Bulletin No. 2022–17

HIGHLIGHTS

OF THIS ISSUE





Bulletin No. 2022–17

April 25, 2022

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

INCOME TAX

REG-114339-21, page 1030.

These proposed regulations under section 36B of the

Internal Revenue Code would amend the existing regulations regarding eligibility for the premium tax credit to provide that affordability of employer-sponsored

Finding Lists begin on page ii.

minimum essential coverage for family members of an

employee is determined based on the employee’s share

of the cost of covering the employee and those family

members, not the cost of covering only the employee.

The proposed regulations also would add a minimum

value rule for family members of employees based on

the benefits provided to the family members.

The IRS Mission

Provide America’s taxpayers top-quality service by helping

them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.

Introduction

The Internal Revenue Bulletin is the authoritative instrument

of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service

and for publishing Treasury Decisions, Executive Orders, Tax

Conventions, legislation, court decisions, and other items of

general interest. It is published weekly.

It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application

of the tax laws, including all rulings that supersede, revoke,

modify, or amend any of those previously published in the

Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of

internal practices and procedures that affect the rights and

duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service

on the application of the law to the pivotal facts stated in

the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices,

identifying details and information of a confidential nature are

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comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not have the

force and effect of Treasury Department Regulations, but they

may be used as precedents. Unpublished rulings will not be

relied on, used, or cited as precedents by Service personnel in

the disposition of other cases. In applying published rulings and

procedures, the effect of subsequent legislation, regulations,

court decisions, rulings, and procedures must be considered,

and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unless

the facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.

This part includes rulings and decisions based on provisions

of the Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.

This part is divided into two subparts as follows: Subpart A,

Tax Conventions and Other Related Items, and Subpart B,

Legislation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.

To the extent practicable, pertinent cross references to these

subjects are contained in the other Parts and Subparts. Also

included in this part are Bank Secrecy Act Administrative

Rulings. Bank Secrecy Act Administrative Rulings are issued

by the Department of the Treasury’s Office of the Assistant

Secretary (Enforcement).

Part IV.—Items of General Interest.

This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative index

for the matters published during the preceding months. These

monthly indexes are cumulated on a semiannual basis, and are

published in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

April 25, 2022 

Bulletin No. 2022–17

Part IV

Notice of Proposed

Rulemaking

Monday, June 13, 2022. If no outlines are

received by Monday, June 13, 2022, the

public hearing will be cancelled.

Affordability of Employer

Coverage for Family

Members of Employees

ADDRESSES: Commenters are strongly

encouraged to submit public comments

electronically. Submit electronic submissions via the Federal eRulemaking Portal

at www.regulations.gov (indicate IRS and

REG-114339-21) by following the online

instructions for submitting comments.

Once submitted to the Federal eRulemaking Portal, comments cannot be edited

or withdrawn. The IRS expects to have

limited personnel available to process

public comments that are submitted on

paper through mail. Until further notice,

any comments submitted on paper will be

considered to the extent practicable. The

Department of the Treasury (“Treasury

Department”) and the IRS will publish for

public availability any comment submitted electronically, and, to the extent practicable any paper comments submitted, to

its public docket. Send paper submissions

to: CC:PA:LPD:PR (REG-114339-21),

Room 5203, Internal Revenue Service,

P.O. Box 7604, Ben Franklin Station,

Washington, DC 20044.

REG-114339-21

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Notice of proposed rulemaking; withdrawal of a notice of proposed

rulemaking; notification of hearing

SUMMARY: This document contains

proposed regulations under section 36B of

the Internal Revenue Code (the “Code”)

that would amend the existing regulations

regarding eligibility for the premium tax

credit (“PTC”) to provide that affordability of employer-sponsored minimum

essential coverage (employer coverage)

for family members of an employee is determined based on the employee’s share

of the cost of covering the employee and

those family members, not the cost of covering only the employee. The proposed

regulations also would add a minimum

value rule for family members of employees based on the benefits provided to the

family members. The proposed regulations would affect taxpayers who enroll,

or enroll a family member, in individual health insurance coverage through a

Health Insurance Exchange (“Exchange”)

and who may be allowed a PTC for the

coverage. This document also provides a

notice of a public hearing on these proposed regulations.

