SIP Revision
On November 15, 2013, the
Pennsylvania Department of
Environmental Protection (PADEP)
submitted to EPA on behalf of ACHD a
SIP revision concerning the adoption of
the EPA CTGs for miscellaneous metal
and/or plastic parts surface coating
DATES: This final rule is effective on
processes, automobile and light-duty
December 26, 2014.
truck assembly coatings, miscellaneous
ADDRESSES: EPA has established a
industrial adhesives, and fiberglass boat
docket for this action under Docket ID
manufacturing materials in Allegheny
Number EPA–R03–OAR–2014–0475. All County. These regulations are contained
documents in the docket are listed in
in the ACHD Rules and Regulations,
the www.regulations.gov Web site.
Article XXI, Air Pollution Control
Although listed in the electronic docket, sections 2105.83, 2105.84, 2105.85, and
some information is not publicly
2105.86 to: (1) Establish applicability for
available, i.e., confidential business
miscellaneous metal and/or plastic parts
information (CBI) or other information
surface coating processes, automobile
whose disclosure is restricted by statute. and light-duty truck assembly coatings,
miscellaneous industrial adhesives, and
Certain other material, such as
fiberglass boat manufacturing materials;
copyrighted material, is not placed on
(2) establish exemptions; (3) establish
the Internet and will be publicly
record-keeping and work practice
available only in hard copy form.
requirements; and (4) establish emission
Publicly available docket materials are
limitations. Upon review of the
available either electronically through
www.regulations.gov or in hard copy for November 15, 2013 submittal, EPA
found that a table of average monomer
public inspection during normal
VOC content limits for fiberglass boat
business hours at the Air Protection
Division, U.S. Environmental Protection manufacturing materials was referenced,
however, the table was erroneously not
Agency, Region III, 1650 Arch Street,
included in the regulation. Pursuant to
Philadelphia, Pennsylvania 19103.
section 110(k)(4) of the CAA, PADEP
Copies of the state submittal are
submitted on behalf of ACHD a letter
available at the Allegheny County
dated July 16, 2014 committing to
Health Department, Bureau of
submit a SIP revision to EPA addressing
Environmental Quality, Division of Air
this error. Other specific requirements
Quality, 301 39th Street, Pittsburgh,
and the rationale for EPA’s proposed
Pennsylvania 15201 and at the
rulemaking action are explained in the
Pennsylvania Department of
Environmental Protection, Bureau of Air NPR and will not be restated here. No
public comments were received on the
Quality Control, P.O. Box 8468, 400
Market Street, Harrisburg, Pennsylvania NPR.
17105.
III. Final Action
In this rulemaking action, EPA is
FOR FURTHER INFORMATION CONTACT:
conditionally approving the
Irene Shandruk, (215) 814–2166, or by
Commonwealth of Pennsylvania SIP
email at shandruk.irene@epa.gov.
revision submitted on November 15,
SUPPLEMENTARY INFORMATION:
2013, which consists of amendments to
the ACHD Rules and Regulations,
I. Background
Article XXI, Air Pollution Control for
Section 172(c)(1) of the CAA provides adopting RACT for sources covered by
that SIPs for nonattainment areas must
EPA’s CTG standards for the following
include reasonably available control
categories: Miscellaneous metal and/or
measures (RACM), including RACT, for
plastic parts surface coating processes,
sources of emissions. Section
automobile and light-duty truck
182(b)(2)(A) provides that for certain
assembly coatings, miscellaneous
nonattainment areas, states must revise
industrial adhesives, and fiberglass boat
their SIP to include RACT for sources of manufacturing materials. Pursuant to
VOC emissions covered by a CTG
section 110(k)(4) of the CAA, this
document issued after November 15,
conditional approval is based upon a
1990 and prior to the area’s date of
letter from PADEP on behalf of ACHD
attainment. In 2008, EPA developed
dated July 16, 2014 committing to
new CTGs for miscellaneous metal and
submit to EPA, no later than twelve
plastic parts coatings, automobile and
months from EPA’s final conditional
light-duty assembly coatings,
approval of ACHD’s adoption of CTGs
miscellaneous industrial adhesives, and for miscellaneous metal and/or plastic
fiberglass boat manufacturing materials. parts surface coating processes,
materials to EPA in order to address
specific RACT requirements for
Allegheny County. EPA is, therefore,
conditionally approving this revision to
the Pennsylvania SIP in accordance
with the requirements of the Clean Air
Act (CAA).
