Definition of the Term “Coverage Month” for Computing the Premium Tax Credit, 75984-75990 [2024-20758]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 89, Number 180 (Tuesday, September 17, 2024)]
[Proposed Rules]
[Pages 75984-75990]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-20758]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-116787-23]
RIN 1545-BR31


Definition of the Term ``Coverage Month'' for Computing the 
Premium Tax Credit

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking and public hearing.

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SUMMARY: This document contains proposed regulations that would amend 
the definition of ``coverage month'' and amend certain other rules in 
existing income tax regulations regarding the computation of an 
individual taxpayer's premium tax credit (PTC). The proposed coverage 
month amendment generally would provide that, in computing a PTC, a 
month may be a coverage month for an individual if the amount of the 
premium paid, including by advance payments of the PTC (APTC), for the 
month for the individual's coverage is sufficient to avoid termination 
of the individual's coverage for that month. The proposal also would 
amend the existing regulations relating to the amount of enrollment 
premiums used in computing the taxpayer's monthly PTC if a portion of 
the monthly enrollment premium for a coverage month is unpaid. Finally, 
the proposed regulations would clarify when an individual is considered 
to be ineligible for coverage under a State's Basic Health Program 
(BHP). The proposed regulations would affect taxpayers who enroll 
themselves, or enroll a family member, in individual health insurance 
coverage through a Health Insurance Exchange (Exchange) and may be 
allowed a PTC for the coverage. This document also provides a notice of 
a public hearing on these proposed regulations.

[[Page 75985]]


DATES: Electronic or written comments must be received by November 1, 
2024. A public hearing on this proposed regulation has been scheduled 
for December 13, 2024, at 10:00 a.m. ET. Requests to speak and outlines 
of topics to be discussed at the public hearing must be received by 
November 1, 2024. If no outlines are received by November 1, 2024, the 
public hearing will be cancelled.

ADDRESSES: Commenters are strongly encouraged to submit public comments 
electronically. Submit electronic submissions via the Federal 
eRulemaking Portal at https://www.regulations.gov (indicate IRS and 
REG-116787-23) by following the online instructions for submitting 
comments. Once submitted to the Federal eRulemaking Portal, comments 
cannot be edited or withdrawn. The Department of the Treasury (Treasury 
Department) and the IRS will publish for public availability any 
comments to the IRS's public docket. Send paper submissions to: 
CC:PA:01:PR (REG-116787-23), Room 5203, Internal Revenue Service, P.O. 
Box 7604, Ben Franklin Station, Washington, DC 20044.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Clara Raymond at (202) 317-4718; concerning submission of comments or 
outlines, or requests for a public hearing, Vivian Hayes at (202) 317-
6901 (not toll-free numbers) or [email protected] (preferred).

SUPPLEMENTARY INFORMATION:

Authority

    This document contains proposed amendments to the Income Tax 
Regulations (26 CFR part 1) under section 36B of the Internal Revenue 
Code (Code). Section 36B(h) provides an express delegation of authority 
for the Secretary of the Treasury or her delegate to prescribe 
regulations as may be necessary to carry out section 36B, including 
regulations that provide for the coordination of the credit allowed 
under 36B with the program for advance payment of the credit under 
section 1412 of the Affordable Care Act.\1\ The proposed regulations 
are also issued under the express delegation of authority under section 
7805 of the Code.
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    \1\ The Affordable Care Act (or ACA) refers to the Patient 
Protection and Affordable Care Act (Pub. L. 111-148, enacted on 
March 23, 2010), as amended by the Health Care and Education 
Reconciliation Act of 2010 (Pub. L. 111-152, enacted on March 30, 
2010).
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Background