DATES: Written or electronic comments

must be received by June 6, 2022. As

of April 7, 2022, the notice of proposed

rulemaking published in the Federal

Register on September 1, 2015 (80 FR

52678), is withdrawn. A public hearing

has been scheduled for Monday, June

27, 2022, at 10:00 a.m. EDT. The IRS

must receive speakers’ outlines of topics

to be discussed at the public hearing by

April 25, 2022

FOR FURTHER INFORMATION

CONTACT: Concerning the proposed

regulations, Clara Raymond at (202)

317-4718; concerning submission of

comments or outlines, the hearing, or

any questions to attend the hearing by

teleconferencing, Regina Johnson at

(202) 317-5177 (not toll-free numbers)

or preferably by email to publichearings@irs.gov. If emailing, please include

the following information in the subject

line: Attend, Testify, or Question and

REG-114339-21.

SUPPLEMENTARY INFORMATION:

Background

This document contains proposed

amendments to the Income Tax Regulations (26 CFR part 1) under section 36B

of the Code.

Section 36B provides a PTC for applicable taxpayers who meet certain

1030

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.” Under §1.36B-1(d) of the Income Tax Regulations, a taxpayer’s family consists of the taxpayer, the taxpayer’s

spouse if filing jointly, and any dependents

of the taxpayer.

Section 1.36B-3(d)(1) provides that the

PTC 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 (“taxpayer’s contribution

amount”).

Under section 36B(c)(2)(B) and

§1.36B-3(c), a month is a coverage month

for an individual only if the individual is

not eligible for minimum essential coverage (“MEC”) for that month (other than

coverage under a health care plan offered

in the individual market within a state).

Under section 5000A(f)(1)(B) of the

Code, the term MEC includes employer

coverage. If an individual is eligible for

employer coverage for a given month, no

PTC is allowed for the individual for that

month.

Section 36B(c)(2)(C) generally provides that an individual is not eligible for

employer coverage if the coverage offered

is unaffordable or does not provide minimum value. However, if the individual enrolls in employer coverage, the individual

is eligible for MEC, irrespective of whether the employer coverage is affordable

or provides minimum value. See section

36B(c)(2)(C)(iii) and §1.36B-2(c)(3)(vii).

Section

36B(c)(2)(C)(i)(II)

and

§1.36B-2(c)(3)(v)(A)(1) generally provide that employer coverage is unaffordable for an employee if the share of the

annual premium the employee must pay

for self-only coverage is more than the required contribution percentage of household income. The required contribution

percentage is 9.5 percent and is indexed

Bulletin No. 2022–17

annually under section 36B(c)(2)(C)(iv).1

Likewise, §1.36B-2(c)(3)(v)(A)(2) generally provides that employer coverage

is unaffordable for individuals eligible to

enroll in employer coverage because of

their relationship to the employee (related

individuals) if the share of the annual premium the employee must pay for self-only coverage is more than the required

contribution percentage of household income. Thus, the employee’s share of the

premium for family coverage, as defined

in §1.36B-1(m), is not considered in determining whether employer coverage is

affordable for related individuals.

Under section 36B(c)(2)(C)(ii) and

§1.36B-6(a)(1), an eligible employer-sponsored plan provides minimum

value only if the plan’s share of the total

allowed costs of benefits provided to an

employee is at least 60 percent. On November 4, 2014, the IRS released Notice

2014-69, 2014-48 I.R.B. 903, which advised taxpayers of the intent to propose

regulations providing that plans that fail

to provide substantial coverage for inpatient hospitalization or physician services

also do not provide minimum value. Notice 2014-69 noted that the Department of

Health and Human Services (HHS) was

concurrently issuing parallel guidance

and also provided that, pending issuance

of final Treasury regulations, an employee

will not be required to treat a non-hospital/

non-physician services plan as providing

minimum value for purposes of an employee’s eligibility for a PTC.