PO 00000
Frm 00044
Fmt 4700
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E:\FR\FM\26NOR1.SGM
26NOR1
Agencies
[Federal Register Volume 79, Number 228 (Wednesday, November 26, 2014)]
[Rules and Regulations]
[Pages 70464-70470]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-27998]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9705]
RIN 1545-BL91
Minimum Essential Coverage and Other Rules Regarding the Shared
Responsibility Payment for Individuals
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
-----------------------------------------------------------------------
SUMMARY: This document contains final regulations relating to the
requirement to maintain minimum essential coverage enacted by the
Patient Protection and Affordable Care Act and the Health Care and
Education Reconciliation Act of 2010, as amended by the TRICARE
Affirmation Act and Public Law 111-173 (collectively, the Affordable
Care Act). These final regulations provide individual taxpayers with
guidance under section 5000A of the Internal Revenue Code on the
requirement to maintain minimum essential coverage and rules governing
certain types of exemptions from that requirement.
DATES: Effective Date: These regulations are effective on November 26,
2014.
Applicability Date: For date of applicability, see Sec. 1.5000A-
5(c).
FOR FURTHER INFORMATION CONTACT: Sue-Jean Kim or John B. Lovelace at
(202) 317-7006 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains final regulations that amend the Income Tax
Regulations (26 CFR part 1) under section 5000A relating to the
individual shared responsibility provision. Section 5000A was enacted
by the Affordable Care Act. Section 5000A generally requires
individuals to have qualifying health care coverage (called minimum
essential coverage), qualify for a health coverage exemption, or make a
shared responsibility payment when filing a Federal income tax return.
On January 27, 2014, a notice of proposed rulemaking (REG-141036-13)
was published in the Federal Register (79 FR 4302).
Written comments responding to the notice of proposed rulemaking of
January 27, 2014, were received. The comments are available for public
inspection at www.regulations.gov or on request. No public hearing was
requested or held. After considering all the comments, the proposed
regulations are adopted as revised by this Treasury decision. The
comments and revisions are discussed in the preamble.
As described in the Summary of Comments and Explanation of
Revisions, in related guidance, Notice 2014-76, 2014-50 IRB (available
at www.irs.gov) (see Sec. 601.601(d)), the Treasury Department and the
IRS provide a comprehensive list of the hardship exemptions that may be
claimed for 2014 on a Federal income tax return without obtaining a
hardship exemption certification from a Health Insurance Marketplace
(Marketplace).
Summary of Comments and Explanation of Revisions
I. Minimum Essential Coverage
A. Coverage for the Medically Needy
The proposed regulations provide that certain categories of
Medicaid coverage authorized under Title XIX of the Social Security Act
(42 U.S.C. 1396 and following sections) that are not required to be
comprehensive are not generally government-sponsored minimum essential
coverage under section 5000A(f)(1). Specifically, under the proposed
regulations, coverage offered to individuals with high medical expenses
who would be eligible for Medicaid but for their income level
(medically needy individuals) (see section 1902(a)(10)(C) of the Social
Security Act (42 U.S.C. 1936a(a)(10)(C))) generally is not minimum
essential coverage. Commenters agreed that Medicaid coverage for
medically needy individuals that is not comprehensive should not be
minimum essential coverage. The final regulations retain the rule in
proposed regulations that Medicaid coverage for medically needy
individuals is not government-sponsored minimum essential coverage
under section 5000A(f)(1)(A).
The preamble to the proposed regulations explains that although
Medicaid coverage offered to medically needy individuals generally is
not minimum essential coverage, the Secretary of Health and Human
Services, in coordination with the Secretary of the Treasury, may in
appropriate circumstances designate certain coverage for medically
needy individuals as minimum essential coverage pursuant to section
5000A(f)(1)(E). Some commenters suggested that the determination of
whether a particular state's program for medically needy individuals is
comprehensive, and therefore should be recognized as minimum essential
coverage, should be based on whether the program offers the essential
health benefits required by the Affordable Care Act for coverage in the
individual and
[[Page 70465]]
group health insurance markets. The determination of whether coverage
is designated as minimum essential coverage under section
5000A(f)(1)(E) is under the jurisdiction of the Department of Health
and Human Services (HHS). On November 7, 2014, the HHS provided
guidance on the considerations that it intends to apply in recognizing
Medicaid coverage for medically needy individuals as minimum essential
coverage. HHS Centers for Medicare & Medicaid Services, Minimum
Essential Coverage (SHO #14-002) (Nov. 7, 2014) (available at
www.medicaid.gov/federal-policy-guidance/downloads/sho-14-002.pdf).
B. Section 1115 Demonstration Projects
The proposed regulations provide that coverage authorized under
section 1115(a)(2) of the Social Security Act (42 U.S.C. 1315(a)(2)) is
generally not minimum essential coverage. One commenter recommended
that the citation be changed to refer to section 1115(a) of the Social
Security Act (42 U.S.C. 1315(a)(1)), because demonstration projects
authorized under section 1115(a)(1) may limit the benefits available to
individuals whose coverage is authorized under the approved state plan
and limited-benefit coverage should not be treated as minimum essential
coverage.