I. Definition of ``Coverage Month'' and Computation of PTC

    Section 36B provides a PTC for applicable taxpayers who meet 
certain eligibility requirements, including that a member of the 
taxpayer's family enrolls in a qualified health plan (QHP) through an 
Exchange for one or more ``coverage months.''
    Section 1.36B-3(c)(1) provides that a month is a coverage month for 
an individual if (i) as of the first day of the month, the individual 
is enrolled in a QHP through an Exchange; (ii) the taxpayer pays the 
taxpayer's share of the premium for the individual's coverage under the 
plan for the month by the unextended due date for filing the taxpayer's 
income tax return for that taxable year, or the full premium for the 
month is paid by APTC; and (iii) the individual is not eligible for the 
full calendar month for minimum essential coverage (within the meaning 
of Sec.  1.36B-2(c)) other than coverage described in section 
5000A(f)(1)(C) of the Code (relating to coverage in the individual 
market).
    Section 1.36B-3(d)(1) provides that the PTC (also called the 
premium assistance amount) for a coverage month is the lesser of (i) 
the premiums for the month, reduced by any amounts that were refunded, 
for one or more QHPs in which a taxpayer or a member of the taxpayer's 
family enrolls (enrollment premiums); or (ii) the excess of the 
adjusted monthly premium for the applicable benchmark plan over \1/12\ 
of the product of a taxpayer's household income and the applicable 
percentage for the taxable year. Family is defined in Sec.  1.36B-1(d), 
and the applicable percentage is defined in Sec.  1.36B-3(g).
    Section 36B(f)(3) and Sec.  1.36B-5 require Exchanges to report to 
QHP enrollees and the IRS certain information, including monthly 
enrollment premiums, needed to compute the PTC allowed for the 
enrollee. This information is reported to enrollees on IRS Form 1095-A, 
Health Insurance Marketplace Statement. The Centers for Medicare & 
Medicaid Services (CMS), part of the Department of Health and Human 
Services (HHS), is responsible for the Form 1095-A reporting for 
Exchanges that use the Federal eligibility and enrollment platform 
(Federally-facilitated Exchanges, or FFEs, and State-based Exchanges on 
the Federal platform, or SBE-FPs). State Exchanges with their own 
platforms (State Exchanges) are responsible for the Form 1095-A 
reporting for individuals who enroll in their State Exchange.
    HHS regulations at 45 CFR 156.270(d) implement section 
1412(c)(2)(B)(iv)(II) of the Affordable Care Act to require issuers of 
QHPs to allow a ``grace period'' for enrollees for whom APTC is paid 
but who fail to timely pay their share of the premium for the coverage. 
In general, a QHP issuer must provide a grace period of 3 consecutive 
months for such an enrollee before the issuer may terminate the 
enrollee's coverage. During the first month of the grace period, the 
QHP issuer must pay all appropriate claims for services rendered, and, 
during the second and third months of the grace period, the QHP issuer 
may pend claims.
    HHS regulations at 45 CFR 155.400(g) allow issuers to implement a 
premium payment threshold policy under which issuers can consider 
enrollees to have paid all amounts due if the enrollees pay an amount 
sufficient to maintain a percentage of total premium paid out of the 
total premium owed equal to or greater than a level prescribed by the 
issuer, provided that the level and the policy are applied in a uniform 
manner to all enrollees. If an enrollee satisfies these conditions, the 
issuer may provide coverage even though the full enrollment premium is 
not paid.
    In certain States, issuers also may provide coverage without 
payment of the full enrollment premium if a State department of 
insurance prohibits an issuer from terminating QHP coverage during a 
declared emergency.
    For a month for which a taxpayer's share of the enrollment premium 
is not paid in full, the current instructions for Form 1095-A require 
Exchanges to report $0 on Form 1095-A as the enrollment premium for 
that month, which signals to the taxpayer and the IRS that no PTC is 
allowed for that month (non-payment month) because a month in which the 
premium is not paid in full is not a coverage month. Thus, if an 
individual is enrolled in a QHP with APTC for a month but does not pay 
the full amount of the monthly premium as permitted under 45 CFR 
156.270(d), 45 CFR 155.400(g), or applicable State law, $0 should be 
reported as the enrollment premium for the month, and a PTC is not 
allowed for that month for the coverage.
    CMS has informed the Treasury Department and the IRS that, because 
CMS is not the entity that collects premium payments from an enrollee, 
implementing the section 36B definition of coverage month is 
challenging for CMS in situations in which the taxpayer's share of the 
premium is not paid in full but the taxpayer (or the taxpayer's 
enrollee) nevertheless may remain enrolled in a QHP with APTC,