On November 26, 2014, HHS issued

proposed regulations providing that an

eligible employer-sponsored plan provides minimum value only if, in addition

to covering at least 60 percent of the total

allowed costs of benefits provided under

the plan, the plan benefits include substantial coverage of inpatient hospital services

and physician services. See 79 FR 70674.

On February 27, 2015, HHS finalized this

minimum value rule at 45 CFR 156.145(a).

See 80 FR 10750, 10872. On September

1, 2015, the Treasury Department and the

IRS issued proposed regulations under

section 36B (REG-143800-14, 80 FR

52678) (2015 proposed regulations) incorporating the substance of the minimum

value rule in the HHS final regulations.

The rule in the 2015 proposed regulations

issued by the Treasury Department and

the IRS relating to substantial coverage of

inpatient hospital services and physician

services has not been finalized.

On January 28, 2021, President Biden

issued Executive Order (EO) 14009,

Strengthening Medicaid and the Affordable Care Act (ACA). Section 3(a) of EO

14009 directs the Secretary of the Treasury to review, as soon as practicable, all

existing regulations and other agency actions to determine whether the actions are

inconsistent with the policy to protect and

strengthen the ACA. Section 3(a)(v) of

EO 14009 also directs the Secretary of the

Treasury, as part of this review, to examine policies or practices that may reduce

the affordability of coverage or financial

assistance for coverage, including for dependents. Consequently, the Treasury Department and the IRS have reviewed the

regulations under section 36B, including

§1.36B-2(c)(3)(v)(A)(2), which provides

that the affordability of employer coverage for related individuals is based on the

employee’s share of the annual premium

for self-only coverage, not the cost of family coverage. The Treasury Department

and the IRS have tentatively determined

that the rule in §1.36B-2(c)(3)(v)(A)(2) is

not required by the relevant statutes and

is inconsistent with the overall purpose of

the ACA to expand access to affordable

health care coverage.

Explanation of Provisions

I. Reasons for Regulatory Changes to

Affordability Rule

As explained in the Background section

of this preamble, individuals generally are

not allowed a PTC if they are eligible for

non-individual market MEC, including

employer coverage. However, individuals

are not eligible for employer coverage if

the coverage is unaffordable or does not

provide minimum value, unless they enroll in the coverage. Coverage is not affordable for an employee if the portion of

the premiums required to be paid by the

employee for self-only coverage exceeds

9.5 percent of household income. The

current regulations under section 36B provide that if self-only employer coverage is

affordable for an employee, then the coverage is also affordable for a spouse with

whom the employee is filing a joint return

and any dependents of the employee who

may be eligible to enroll in the employer coverage, regardless of the amount the

employee must pay to cover the spouse

and dependents. See §1.36B-2(c)(3)(v)(A)

(2).

Section 1.36B-2(c)(3)(v)(A)(2) was

promulgated as a final regulation in 2013.

See TD 9611 (78 FR 7264). The Treasury

Department and the IRS explained in the

preamble to the 2013 final regulation that

the language of section 36B, through the

cross-reference to section 5000A(e)(1)

(B),2 specifies that the affordability test

for related individuals is based on the

cost of self-only coverage. However, the

approach in the current regulations has

potentially impacted millions of Americans. Among those impacted are families

with children, some of whom have suffered economic hardship. In addition, the

current approach has undermined access

to more affordable health care coverage

by preventing access to lower-premium

subsidized Exchange plans. Under the

current regulations, a PTC is not allowed

for children and other family members

who have been offered employer coverage if the cost of the employee’s self-only coverage is affordable, regardless of

the employee’s cost to cover those family

members. Many of these families purchase health insurance, either through

a family member’s job or an Exchange,

but pay high portions of their income

towards premiums. Other families forgo

coverage altogether due to the high premium costs. Several studies have analyzed this problem.3

1

As adjusted, the required contribution percentage is 9.61 percent for 2022. See Rev. Proc. 2021-36, 2021-35 I.R.B. 357. For simplicity, this preamble refers to 9.5 percent as the required

contribution percentage.