A section 1115 demonstration project authorized under section
1115(a)(1) of the Social Security Act may provide only limited
benefits. Accordingly, the final regulations adopt the commenter's
recommendation and provide that coverage authorized under section
1115(a) of the Social Security Act is not government-sponsored minimum
essential coverage under section 5000A(f)(1)(A).
The preamble to the proposed regulations explains that certain
coverage under a section 1115 demonstration project may be recognized
as minimum essential coverage by the Secretary of HHS, in coordination
with the Secretary of the Treasury, under section 5000A(f)(1)(E). On
November 7, 2014, HHS released guidance on the considerations it will
apply in recognizing a section 1115 demonstration project as minimum
essential coverage under section 5000A(f)(1)(E). HHS Centers for
Medicare & Medicaid Services, Minimum Essential Coverage (SHO #14-002)
(Nov. 7, 2014) (available at www.medicaid.gov/federal-policy-guidance/downloads/sho-14-002.pdf).
II. Exemption for Individuals Who Cannot Afford Coverage
A. Employer Contributions to a Cafeteria Plan (Flex Contributions)
The preamble to the proposed regulations requests comments on the
treatment for purposes of section 5000A of employer contributions under
a section 125 cafeteria plan to the extent employees may not opt to
receive the employer contribution as a taxable benefit. Specifically,
the preamble to the proposed regulations requests comments about how
these contributions should be taken into account for purposes of
determining the affordability of coverage.
As described in this preamble after consideration of the comments
received, the final regulations provide that, for purposes of
determining the affordability of coverage, the required contribution is
reduced by any contributions made by an employer under a section 125
cafeteria plan that (1) may not be taken as a taxable benefit, (2) may
be used to pay for minimum essential coverage, and (3) may be used only
to pay for medical care within the meaning of section 213 (such
contributions are referred to in this preamble as health flex
contributions).
One commenter suggested that the value of any benefit provided
under a cafeteria plan should be included in the taxpayer's household
income for purposes of determining eligibility for the exemption for
unaffordable coverage, regardless of whether the benefit is taxable.
The commenter noted that taxable benefits are included in an employee's
household income, thereby increasing the likelihood that coverage
offered by an employer will be affordable. Reasoning that a nontaxable
benefit similarly provides an employee with a financial benefit, the
commentator argued that nontaxable contributions should be considered
available to purchase minimum essential coverage to eliminate any
possible employee incentive under section 5000A for choosing a taxable
or nontaxable benefit.
The suggestion to include employer contributions to a cafeteria
plan in an employee's household income is inconsistent with the
definition of household income in section 5000A(c)(4)(B) and the
increase to household income for the purposes of determining
affordability provided in section 5000A(e)(1)(A). Household income as
defined in section 5000A(c)(4)(B), while specifically including certain
amounts otherwise excluded from gross income such as tax-exempt
interest, does not include amounts excluded from gross income under
section 125. Section 5000A(e)(1)(A) provides that, for purposes of
determining the affordability of coverage, household income is
increased by any portion of the required contribution paid through a
salary reduction arrangement. Health flex contributions that can be
received under a cafeteria plan, however, are not made pursuant to a
salary reduction arrangement. Section 5000A does not direct that
household income include all amounts excluded from gross income
pursuant to a cafeteria plan. Accordingly, the final regulations do not
incorporate the suggestion to include all benefits provided under a
cafeteria plan in the taxpayer's household income.
Another commenter recommended that contributions under a cafeteria
plan should be taken into account in determining the employee's
required contribution if the contributions could be used to purchase
minimum essential coverage, regardless of whether the contributions
could be used to purchase other benefits. The commenter suggested that
a contrary rule could potentially cause employers to limit employee
choice by structuring cafeteria plans so that contributions can be used
only to pay for minimum essential coverage.
Section 5000A(e)(1)(B) defines an employee's required contribution
by reference to the portion of the annual premium that would be paid by
the employee if the employee purchased coverage. The statute does not
require an employee to treat amounts provided pursuant to a cafeteria
plan as reductions to the employee's required contribution. If an
employee may use nontaxable employer contributions to a cafeteria plan
to pay for minimum essential coverage and only to pay for medical
expenses, then that represents a real reduction in the cost to the
employee of purchasing minimum essential coverage. In such a case, it
is appropriate to treat the amounts as a reduction in the employee's
required contribution. However, if an employee's use of nontaxable
employer contributions to a cafeteria plan is not limited to medical
expenses, then it cannot be assumed that the employee will use the
contribution for purchasing minimum essential coverage.
Accordingly, the final regulations provide that health flex
contributions made available for the current plan year are taken into
account for purposes of determining an individual's required
contribution. As a result, health flex contributions reduce an
employee's, or related individual's, required
[[Page 70466]]
contribution for employer-sponsored coverage.