[[Page 75986]]

if applicable, under 45 CFR 156.270(d), 45 CFR 155.400(g), or 
applicable State law. An audit by the HHS Office of Inspector General 
\2\ found that CMS currently reports to FFE and SBE-FP enrollees and 
the IRS on Form 1095-A the full enrollment premium for the first month 
of a grace period, notwithstanding that the taxpayer's share of the 
full premium for that month may never have been paid. Similarly, CMS 
currently reports to FFE and SBE-FP enrollees and the IRS on Form 1095-
A the full enrollment premium (1) for months for which an issuer 
provides coverage to enrollees who satisfy the premium payment 
threshold, and (2) for months for which an issuer has been ordered by a 
State department of insurance, during a declared emergency, not to 
terminate an enrollee's coverage for the month even though the full 
premium has not been paid. Consequently, for these two scenarios as 
well as the grace period scenario, FFEs and SBE-FPs treat a month as a 
coverage month for which APTC is allowed, and the IRS would not have 
information to disallow a PTC for the month because the full enrollment 
premium is reported for the month.
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    \2\ CMS AUTHORIZED HUNDREDS OF MILLIONS OF DOLLARS IN ADVANCED 
PREMIUM TAX CREDITS ON BEHALF OF ENROLLEES WHO DID NOT MAKE THEIR 
REQUIRED PREMIUM PAYMENTS (A-02-19-02005), OIG, March 2021, accessed 
at https://oig.hhs.gov/oas/reports/region2/21902005.pdf.
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    In contrast, some State Exchanges have been reporting $0 as the 
enrollment premium for the first month of a grace period and for 
certain other months for which coverage was provided without the 
taxpayer's share of the full premium being paid. Consequently, 
taxpayers in these State Exchanges generally are unable to claim a PTC 
for those months.

II. Determination of Ineligibility for a State's BHP

    As noted in section I of this Background, Sec.  1.36B-3(c)(1) 
provides that a month is a coverage month for an individual only if, 
among other requirements, the individual is not eligible for the full 
calendar month for minimum essential coverage (within the meaning of 
Sec.  1.36B-2(c)) other than coverage described in section 
5000A(f)(1)(C) of the Code (relating to coverage in the individual 
market). Under section 5000A(f)(1)(A) and Sec.  1.5000A-2, the term 
``minimum essential coverage'' includes coverage under government-
sponsored programs such as Medicaid, Children's Health Insurance 
Program (CHIP), and a State's BHP.\3\
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    \3\ Under the authority in section 5000A(f)(1)(A) and Sec.  
1.5000A-2(f)(1)(E), coverage through a BHP standard health plan has 
been recognized as minimum essential coverage. See 42 CFR 600.5.
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    Section 1.36B-2(c)(2)(i) provides that, for purposes of determining 
whether a given month is a coverage month for an individual, an 
individual generally is considered eligible for government-sponsored 
minimum essential coverage if the individual meets the criteria for 
coverage under a government-sponsored program described in section 
5000A(f)(1)(A) as of the first day of the first full month the 
individual may receive benefits under the program.
    Section 1.36B-2(c)(2)(v) provides that an individual is treated as 
not eligible for Medicaid, CHIP, or a similar program for a period of 
coverage under a QHP if, when the individual enrolls in the QHP, an 
Exchange determines or considers (within the meaning of 45 CFR 
155.302(b)) the individual to be not eligible for Medicaid or CHIP.
    Under 42 U.S.C. 18051 and the implementing regulations at 42 CFR 
part 600, a State is allowed to establish a BHP for eligible 
individuals. Section 18051(e) provides that a resident of a State 
cannot be an eligible individual unless the individual is not eligible 
to enroll in the State's Medicaid program under title XIX of the Social 
Security Act for benefits that at a minimum consist of the essential 
health benefits described in 42 U.S.C. 18022(b).
    The Treasury Department and the IRS have become aware that the rule 
in Sec.  1.36B-2(c)(2)(v) relating to an individual being considered 
ineligible for coverage under a Medicaid, CHIP, or a similar program, 
is ambiguous as it applies to a State's BHP and should be clarified.