2

Section 5000A provides rules regarding the individual shared responsibility payment, including an exemption from the payment for individuals who have an offer of employer coverage

that is unaffordable.

3

For example, see https://www.healthaffairs.org/do/10.1377/hblog20210520.564880/full/.

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April 25, 2022

Pursuant to EO 14009, the Treasury

Department and the IRS have reexamined

the current interpretation of section 36B(c)

(2)(C)(i) in §1.36B-2(c)(3)(v)(A)(2). The

Treasury Department and the IRS have preliminarily determined that section 36B(c)

(2)(C)(i) does not compel the result that if

self-only employer coverage is affordable

for an employee, then the coverage also is

affordable for a spouse and any dependents.

To the contrary, the Treasury Department

and the IRS believe that the statute is better

read to require a separate affordability determination for employees and for family

members. Further, the Treasury Department

and the IRS are now of the view that the interpretation in the current regulations unduly weakens the ACA by basing affordability

solely on the premium cost for the employee’s self-only coverage and, therefore, the

interpretation in the current regulations is

contrary to the policy of the ACA to expand

access to affordable health care coverage.

As discussed more fully in part II of

this Explanation of Provisions, the Treasury Department and the IRS believe that

section 36B(c)(2)(C)(i) is best interpreted

in a manner that requires consideration of

the premium cost to the employee to cover not just the employee, but also other

members of the employee’s family who

may enroll in the employer coverage. This

interpretation would create consistency

across parallel provisions of the Code

enacted by the ACA, specifically with regard to the affordability tests in sections

36B and 5000A. Consequently, the Treasury Department and the IRS propose to

exercise the regulatory authority granted

in section 36B(h) to adopt an alternative

reading of section 36B(c)(2)(C)(i). Under

this alternative reading, affordability of

employer coverage for related individuals

in the employee’s family is determined

based on the cost of covering the employee and those related individuals.

II. Affordability Rule for Related

Individuals

A. Approach in Current Regulations

When the Treasury Department and the

IRS promulgated §1.36B-2(c)(3)(v)(A)(2)

as a final regulation in 2013, it was after

considerable deliberation regarding the

affordability rule for related individuals.

The Treasury Department and the IRS first

issued proposed regulations under section

36B in August 2011. See REG-131491-10

(76 FR 50931). In addition to proposing

general rules on all aspects of the PTC, the

2011 proposed regulations provided that

affordability for related individuals was

based on the amount an employee must

pay for self-only coverage. In response to

the 2011 proposed regulations, the Treasury Department and the IRS received a

significant number of comments on the

proposed affordability rule for related

individuals. To fully consider those comments and ensure a comprehensive analysis of the issue, the Treasury Department

and the IRS promulgated final regulations

in May 2012 that reserved with respect

to the affordability rule for related individuals and stated that future regulations

would address the issue. See TD 9590 (77

FR 30377). In February 2013, the Treasury Department and the IRS finalized the

affordability rule for related individuals as

initially proposed in 2011. See TD 9611

(78 FR 7264). In finalizing the rule as initially proposed in 2011 -- that is, providing that affordability for related individuals was based on the amount an employee

must pay for self-only coverage -- the

Treasury Department and the IRS focused

on the relevant statutory provisions in sections 36B(c)(2)(C)(i)(II), 5000A(e)(1)(B),

and 5000A(e)(1)(C).