B. Health Reimbursement Arrangements
The proposed regulations provide that amounts newly made available
in the current plan year under a health reimbursement arrangement (HRA)
that is integrated with an eligible employer-sponsored plan are taken
into account in determining the employee's or related individual's
required contribution if an employee may use them to pay the employee's
share of premiums for coverage under the plan. No comments were
received on this proposed rule. However, this preamble addresses
comments received in response to an identical rule provided in proposed
regulations under section 36B (REG-125398-12, 78 FR 25909) (section 36B
proposed regulations) published on May 3, 2013.
Commenters requested guidance on the requirements for an HRA to be
integrated with eligible employer-sponsored coverage. Notice 2013-54
(2013-40 IRB 287) (see Sec. 601.601(d)), and for this purpose
identical guidance issued by the Department of Labor and with which HHS
concurred provides, however, that an HRA is integrated with another
group health plan only if, among other things, an employee enrolls in
the other group health plan. Because an employee who enrolls in
eligible employer-sponsored coverage is not eligible for the premium
tax credit subsidy, whether or not the eligible employer-sponsored
coverage is affordable, requiring an HRA to be integrated with a
primary group health plan for purposes of determining affordability
would be meaningless. Therefore, the final regulations cross-reference
Notice 2013-54 and clarify that amounts newly made available under an
HRA count toward an employee's required contribution if the HRA would
have been integrated with an eligible employer-sponsored plan if the
employee had enrolled in the primary plan.
Notice 2013-54 also provides that under certain circumstances an
HRA offered by an employer may be integrated with a group health plan
offered by a different employer, for example a plan offered by the
employer of an employee's spouse. Notice 2013-54 indicated, however,
that an HRA could not be integrated with a plan offered by another
employer for purposes of determining affordability and minimum value
under section 36B. Accordingly, the final regulations provide that, for
purposes of determining an individual's required contribution, an HRA
is taken into account only if the HRA and the primary eligible
employer-sponsored coverage are offered by the same employer.
Commenters suggested that HRAs should be considered integrated with
any plan that provides minimum essential coverage, whether that plan is
an employer plan or a plan purchased through a Marketplace. As
explained in Notice 2013-54, the combination of an HRA and a plan
purchased through a Marketplace may raise significant issues under the
market reforms applicable to the group insurance market. For this
reason, as well as to reduce complexity through consistent rules, the
Treasury Department and the IRS have concluded that the rules for
determining when an HRA is considered integrated with another group
health plan for purposes of section 5000A should be consistent with the
rules applicable for purposes of application of the market reforms, and
the final regulations, therefore, cross-reference Notice 2013-54. The
rules addressed in Notice 2013-54 are under the jurisdiction of the
Departments of Labor and HHS as well as the Treasury Department and the
IRS and are, therefore, outside the scope of these regulations.
Under the section 36B proposed regulations, HRA amounts that may be
used to pay premiums or to pay both premiums and cost-sharing are
counted toward affordability. A commenter suggested that HRA amounts
should not count toward affordability unless the amounts may be used
only for premiums. The commenter observed that counting HRA amounts
that may be used either for premiums or cost-sharing in determining
affordability could lead to double counting for affordability and
minimum value purposes under section 36B.
The final regulations clarify that, in general, HRA contributions
count toward affordability, and not minimum value, if an employee may
use the HRA contributions to pay premiums for the primary plan only, or
to pay cost-sharing or benefits not covered by the primary plan in
addition to premiums. Under the section 36B proposed regulations, HRA
amounts that may be used only for cost-sharing are counted for purposes
of minimum value and not for affordability. Accordingly, HRA
contributions that can be used only to pay for cost-sharing do not
count toward affordability. The Treasury Department and the IRS
anticipate that the section 36B proposed regulations addressing HRA
contributions and minimum value will be adopted in section 36B final
regulations and, thus, HRA contributions that can be used for premiums
and cost-sharing will only count for affordability and there will be no
double counting of these contributions.
Commenters suggested that employers should be permitted to treat
HRA contributions as made in particular months during a year, which
could affect their potential liability under the employer shared
responsibility requirement of section 4980H. Employees who enroll in
eligible employer-sponsored coverage may not claim the premium tax
credit for their coverage in a qualified health plan and must be able
to determine the amount of their annual required contribution before
deciding whether to enroll in eligible employer-sponsored coverage.
Accordingly, the final regulations clarify that employer contributions
to an HRA count towards an employee's required contribution only to the
extent the amount of the annual contribution is required under the
terms of the plan or is otherwise determinable within a reasonable time
before the employee must decide whether to enroll. The Treasury
Department and the IRS anticipate adopting the same rule when the
section 36B proposed regulations are finalized.
A commenter argued that health insurance issuers should not be
required to determine if employers are making contributions to an HRA
or HSA or otherwise determine limitations employers place on the use of
funds in an HRA or HSA. Neither the proposed regulations under sections
36B or 5000A nor the final regulations impose these requirements on
health insurance issuers.