Explanation of Provisions

I. Change to the Definition of ``Coverage Month'' and Conforming 
Amendments to PTC Computation

    As explained in the Background section of this preamble, a PTC 
generally is allowed for a taxpayer for months that are coverage months 
for the taxpayer and other individuals in the taxpayer's family. 
Further, under Sec.  1.36B-3(c)(1)(ii), a month is not a coverage month 
for an individual unless the taxpayer pays the taxpayer's full share of 
the premium for the individual's coverage under the plan for the month 
by the unextended due date for filing the taxpayer's income tax return 
for that taxable year, or the full premium for the month is paid by 
APTC.
    Under HHS regulations at 45 CFR 156.270(d), issuers must provide 
coverage to enrollees for whom APTC is paid in the first month of a 
grace period, even if the enrollee's share of the premium for the 
coverage is unpaid. Thus, in that situation, the amount of the total 
premium paid by APTC is sufficient to allow for enrollees to remain 
covered. In addition, as noted in the Background section, Exchanges are 
not consistent in the manner they report enrollment premiums for the 
first month of a grace period, with some reporting the full premium for 
the month and others reporting $0. This inconsistent reporting may lead 
to disparate treatment among taxpayers, with some being allowed to 
claim a PTC for the first month of a grace period and others being 
denied PTC for such a month. The Treasury Department and the IRS are of 
the view that amending the coverage month rule would promote reporting 
consistency and thus would achieve more consistent treatment among 
taxpayers. Moreover, because HHS regulations require issuers to provide 
coverage for the first month of a grace period to enrollees for whom 
APTC is paid for that month, it is reasonable to provide consistent 
treatment for tax purposes. Thus, the proposed regulations would treat 
the first month of a grace period as a coverage month for PTC purposes 
if the other coverage month requirements in Sec.  1.36B-3(c) are 
satisfied. These proposed regulations are consistent with the express 
delegation of authority in section 36B(h)(1) to provide regulations 
that provide for coordination of the section 36B credit allowed with 
the APTC program.
    In addition to addressing the first month of a grace period, the 
proposed regulations would address two other scenarios in which an 
issuer provides coverage even though the full enrollment premium is not 
paid as permitted under applicable law. In the first scenario, some 
issuers provide coverage for a month as long as at least a certain 
portion of the enrollee's premium for the month is paid, as permitted 
under CMS's premium payment threshold policy. The Treasury Department 
and the IRS are of the view that a month for which coverage is provided 
because a premium payment threshold is met should not fail to be a 
coverage month solely because the full premium has not been paid. 
Otherwise, a taxpayer could have monthly PTC disallowed due to a 
relatively small amount of unpaid premium, resulting in a tax liability 
that far exceeds the amount of the unpaid premium, for a

[[Page 75987]]

month in which the amount paid for the coverage met the threshold for 
the provision of coverage permitted by HHS.
    The second scenario involves a State department of insurance 
prohibiting an issuer from terminating QHP coverage during a declared 
emergency. In this scenario, if the issuer provides coverage for a 
month even though the enrollee's portion of the premium has not been 
fully paid, the Treasury Department and the IRS are of the view that 
the month should not fail to be a coverage month solely because the 
full premium has not been paid. This month should be treated as a 
coverage month because the portion, if any, of the premium that was 
paid is sufficient to provide coverage to the enrollees during an 
emergency situation under applicable State law.
    Consequently, pursuant to the express delegations of authority in 
sections 36B(h) and 7805, the proposed regulations would provide that, 
under these three scenarios, a month may be a coverage month for a 
taxpayer irrespective of whether the full premium for the month is paid 
by the unextended due date of the taxpayer's return for the year of 
coverage. The Treasury Department and the IRS request comments on 
whether there are other scenarios in which an issuer does not terminate 
coverage for a month for which the full premium has not been paid and 
whether such a month should be treated as a coverage month.
    The proposed amendment to the definition of ``coverage month'' in 
Sec.  1.36B-3(c)(1) would require a conforming change to the 
calculation of the monthly PTC amount under Sec.  1.36B-3(d)(1)(i), 
which provides, in effect, that monthly PTC for a coverage month cannot 
exceed the premiums for the month, reduced by any amounts that were 
refunded in the same taxable year as the premium liability. If a month 
in which a portion of the enrollment premiums is unpaid is a coverage 
month, the premium used to compute the PTC for the month should not 
include the unpaid portion. Otherwise, a taxpayer could receive a 
monthly PTC for coverage that exceeds the amount of the premium paid 
for the coverage, which would result in an undue windfall to the 
taxpayer. In addition, as noted previously, existing regulations 
require, in computing monthly PTC, enrollment premiums to be reduced by 
amounts refunded in the year of coverage. Consistent with the existing 
rule for computing monthly PTC, the premiums used for computing monthly 
PTC under the proposed rule also should be reduced by unpaid amounts. 
Thus, pursuant to the express delegations of authority in sections 
36B(h) and 7805, the proposed regulations would provide that the 
premium for a month to be considered in determining PTC for an 
individual's coverage must be reduced by amounts refunded in the same 
taxable year as the premium liability is incurred and by any portion of 
the premium that is unpaid as of the unextended due date for filing the 
taxpayer's income tax return for the taxable year that includes the 
month. Taxpayers would be instructed to comply with this rule by 
reducing their enrollment premiums on Form 8962, Premium Tax Credit 
(PTC), for a coverage month by any amount that remains unpaid as of the 
unextended due date of their return.