Under section 36B(c)(2)(C)(i)(II), an

employee who does not enroll in employer coverage is not considered eligible for

the coverage if “the employee’s required

contribution (within the meaning of section 5000A(e)(1)(B)) with respect to the

plan exceeds 9.5 percent of the applicable

taxpayer’s household income.” The flush

language following this provision provides that “[t]his clause shall also apply

to an individual who is eligible to enroll

in the plan by reason of a relationship the

individual bears to the employee.” This

flush language does not specify how the

language in section 36B(c)(2)(C)(i)(II) is

intended to apply with respect to related

individuals or how the cross-reference to

section 5000A(e)(1)(B) is to be understood with regard to coverage of related

individuals.

Section 5000A(e)(1)(B)(i)4 provides

that, for an employee eligible to purchase

employer coverage, the term “required

contribution” means “the portion of the

annual premium which would be paid

by the individual . . . for self-only coverage.” For related individuals, the definition of “required contribution” in section

5000A(e)(1)(B)(i) is modified by a “special rule” in section 5000A(e)(1)(C). Section 5000A(e)(1)(C) provides that “[f]or

purposes of [section 5000A(e)(1)](B)(i), if

an . . . individual is eligible for minimum

essential coverage through an employer

by reason of a relationship to an employee, the determination under subparagraph

(A) shall be made by reference to the required contribution of the employee.” The

regulations under section 5000A interpret

section 5000A(e)(1)(C) as modifying

the required contribution rule in section

5000A(e)(1)(B)(i) with regard to coverage

for related individuals to take into account

the cost of covering the employee and the

related individuals, not just the employee.

Specifically, with respect to related individuals, §1.5000A-3(e)(3)(ii)(B) provides

that the required contribution for related

individuals is the amount an employee

must pay to cover the employee and the

related individuals. The affordability rule

for related individuals in §1.5000A-3(e)

(3)(ii)(B) was proposed on the same day

that the affordability rule for related individuals in §1.36B-2(c)(3)(v)(A)(2) was

finalized in TD 9611.

When §1.36B-2(c)(3)(v)(A)(2) was

promulgated as a final regulation in 2013,

the Treasury Department and the IRS

considered the statutory language of section 36B(c)(2)(C)(i)(II) and its cross-reference to section 5000A(e)(1)(B), as

well as the statutory language of section

5000A(e)(1)(B) and the cross-reference

in section 5000A(e)(1)(C) to section

5000A(e)(1)(B). Under one reading of

section 36B(c)(2)(C)(i)(II), the affordability rule for related individuals is determined solely by reference to section

5000A(e)(1)(B), without the modification to that section for related individuals

Section 5000A(e)(1) provides an exemption from the requirement to maintain MEC for individuals who are eligible only for coverage that is unaffordable. Under section 5000A(e)(1)(A),

coverage is unaffordable for an individual if the individual’s required contribution exceeds a certain percentage of the individual’s household income for the taxable year.

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Bulletin No. 2022–17

provided by section 5000A(e)(1)(C).

This reading results in affordability being

determined based on the cost of self-only

coverage to the employee. Under an alternative reading, the affordability rule

for related individuals is determined by

reference to section 5000A(e)(1)(B) taking into account the modification by section 5000A(e)(1)(C). With the issuance

of current §1.36B-2(c)(3)(v)(A)(2), the

Treasury Department and the IRS adopted the interpretation that affordability of

employer coverage for related individuals is based on the cost of self-only coverage to the employee.

B. Approach in Proposed Regulations

The Treasury Department and the IRS

recognize that the statutory language in

section 36B(c)(2)(C)(i)(II) supports two

different readings. Under one reading, reflected in current §1.36B-2(c)(3)(v)(A)(2),

the affordability rule for related individuals is determined solely by reference to

section 5000A(e)(1)(B), without the modification to that section for related individuals provided by section 5000A(e)(1)(C).

This reading results in affordability being

determined based on the cost of self-only

coverage to the employee. Under an alternative reading, however, the affordability

rule for related individuals is determined

by reference to section 5000A(e)(1)(B),

but also encompasses the modification of

5000A(e)(1)(B) by section 5000A(e)(1)

(C), which provides a special rule for related individuals.