A commenter stated that stand-alone HRAs for pre-Medicare eligible
retirees should not be considered minimum essential coverage under
certain circumstances. The final regulations do not address this issue,
which is outside the scope of the regulations.
C. Wellness Program Incentives
The proposed regulations provide that, in determining whether
coverage under an eligible employer-sponsored plan is affordable for
purposes of the affordability exemption in section 5000A(e)(1),
nondiscriminatory wellness program incentives are treated as earned
only if the incentives relate to tobacco use. For this purpose, a
nondiscriminatory wellness program is a wellness program that does not
violate the wellness plan regulations whether the program is
participatory or outcome based. See Sec. 54.9802-1(f), 29 CFR
2590.702(f), and 45 CFR 146.121(f) for regulations governing wellness
program incentives issued by the Departments of
[[Page 70467]]
Labor and HHS, and the Treasury Department and the IRS (tri-agency
regulations). The section 36B proposed regulations include an identical
rule for counting wellness program incentives in determining an
individual's required contribution. Comments were received on both the
rule in the proposed regulations and the identical rule in the section
36B proposed regulations. Both sets of comments were considered in the
development of these final regulations.
The proposed regulations provide that the affordability of eligible
employer-sponsored coverage is determined by assuming that each
employee fails to satisfy the requirements of a wellness program,
except the requirements of a nondiscriminatory wellness program related
to tobacco use. Thus, the affordability of coverage that requires a
higher initial premium for tobacco users is determined based on the
premium that is charged to non-tobacco users or to tobacco users who
complete the related wellness program, such as attending smoking
cessation classes.
Some commenters requested that all wellness incentives, including
those related to tobacco use, be treated as unearned when determining
the affordability and minimum value of an offer of eligible employer-
sponsored coverage. These commenters asserted that wellness incentives
could be used to discriminate based on health status or that certain
individuals would be unable to complete the wellness program and earn
the wellness incentives.
Other commenters requested that all wellness incentives, including
those related to tobacco use, be treated as earned when determining the
affordability and minimum value of an offer of eligible employer-
sponsored coverage. These commenters asserted that wellness incentives
are an effective way of encouraging healthy lifestyle adjustments and
reducing health costs and that the consumer protections in the tri-
agency regulations that were finalized on June 3, 2013 (TD 9620, 78 FR
33158), ensure that wellness incentives will not be used to
discriminate based on health status or burdens to employees. Some of
these commenters advised, however, that if the final regulations do not
treat all wellness incentives as unearned, they favor the proposed rule
as a reasonable alternative.
After consideration of these comments, the final regulations retain
the rules in the proposed regulations that wellness incentives
unrelated to tobacco use are treated as unearned and wellness
incentives related to tobacco use are treated as earned in determining
affordability. These rules are consistent with policies related to
tobacco use reflected in the Affordable Care Act, such as allowing
issuers to charge higher premiums based on tobacco use. The Treasury
Department and the IRS anticipate adopting the same rules when the
section 36B proposed regulations are finalized.
Commenters requested guidance on whether a wellness incentive is
treated as earned or unearned when an employee must complete a wellness
program related to tobacco use and a program unrelated to tobacco use
to receive an incentive. The final regulations clarify that a wellness
incentive that includes any component unrelated to tobacco use is
treated as unearned. If, however, there is an incentive for completing
a program unrelated to tobacco use and a separate incentive for
completing a program related to tobacco use, then the incentive related
to tobacco use may be treated as earned.
A commenter requested clarification that programs that provide a
discount or rebate and programs that impose a surcharge both provide
wellness program incentives under the final regulations. Another
commenter asked that the final regulations clarify that
nondiscriminatory wellness programs include both participatory and
health-contingent wellness programs. The final regulations clarify that
the term wellness program incentives has the same meaning as the term
reward in the tri-agency regulations. Thus, programs that provide a
discount or rebate, programs that impose a surcharge, and participatory
and health-contingent wellness programs are wellness program incentives
under the final regulations.
III. Hardship Exemptions
Under section 5000A(e)(5), an individual is exempt from section
5000A if the individual has an exemption certification issued by the
Marketplace stating that HHS has determined that the individual
suffered a hardship with respect to the ability to obtain minimum
essential coverage. The proposed regulations provide that, under
certain circumstances, a taxpayer may claim a hardship exemption on a
Federal income tax return without first obtaining a hardship exemption
certification from a Marketplace. Specifically, the proposed
regulations provide that an individual may claim a hardship exemption
on the Federal income tax return if they are specifically described in
45 CFR 155.605(g)(3) (relating to individuals with gross income below
the filing threshold) or 45 CFR 155.605(g)(5) (relating to employed and
related individuals whose combined cost of employer-sponsored coverage
exceeds the required contribution percentage), or if the individual is
described HHS guidance released on October 28, 2013 (relating to
individuals who enrolled in a plan through a Marketplace before the
close of the open enrollment period in 2014 but had a gap in coverage
before the coverage was effective).