II. Determination of Ineligibility for Medicaid, CHIP, or a Similar 
Program

    As discussed in the Background section of this preamble, Sec.  
1.36B-2(c)(2)(v) provides that an individual is treated as not eligible 
for Medicaid, CHIP, or a similar program for a period of coverage under 
a QHP if, when the individual enrolls in the QHP, an Exchange 
determines or assesses the individual to be not eligible for Medicaid 
or CHIP. The first part of the sentence references ``Medicaid, CHIP or 
similar program,'' which includes a State's BHP. See 81 FR 91755, 
91756. However, the second part of the sentence references only 
Medicaid or CHIP determinations under 45 CFR 155.302(b) and says 
nothing about determinations of eligibility under similar programs such 
as State BHPs. The unintended consequence of this language is that an 
individual who meets the criteria for coverage under a State BHP could 
be considered ineligible for the BHP coverage if the Exchange 
determines that the individual is ineligible for Medicaid or CHIP. 
Based on the Exchange determination of ineligibility for Medicaid or 
CHIP, the individual could enroll in a QHP and be allowed a PTC for the 
QHP coverage.
    Consequently, pursuant to the express delegations of authority in 
sections 36B(h) and 7805, the proposed regulations would clarify that 
an individual is treated as not eligible for Medicaid, CHIP, or a 
similar program such as a State BHP, for a period of coverage under a 
QHP if, when the individual enrolls in the QHP, an Exchange conducts an 
eligibility determination or, if applicable, eligibility assessment 
(within the meaning of 45 CFR 155.302(b)) for Medicaid, CHIP, or a 
similar program and determines or assesses the individual to be not 
eligible for coverage under the program. Thus, under the proposed 
revision, an individual's determination of ineligibility for Medicaid 
or CHIP would not affect whether the individual is treated as 
ineligible for BHP coverage for purposes of determining whether a PTC 
is allowed.

III. Severability

    If any provision in this rulemaking is held to be invalid or 
unenforceable facially, or as applied to any person or circumstance, it 
shall be severable from the remainder of this rulemaking, and shall not 
affect the remainder thereof, or the application of the provision to 
other persons not similarly situated or to other dissimilar 
circumstances.

Statement of Availability of IRS Documents

    Guidance cited in this preamble is published in the Internal 
Revenue Bulletin and is available from the Superintendent of Documents, 
U.S. Government Publishing Office, Washington, DC 20402, or by visiting 
the IRS website at https://www.irs.gov.

Proposed Applicability Dates

    The proposed regulations under Sec. Sec.  1.36B-2 and 1.36B-3 are 
proposed to apply for taxable years beginning on or after the first 
date of the calendar year that begins after the date these regulations 
are published as final regulations in the Federal Register.

Special Analyses

I. Regulatory Planning and Review

    Pursuant to the Memorandum of Agreement, Review of Treasury 
Regulations under Executive Order 12866 (June 9, 2023), tax regulatory 
actions issued by the IRS are not subject to the requirements of 
section 6 of Executive Order 12866, as amended. Therefore, a regulatory 
impact assessment is not required.

II. Paperwork Reduction Act

    These proposed regulations do not impose any additional information 
collection requirements in the form of reporting, recordkeeping 
requirements, or third-party disclosure statements. Taxpayers who claim 
PTC on their income tax returns are required to file Form 8962, which 
is the sole collection of information requirement imposed by section 
36B and the regulations under section 36B. The rules in these proposed 
regulations, if finalized, would require the IRS to revise the 
instructions for Form 8962. For purposes of the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3507(c)), the reporting burden associated with the 
collection of information for Form 8962 will be

[[Page 75988]]

reflected in the PRA submission associated with income tax returns 
under the OMB control number 1545-0074. To the extent there is a change 
in burden because of these proposed regulations, the change in burden 
will be reflected in the updated burden estimates for Form 8962.