These proposed regulations would

adopt the alternative reading, which the

Treasury Department and the IRS have

now preliminarily concluded is the better

reading of these provisions. Under this interpretation, because section 5000A(e)(1)

(C) begins with the language “[f]or purposes of [section 5000A(e)(1)](B)(i),” the

parenthetical cross reference in section

36B(c)(2)(C)(i)(II) to section 5000A(e)

(1)(B)(i) is understood to incorporate the

special rule in section 5000A(e)(1)(C) that

modifies the required contribution rule in

section 5000A(e)(1)(B)(i) when the coverage in question is for related individuals. Under this interpretation, a specific

reference in the flush language of section

36B(c)(2)(C)(i) to section 5000A(e)(1)(C)

is not necessary to require the consideration of section 5000A(e)(1)(C) in determining affordability for related individuals for section 36B purposes.5

This proposed amendment to the affordability rule for related individuals

would create greater consistency between

the affordability rules in section 36B(c)(2)

(C)(i) and the affordability rules in section

5000A(e)(1). The proposed amendment

would also promote consistency between

the affordability rules in these provisions

and 42 U.S.C. 18081(b)(4)(C), which requires Exchange applicants to separately

provide the required contributions of employees and of related individuals in order

to determine PTC eligibility; in the Treasury Department’s and the IRS’s view, the

requirement to provide this information

would make little sense if PTC eligibility

depended only on the cost to the employee for self-only coverage. In addition, the

proposed amendment would also support

efforts to achieve the goal of the ACA to

provide affordable, quality health care for

all Americans. See H.R. Rep. No. 111-243

(2009).

The proposed regulations would provide that an eligible employer-sponsored

plan is affordable for related individuals if

the portion of the annual premium the employee must pay for family coverage, that

is, the employee’s required contribution,

does not exceed 9.5 percent of household

income. For this purpose, family coverage means all employer plans that cover

any related individual other than the employee, including a self plus-one plan for

an employee enrolling one other family

member in the coverage. An employee’s

required contribution for family coverage

is the portion of the annual premium the

employee must pay for coverage of the

employee and all other individuals included in the employee’s family who are offered the coverage.

Some individuals who are not part of

the tax family might nonetheless be offered the employer coverage. For example, children up to age 26 might be offered

coverage by the taxpayer’s employer, but

those adult children might not be reported

on the employee’s tax return because they

do not qualify as dependents of the employee. The cost of covering individuals

who are offered the coverage but are not in

the employee’s family is not considered in

determining whether the employee’s family members have an offer of affordable

employer coverage, regardless of whether

the non-family member enrolls in the coverage. That is because, under §1.36B-2(c)

(4)(i), a related individual who is not a

spouse filing jointly with the employee

or a dependent of the employee, such as

a child of the employee who is no longer

the employee’s dependent, is treated as eligible for the employer coverage only if

he or she is enrolled in the coverage. Consequently, a related individual who is not

a spouse filing jointly with the employee

or a dependent of the employee does not

need a determination of unaffordable coverage to be eligible for the PTC. As a result, the cost of covering that individual

should not be considered in determining

whether other related individuals have an

offer of affordable employer coverage.

The proposed regulations would make

changes only to the affordability rule for

related individuals; they would make no

changes to the affordability rule for employees. As required by statute, employees continue to have an offer of affordable

employer coverage if the employee’s required contribution for self-only coverage

of the employee does not exceed the required contribution percentage of household income. Accordingly, under the proposed regulations, a spouse or dependent

of an employee may have an offer of employer coverage that is unaffordable even

though the employee has an affordable

offer of self-only coverage.

The proposed regulations also address

situations in which an individual has offers of coverage from multiple employers.