Finally, the proposed regulations provide that a taxpayer may claim
a hardship exemption on a Federal income tax return in any situation
that is (1) described in published guidance issued by HHS permitting an
individual to claim the exemption on a Federal income tax return, and
(2) described in published guidance issued by the IRS that allows an
individual to claim the exemption on a Federal income tax return
without obtaining a hardship exemption certification.
Commenters requested that taxpayers be allowed to claim other
hardship exemptions without obtaining hardship exemption
certifications. Specifically, commenters requested that taxpayers
eligible for the hardship exemption described in 45 CFR 155.605(g)(6),
for an Indian eligible for services through Indian Health Service (IHS)
or through an Indian health care provider, be allowed to claim the
exemption without obtaining a hardship exemption certification from a
Marketplace. HHS issued guidance on September 18, 2014, that addresses
this comment. In particular, the HHS guidance identified the hardship
situation described in 45 CFR 155.605(g)(6) and indicated that an
exemption for that hardship may be claimed on a Federal income tax
return pursuant to guidance issued by the Treasury Department and the
IRS. See HHS Centers for Medicare & Medicaid Services, Shared
Responsibility Guidance--Exemption for Individuals Eligible for
Services through an Indian Health Care Provider (Sept. 18, 2014)
(available at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/guidance-exemption-certain-AIAN.pdf).
Commenters also requested that a taxpayer be allowed to claim a
hardship exemption without obtaining a hardship exemption certification
if he or she is eligible for the hardship exemption described in 45 CFR
155.605(g)(4), which applies to an individual who is determined
ineligible for Medicaid for one or more months during a benefit year
solely because the individual resides in a state that has not expanded
Medicaid under section 2001(a) of the Affordable Care Act. HHS issued
guidance on November 21, 2014,
[[Page 70468]]
addressing this comment. In particular, the HHS guidance provides that
an individual is eligible for a hardship exemption for the taxable year
if at any time during 2014 the individual resided in a state that did
not expand Medicaid coverage and the individual's household income,
within the meaning of section 36B, is below 138 percent of the
applicable federal poverty level for the individual's family size. See
HHS Centers for Medicare & Medicaid Services, Guidance on Hardship
Exemptions for Persons Meeting Certain Criteria (Nov. 21, 2014)
(available at www.cms.gov).
To consolidate the list of circumstances described in the proposed
regulations with any additional circumstances that have been or will be
identified, Sec. 1.5000A-3(h)(3)(i) of the final regulations removes
the references to specific hardship circumstances and instead provides
that a taxpayer may claim a hardship exemption on a Federal income tax
return without obtaining an exemption certification for any month that
includes a day on which the taxpayer satisfies the requirements of a
hardship for which HHS, and the Treasury Department and the IRS, issue
published guidance. Notice 2014-76, 2014-50 IRB (available at
www.irs.gov) (see Sec. 601.601(d)), released concurrently with these
regulations, provides a comprehensive list of all hardship exemptions
that may be claimed on a Federal income tax return without obtaining a
hardship exemption certification. The list of hardship exemptions that
may be claimed on a Federal income tax return without obtaining a
hardship exemption certification includes the following: (a) The
hardship exemptions described in 45 CFR 155.605(g)(3) and (g)(5); (b)
the hardship exemption described in HHS guidance issued October 28,
2013, relating to individuals enrolled in Marketplace coverage on or
before March 31, 2014; (c) the hardship exemption described in HHS
guidance released on March 26, 2014, relating to individuals ``in
line'' to enroll in coverage through the Marketplace on March 31, 2013;
(d) the hardship exemption described in HHS guidance released on March
31, 2014, relating to individuals who applied for CHIP during the 2014
open enrollment period and were found eligible; (e) the hardship
exemption described in HHS guidance released on May 2, 2014, relating
to individuals who enrolled outside the Marketplace in minimum
essential coverage that is effective on or before May 1, 2014; (f) the
hardship exemption described in HHS guidance issued September 18, 2014,
relating to individuals eligible for services through an Indian health
care provider; and (g) the hardship exemption described in HHS guidance
issued November 21, 2014, relating to individuals with specified
household incomes who reside in a state that did not expand Medicaid.
Commenters requested that the IRS, in conjunction with HHS, adopt
additional hardship exemptions to address specific situations. Other
commenters requested that the transition relief provided in Notice
2014-10, 2014-9 IRB 605, for individuals enrolled in limited benefit
Medicaid programs that are not minimum essential coverage be extended
to 2015. Some commenters specifically requested that no additional
transition relief be provided.
Authority to define circumstances giving rise to a hardship
exemption, as well as authority to grant hardship exemptions in
individual cases, resides with HHS. In guidance released on November 7,
2014, HHS described additional circumstances that Marketplaces may use
when determining what constitutes a hardship effective January 1, 2015.