III. Regulatory Flexibility Act

    When an agency issues a proposed rulemaking, the Regulatory 
Flexibility Act (5 U.S.C. chapter 6) (RFA) requires the agency to 
``prepare and make available for public comment an initial regulatory 
flexibility analysis'' that ``describe[s] the impact of the proposed 
rule on small entities.'' See 5 U.S.C. 603(a). The term ``small 
entities'' is defined in 5 U.S.C. 601 to mean ``small business,'' 
``small organization,'' and ``small governmental jurisdiction,'' which 
are also defined in 5 U.S.C. 601. Small business size standards define 
whether a business is ``small'' and have been established for types of 
economic activities, or industry, generally under the North American 
Industry Classification System (NAICS). See title 13, part 121 of the 
Code of Federal Regulations (Small Business Size Regulations). The size 
standards look at various factors, including annual receipts, number of 
employees, and amount of assets, to determine whether the business is 
small. See title 13, Sec.  121.201 of the Code of Federal Regulations 
for the Small Business Size Standards by NAICS Industry.
    Section 605 of the RFA provides an exception to the requirement to 
prepare an initial regulatory flexibility analysis if the agency 
certifies that the proposed rulemaking will not have a significant 
economic impact on a substantial number of small entities. The Treasury 
Department and the IRS hereby certify that these proposed regulations 
will not have a significant economic impact on a substantial number of 
small entities. This certification is based on the fact that the 
majority of the effect of the proposed regulations falls on individual 
taxpayers, and entities will experience only small changes.
    Pursuant to section 7805(f) of the Code, these proposed regulations 
have been submitted to the Chief Counsel for the Office of Advocacy of 
the Small Business Administration for comment on their impact on small 
business.

IV. Unfunded Mandates Reform Act

    Section 202 of the Unfunded Mandates Reform Act of 1995 requires 
that agencies assess anticipated costs and benefits and take certain 
other actions before issuing a final rule that includes any Federal 
mandate that may result in expenditures in any one year by a State, 
local, or Tribal government, in the aggregate, or by the private 
sector, of $100 million (updated annually for inflation). This proposed 
rule does not include any Federal mandate that may result in 
expenditures by State, local, or Tribal governments, or by the private 
sector in excess of that threshold.

V. Executive Order 13132: Federalism

    E.O. 13132 (Federalism) prohibits an agency from publishing any 
rule that has federalism implications if the rule either imposes 
substantial, direct compliance costs on State and local governments, 
and is not required by statute, or preempts State law, unless the 
agency meets the consultation and funding requirements of section 6 of 
the E.O. This proposed rule does not have federalism implications and 
does not impose substantial direct compliance costs on State and local 
governments or preempt State law within the meaning of the E.O.

Comments and Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to comments that are submitted timely to 
the IRS as prescribed in this preamble in the ADDRESSES section. The 
Treasury Department and the IRS request comments on all aspects of the 
proposed regulations, including the economic impact of the proposed 
regulations. Any electronic comments submitted, and to the extent 
practicable any paper comments submitted, will be made available at 
www.regulations.gov or upon request.
    A public hearing is being held on December 13, 2024, beginning at 
10:00 a.m. ET, in the Auditorium at the Internal Revenue Service 
Building, 1111 Constitution Avenue NW, Washington, DC. Due to building 
security procedures, visitors must enter at the Constitution Avenue 
entrance. In addition, all visitors must present photo identification 
to enter the building. Because of access restrictions, visitors will 
not be admitted beyond the immediate entrance area more than 30 minutes 
before the hearing starts. Participants may alternatively attend the 
public hearing by telephone.
    The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who 
wish to present oral comments at the hearing must submit an outline of 
the topics to be discussed as well as the time to be devoted to each 
topic by November 1, 2024. A period of ten minutes will be allocated to 
each person for making comments. After the deadline for receiving 
outlines has passed, the IRS will prepare an agenda containing the 
schedule of speakers. Copies of the agenda will be made available free 
of charge at the hearing. If no outlines of the topics to be discussed 
at the hearing are received by November 1, 2024, the public hearing 
will be cancelled. If the public hearing is cancelled, a notice of 
cancellation of the public hearing will be published in the Federal 
Register.
    Individuals who want to testify in person at the public hearing 
must send an email to [email protected] to have their name added 
to the building access list. The subject line of the email must contain 
the regulation number REG-116787-23 and the language TESTIFY In Person. 
For example, the subject line may say: Request to TESTIFY In Person at 
Hearing for REG-116787-23.
    Individuals who want to testify by telephone at the public hearing 
must send an email to [email protected] to receive the telephone 
number and access code for the hearing. The subject line of the email 
must contain the regulation number REG-116787-23 and the language 
TESTIFY Telephonically. For example, the subject line may say: Request 
to TESTIFY Telephonically at Hearing for REG-116787-23.
    Individuals who want to attend the public hearing in person without 
testifying must also send an email to [email protected] to have 
their name added to the building access list. The subject line of the 
email must contain the regulation number REG-116787-23 and the language 
ATTEND In Person. For example, the subject line may say: Request to 
ATTEND Hearing in Person for REG-116787-23. Requests to attend the 
public hearing must be received by 5:00 p.m. ET on December 11, 2024.
    Individuals who want to attend the public hearing telephonically 
without testifying must also send an email to [email protected] to 
receive the telephone number and access code for the hearing. The 
subject line of the email must contain the regulation number REG-
116787-23 and the language ATTEND Hearing Telephonically. For example, 
the subject line may say: Request to ATTEND Hearing Telephonically for 
REG-116787-23. Requests to attend the public hearing must be received 
by 5:00 p.m. ET on December 11, 2024.
    Hearings will be made accessible to people with disabilities. To 
request special assistance during the hearing, contact the Publications 
and Regulations Branch of the Office of Associate Chief Counsel 
(Procedure and Administration) by sending an email to 
[email protected] (preferred) or by