In Joint Committee on Taxation, Technical Explanation of the Revenue Provisions of the ”Reconciliation Act of 2010,” as amended, in combination with the “Patient Protection and Affordable Care Act,” (JCX-18-10), March 21, 2010 (the JCT report), the Joint Committee staff initially explained that “[u]naffordable is defined as coverage with a premium required to be

paid by the employee that is 9.5 percent or more of the employee’s household income, based on the type of coverage applicable (e.g., individual or family coverage).” The quoted language

was later revised to state that “[u]naffordable is defined as coverage with a premium required to be paid by the employee that is 9.5 percent or more of the employee’s household income,

based on self-only coverage.” See ERRATA for JCX-18-10, (JCX-27-10), May 4, 2010. Although the JCT report does not compel any particular reading of section 36B(c)(2)(C)(i)(II) as it

relates to family coverage, these differing interpretations by the Joint Committee staff further demonstrate the statutory ambiguity that renders either interpretation available under the ACA.

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April 25, 2022

Under the proposed regulations, an individual with offers of coverage from multiple employers, either as an employee or a

related individual, has an offer of affordable coverage if at least one of the offers

is affordable.6 Thus, for example, assume

X is married and files a joint return with

X’s spouse, Y. If X has offers of coverage

from X’s employer and Y’s employer, X

has an offer of affordable coverage if the

self-only cost of X’s employer coverage

is affordable or if the family cost of Y’s

employer coverage is affordable. This

rule regarding multiple offers of coverage

is consistent with section 36B(c)(2)(B),

under which a month is not a coverage

month for an individual if the individual is

eligible for MEC for the month, including

employer coverage that is affordable and

provides minimum value. In this example,

X is eligible for affordable employer coverage if one or both of the offers of coverage to X is affordable.

The proposed change to the affordability rule for related individuals in

§1.36B-2(c)(3)(v)(A)(2) requires a conforming change to §1.36B-2(c)(3)(v)(B),

which provides that the affordability of

employer coverage for an employment

period that is less than a full calendar

year is based on the employee’s required

contribution for self-only coverage

(“part-year period rule”). The proposed

regulations would amend §1.36B-2(c)

(3)(v)(B) to provide a part-year period

rule for employees that is based on the

employee’s required contribution for

self-only coverage and a part-year period

rule for related individuals that is based

on the employee’s required contribution

for family coverage. Changes to other existing rules such as §1.36B-2(c)(3)(v)(A)

(4) (wellness incentive programs) and (5)

(employer contributions to health reimbursement arrangements integrated with

eligible employer-sponsored plans) are

not necessary because those paragraphs

refer to an “employee’s required contribution,” which, under the proposed regulations, would cover both the required

contribution for self-only coverage and

the required contribution for family

coverage.

III. Minimum Value

A. Minimum Value Cost of Benefits Rule

for Related Individuals

Section 1.36B-6(a)(1) provides that

an eligible employer-sponsored plan provides minimum value if the plan’s share

of the total allowed cost of benefits provided to an employee is at least 60 percent. The proposed regulations would

expand §1.36B-6(a) to provide a similar

minimum value rule for related individuals that is based on the level of coverage

provided to related individuals under an

employer-sponsored plan.

Section 36B(c)(2)(C)(ii) provides that

an employee is not eligible for employer

coverage when the employer-sponsored

plan does not provide minimum value.

Section 36B(c)(2)(C)(ii) does not specifically mention related individuals. Section

36B(c)(2)(C)(ii) could be interpreted to

mean that there is no minimum value requirement for related individuals so that a

related individual is eligible for employer

coverage as long as the coverage is affordable, regardless of whether the employer

coverage provides minimum value. Under

such an interpretation, if an employer offers coverage to an employee and related

individuals that is affordable, but does not

provide minimum value for the employee, an employee who does not enroll in

the coverage would not be eligible for the

coverage, but related individuals offered

the coverage would be eligible because

section 36B does not have a minimum

value requirement for related individuals.