HHS Centers for Medicare & Medicaid Services, Minimum Essential
Coverage (SHO #14-002) (Nov. 7, 2014) (available at www.medicaid.gov/federal-policy-guidance/downloads/sho-14-002.pdf). The additional
circumstances include enrollment in Medicaid coverage for pregnant
women and for medically needy individuals that is not minimum essential
coverage. HHS provides additional guidance on the hardship exemption in
regulations. See Patient Protection and Affordable Care Act: Exchange
Functions: Eligibility for Exemptions; Miscellaneous Minimum Essential
Coverage Provisions, 78 FR 39494 (codified at 45 CFR part 155).
Special Analyses
It has been determined that this Treasury decision is not a
significant regulatory action as defined in Executive Order 12866, as
supplemented by Executive Order 13563. Therefore, a regulatory
assessment is not required. Section 553(b) of the Administrative
Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations,
and, because the regulations do not impose a collection of information
requirement on small entities, the Regulatory Flexibility Act (5 U.S.C.
chapter 6) does not apply. Pursuant to section 7805(f), the notice of
proposed rulemaking that preceded these final regulations was submitted
to the Chief Counsel for Advocacy of the Small Business Administration
for comment on its impact on small business, and no comments were
received.
Drafting Information
The principal authors of these final regulations are Sue-Jean Kim
and John B. Lovelace of the Office of Associate Chief Counsel (Income
Tax and Accounting). Other personnel from the Treasury Department and
the IRS participated in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
Accordingly, 26 CFR part 1 is amended as follows:
PART 1--INCOME TAXES
0
Paragraph 1. The authority citation for part 1 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
0
Par 2. An undesignated center heading is added immediately following
Sec. 1.1563-4 to read as follows:
Individual Shared Responsibility Payment for Not Maintaining Minimum
Essential Coverage
0
Par. 3. Section 1.5000A-0 is amended by:
0
1. Revising the entry for Sec. 1.5000A-2(b)(2).
0
2. Removing the entries for Sec. 1.5000A-2(b)(2)(i), (b)(2)(ii), and
(b)(2)(iii).
0
3. Revising the entries for Sec. 1.5000A-3(e)(4)(ii)(C) and
(e)(4)(ii)(D).
0
4. Adding a new entry for Sec. 1.5000A-3(e)(4)(ii)(E).
0
5. Revising the entry for Sec. 1.5000A-3(h)(3).
The revisions and addition read as follows.
Sec. 1.5000A-0 Table of contents.
* * * * *
Sec. 1.5000A-2 Minimum essential coverage.
* * * * *
(b) * * *
(2) Certain health care coverage not minimum essential coverage
under a government-sponsored program.
* * * * *
Sec. 1.5000A-3 Exempt individuals.
* * * * *
(e) * * *
(4) * * *
(ii) * * *
(C) Wellness program incentives.
[[Page 70469]]
(D) Credit allowable under section 36B.
(E) Required contribution for part-year period.
* * * * *
(h) * * *
(3) Hardship exemption without hardship exemption certification.
* * * * *
0
Par. 4. Section 1.5000A-2 is amended by:
0
1. Revising paragraphs (b)(1)(ii) and (b)(2).
0
2. Removing the language ``health insurance'' in paragraph (g).
The revisions read as follows:
Sec. 1.5000A-2 Minimum essential coverage.
* * * * *
(b) * * *
(1) * * *
(ii) Medicaid. The Medicaid program under Title XIX of the Social
Security Act (42 U.S.C. 1396 and following sections);
* * * * *
(2) Certain health care coverage not minimum essential coverage
under a government-sponsored program. Government-sponsored program does
not mean any of the following:
(i) Optional coverage of family planning services under section
1902(a)(10)(A)(ii)(XXI) of the Social Security Act (42 U.S.C.
1396a(a)(10)(A)(ii)(XXI));
(ii) Optional coverage of tuberculosis-related services under
section 1902(a)(10)(A)(ii)(XII) of the Social Security Act (42 U.S.C.
1396a(a)(10)(A)(ii)(XII));
(iii) Coverage of pregnancy-related services under section
1902(a)(10)(A)(i)(IV) and (a)(10)(A)(ii)(IX) of the Social Security Act
(42 U.S.C. 1396a(a)(10)(A)(i)(IV), (a)(10)(A)(ii)(IX));
(iv) Coverage limited to treatment of emergency medical conditions
in accordance with 8 U.S.C. 1611(b)(1)(A), as authorized by section
1903(v) of the Social Security Act (42 U.S.C. 1396b(v));
(v) Coverage for medically needy individuals under section
1902(a)(10)(C) of the Social Security Act (42 U.S.C. 1396a(a)(10)(C))
and 42 CFR 435.300 and following sections;
(vi) Coverage authorized under section 1115(a) of the Social
Security Act (42 U.S.C. 1315(a));
(vii) Coverage under section 1079(a), 1086(c)(1), or 1086(d)(1) of
title 10, U.S.C., that is solely limited to space available care in a
facility of the uniformed services for individuals excluded from
TRICARE coverage for care from private sector providers; and
(viii) Coverage under sections 1074a and 1074b of title 10, U.S.C.,
for an injury, illness, or disease incurred or aggravated in the line
of duty for individuals who are not on active duty.