[[Page 75989]]

telephone at (202) 317-6901 (not a toll-free number) by at least 
December 10, 2024.

Statement of Availability of IRS Documents

    Guidance cited in this preamble is published in the Internal 
Revenue Bulletin and is available from the Superintendent of Documents, 
U.S. Government Publishing Office, Washington, DC 20402, or by visiting 
the IRS website at https://www.irs.gov.

Drafting Information

    The principal author of these proposed regulations is Clara L. 
Raymond of the Office of Associate Chief Counsel (Income Tax and 
Accounting). However, other personnel from the Treasury Department and 
the IRS participated in the development of the regulations.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, the Treasury Department and the IRS propose to amend 
26 CFR part 1 as follows:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 is amended by adding 
entries in numerical order for Sec. Sec.  1.36B-1 through 1.36B-3, and 
1.36B-6, and revising the entries for Sec. Sec.  1.36B-0, 1.36B-4, and 
1.36B-5 to read in part as follows:

    Authority: 26 U.S.C. 7805 * * *
* * * * *
    Section 1.36B-0 also issued under 26 U.S.C. 36B(h).
    Section 1.36B-1 also issued under 26 U.S.C. 36B(h).
    Section 1.36B-2 also issued under 26 U.S.C. 36B(h).
    Section 1.36B-3 also issued under 26 U.S.C. 36B(h).
    Section 1.36B-4 also issued under 26 U.S.C. 36B(h).
    Section 1.36B-5 also issued under 26 U.S.C. 36B(h).
    Section 1.36B-6 also issued under 26 U.S.C. 36B(h).
* * * * *
0
Par. 2. Section 1.36B-2 is amended by:
0
1. Revising the first sentence in paragraph (c)(2)(v);
0
2. Revising paragraph (e)(1); and
0
3. Adding paragraph (e)(6).
    The revisions and addition read as follows:


Sec.  1.36B-2  Eligibility for premium tax credit.

* * * * *
    (c) * * *
    (2) * * *
    (v) * * * An individual is treated as not eligible for Medicaid, 
CHIP, or a similar program such as a Basic Health Program, for a period 
of coverage under a qualified health plan if, when the individual 
enrolls in the qualified health plan, an Exchange conducts an 
eligibility determination or, if applicable, eligibility assessment 
(within the meaning of 45 CFR 155.302(b)) for Medicaid, CHIP, or a 
similar program and determines or assesses the individual to be not 
eligible for coverage under the program. * * *
* * * * *
    (e) * * *
    (1) Except as provided in paragraphs (e)(2) through (6) of this 
section, this section applies to taxable years ending after December 
31, 2013.
* * * * *
    (6) The first sentence of paragraph (c)(2)(v) of this section 
applies to taxable years beginning on or after [insert the first date 
of the calendar year that begins after the date of publication of the 
final regulations in the Federal Register]. The first sentence of 
paragraph (c)(2)(v) of this section, as contained in 26 CFR part I 
edition revised as of April 1, 2024, applies to taxable years ending 
after December 31, 2013, and beginning before [insert the first date of 
the calendar year that begins after the date of publication of the 
final regulations in the Federal Register].
    Par. 3. Section 1.36B-3 is amended by:
0
1. Revising paragraph (c)(1)(ii);
0
2. Redesignating paragraphs (c)(4) and (c)(5) as paragraphs (c)(5) and 
(c)(6), respectively, and adding new paragraph (c)(4);
0
3. Revising paragraph (d)(1)(i);
0
4. Revising paragraph (n).
    The revisions and additions read as follows:


Sec.  1.36B-3  Computing the premium assistance credit amount.