* * * * *
0
Par. 5. Section 1.5000A-3 is amended by:
0
1. Revising paragraph (e)(3)(ii)(D).
0
2. Redesignating paragraph (e)(3)(ii)(E) as (e)(3)(ii)(F), revising
newly redesignated paragraph (e)(3)(ii)(F), and adding a new paragraph
(e)(3)(ii)(E).
0
3. Redesignating paragraphs (e)(4)(ii)(C) and (e)(4)(ii)(D) as
(e)(4)(ii)(D) and (e)(4)(ii)(E), respectively, and adding and reserving
a new paragraph (e)(4)(ii)(C).
0
4. Revising paragraphs (h)(1) and (h)(3).
The revisions and additions read as follows:
Sec. 1.5000A-3 Exempt individuals.
* * * * *
(e) * * *
(3) * * *
(ii) * * *
(D) Employer contributions to health reimbursement arrangements.
Amounts newly made available for the current plan year under a health
reimbursement arrangement that an employee may use to pay premiums, or
may use to pay cost-sharing or benefits not covered by the primary plan
in addition to premiums, are counted toward the employee's required
contribution if the health reimbursement arrangement would be
integrated, as that term is used in Notice 2013-54 (2013-40 IRB 287) or
in any successor published guidance (see Sec. 601.601(d) of this
chapter), with an eligible employer-sponsored plan for an employee
enrolled in the plan. The eligible employer-sponsored plan and the
health reimbursement arrangement must be offered by the same employer.
Employer contributions to a health reimbursement arrangement count
toward an employee's required contribution only to the extent the
amount of the annual contribution is required under the terms of the
plan or otherwise determinable within a reasonable time before the
employee must decide whether to enroll in the eligible employer-
sponsored plan.
(E) Employer contributions to cafeteria plans. Amounts made
available for the current plan year under a cafeteria plan, within the
meaning of section 125, are taken into account in determining an
employee's or a related individual's required contribution if:
(1) The employee may not opt to receive the amount as a taxable
benefit;
(2) The employee may use the amount to pay for minimum essential
coverage; and
(3) The employee may use the amount exclusively to pay for medical
care, within the meaning of section 213.
(F) Wellness program incentives. Nondiscriminatory wellness program
incentives, within the meaning of Sec. 54.9802-1(f) of this chapter,
offered by an eligible employer-sponsored plan that affect premiums are
treated as earned in determining an employee's required contribution
for purposes of affordability of an eligible employer-sponsored plan to
the extent the incentives relate exclusively to tobacco use. Wellness
program incentives that do not relate to tobacco use or that include a
component unrelated to tobacco use are treated as not earned for this
purpose. For purposes of this section, the term wellness program
incentive has the same meaning as the term reward in Sec. 54.9802-
1(f)(1)(i) of this chapter.
* * * * *
(4) * * *
(ii) * * *
(C) Wellness programs incentives. [Reserved]
* * * * *
(h) Individuals with hardship exemption certification--(1) In
general. Except as provided in paragraph (h)(3) of this section, an
individual is an exempt individual for a month that includes a day on
which the individual has in effect a hardship exemption certification
described in paragraph (h)(2) of this section.
* * * * *
(3) Hardship exemption without hardship exemption certification. An
individual may claim an exemption without obtaining a hardship
exemption certification described in paragraph (h)(2) of this section
for any month that includes a day on which the individual meets the
requirements of any hardship for which:
(i) The Secretary of HHS issues guidance of general applicability
describing the hardship and indicating that an exemption for such
hardship can be claimed on a Federal income tax return pursuant to
guidance published by the Secretary; and
(ii) The Secretary issues published guidance of general
applicability, see Sec. 601.601(d)(2) of this chapter, allowing an
individual to claim the hardship exemption on a return without
obtaining a hardship exemption from an Exchange.
* * * * *
0
Par. 6. Section 1.5000A-4 is amended by revising paragraph (a)
introductory text and paragraph (a)(1) to read as follows:
[[Page 70470]]
Sec. 1.5000A-4 Computation of shared responsibility payment.
(a) In general. For each taxable year, the shared responsibility
payment imposed on a taxpayer in accordance with Sec. 1.5000A-1(c) is
the lesser of--
(1) The sum of the monthly penalty amounts; or
* * * * *
John Dalrymple,
Deputy Commissioner for Services and Enforcement.
Approved: November 20, 2014.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2014-27998 Filed 11-21-14; 4:15 pm]
BILLING CODE 4830-01-P