* * * * *
    (c) * * *
    (1) * * *
    (ii) The taxpayer pays the taxpayer's share of the premium for the 
individual's coverage under the plan for the month by the unextended 
due date for filing the taxpayer's income tax return for that taxable 
year, the full premium for the month is paid by advance credit 
payments, or the amount of the premium paid (including by advance 
credit payments) for the month is sufficient to avoid termination of 
the individual's coverage for that month under one of the scenarios 
described in paragraph (c)(4) of this section; and
* * * * *
    (4) Scenarios for payments sufficient to avoid coverage 
termination. The scenarios under which the amount of the premium paid 
(including by advance credit payments) for the month is sufficient to 
avoid termination of an individual's coverage for that month under 
paragraph (c)(1)(ii) of this section are the following:
    (i) The first month of a grace period described in 45 CFR 
156.270(d) for the individual.
    (ii) A month for which a premium payment threshold under 45 CFR 
155.400(g) has been met and for which month the issuer of the 
individual's qualified health plan provides coverage.
    (iii) A month for which a State department of insurance has, during 
a declared emergency, issued an order prohibiting the issuer of the 
individual's qualified health plan from terminating the individual's 
coverage for the month irrespective of whether the full premium for the 
month is made.
* * * * *
    (d) * * *
    (1) * * *
    (i) The enrollment premiums, which are the premiums for the month 
for one or more qualified health plans in which a taxpayer or a member 
of the taxpayer's family enrolls, reduced by any amounts--
    (A) Refunded in the same taxable year as the premium liability is 
incurred; or
    (B) Unpaid as of the unextended due date for filing the taxpayer's 
income tax return for the taxable year that includes the month, or
* * * * *
    (n) Applicability dates. (1) Except as provided in paragraphs 
(n)(2) through (4) of this section, this section applies to taxable 
years ending after December 31, 2013.
    (2) Paragraphs (d)(1) (except for paragraph (d)(1)(i)) and (d)(2) 
of this section apply to taxable years beginning after December 31, 
2016. Paragraph (f) of this section applies to taxable years beginning 
after December 31, 2018. Paragraphs (d)(1) and (d)(2) of Sec.  1.36B-3, 
as contained in 26 CFR part I edition revised as of April 1, 2016, 
apply to taxable years ending after December 31, 2013, and beginning 
before January 1, 2017. Paragraph (f) of Sec.  1.36B-3, as contained in 
26 CFR part I edition revised as of April 1, 2016, applies to taxable 
years ending after December 31, 2013, and beginning before January 1, 
2019.
    (3) Paragraphs (c)(4) through (6) of this section apply to taxable 
years

[[Page 75990]]

beginning on or after [insert the first date of the calendar year that 
begins after the date of publication of final regulations in the 
Federal Register]. Paragraph (c)(4) of this section, as contained in 26 
CFR part I edition revised as of April 1, 2024, applies to taxable 
years beginning after December 31, 2016, and beginning before [insert 
the first date of the calendar year that begins after the date of 
publication of the final regulations in the Federal Register]. 
Paragraph (c)(5) of this section, as contained in 26 CFR part I edition 
revised as of April 1, 2024, applies to taxable years ending after 
December 31, 2013, and beginning before [insert the first date of the 
calendar year that begins after the date of publication of the final 
regulations in the Federal Register].
    (4) Paragraph (d)(1)(i) of this section applies to taxable years 
beginning on or after [insert the first date of the calendar year that 
begins after the date of publication of the final regulations in the 
Federal Register]. Paragraph (d)(1)(i) of Sec.  1.36B-3, as contained 
in 26 CFR part I edition revised as of April 1, 2016, applies to 
taxable years ending after December 31, 2013, and beginning before 
January 1, 2017. Paragraph (d)(1)(i) of Sec.  1.36B-3, as contained in 
26 CFR part I edition revised as of April 1, 2022, applies to taxable 
years beginning after December 31, 2016, and beginning before January 
1, 2023. Paragraph (d)(1)(i) of Sec.  1.36B-3, as contained in 26 CFR 
part I edition revised as of April 1, 2024, applies to taxable years 
beginning after December 31, 2022, and beginning before [insert the 
first date of the calendar year that begins after the date of 
publication of the final regulations in the Federal Register].

Douglas W. O'Donnell,
Deputy Commissioner.
[FR Doc. 2024-20758 Filed 9-16-24; 8:45 am]
BILLING CODE 4830-01-P