That approach, however, was not adopted with the issuance of §1.36B-2(c)

(3)(i)(A), which was promulgated in final

regulations in 2012. See TD 9590 (77 FR

30377). Section 1.36B-2(c)(3)(i)(A) clarifies that there is a minimum value requirement for both employees and related individuals, stating that “an employee who

may enroll in an eligible employer-sponsored plan . . . that is minimum essential

coverage, and . . . a related individual, are

eligible for minimum essential coverage

under the plan for any month only if the

plan is affordable and provides minimum

value.” Under this long-standing rule, a

related individual who receives an offer

of employer-sponsored coverage that does

not provide minimum value is ineligible

for the coverage, provided that the related

individual does not enroll in the coverage.

Section 1.36B-2(c)(3)(i)(A) clarifies

that there is a minimum value requirement for related individuals; however,

§1.36B-6(a) provides the rule for determining whether an eligible employer-sponsored plan provides minimum value to related individuals. As explained in

the Background section of this preamble,

under §1.36B-6(a)(1), an eligible employer-sponsored plan provides minimum value if the plan’s share of the total allowed

cost of benefits provided to an employee is

at least 60 percent, regardless of the total

allowed costs of benefits provided to the

related individual. Thus, under this rule, if

the plan’s share of the total allowed cost

of benefits provided to an employee is below 60 percent, the plan does not provide

minimum value to employees nor to any

related individuals offered the coverage.

Without a separate minimum value rule

for related individuals based on the costs

of benefits provided to related individuals,

a PTC would not be allowed for a related individual offered coverage under a

plan that was affordable but that provided

minimum value to employees and not to

related individuals. This outcome would

undermine the benefit a related individual

would derive from the proposed amendment of the affordability rule for related

individuals. That is, the affordability of

employer coverage for related individuals

would be based on the employee’s cost of

covering the related individuals, but there

would be no assurance that affordable

coverage offered to the related individuals

provided a minimum value of benefits to

the related individuals.

The lack of a separate minimum value

rule for related individuals also would be

inconsistent with the overall goal of the

ACA in providing comprehensive, affordable health coverage, as well as the goal of

improving access to quality and affordable

health care. Therefore, these proposed

regulations provide in §1.36B-6(a)(2)(i)

The proposed rule for offers from multiple employers is consistent with the treatment under §1.36B-2(c)(3)(i) for situations in which an employee or family member may choose from multiple plans offered by an employer. In those situations, an individual has an offer of affordable coverage if at least one of the plans offered by the employer is affordable.

6

April 25, 2022

1034

Bulletin No. 2022–17

that an eligible employer-sponsored plan

satisfies the minimum value requirement

only if the plan’s share of the total allowed

costs of benefits provided to related individuals is at least 60 percent, similar to

the existing rule in §1.36B-6(a)(1) for employees. Further, to be considered to provide minimum value under §1.36B-6(a)

(2)(ii) of these proposed regulations, an

eligible-employer sponsored plan would

have to include substantial coverage of

inpatient hospital services and physician

services, as discussed in more detail in

section III.B. of this preamble.

B. Minimum Value Rule Regarding

Inpatient Hospitalization and Physician

Services

As noted earlier in the Background

section of this preamble, the Treasury

Department and the IRS issued proposed

regulations in September 2015 incorporating the substance of the minimum value

rule that was finalized by HHS in February 2015. The HHS final regulations

and §1.36B-6(a)(2) of the 2015 proposed

regulations provide that an eligible employer-sponsored plan provides minimum

value only if, in addition to covering at

least 60 percent of the total allowed costs

of benefits provided to an employee under the plan, the plan benefits include

substantial coverage of inpatient hospital

services and physician services. The Treasury Department and the IRS have not

finalized these regulations. The Treasury

Department and the IRS are withdrawing

the 2015 proposed regulations and reproposing in §1.36B-6(a)(1)(ii) without substantive change the minimum value rule

regarding inpatient hospital services and

physician services for employees. Pending issuance of final Treasury regulations,

an employee will not be required to treat a

non-hospital/non-physician services plan

as providing minimum value for purposes

of an employee’s eligibility for a PTC. See

Notice 2014-69.

In addition, the Treasury Department

and the IRS are proposing in this document to expand the minimum value rule

in §1.36B-6(a)(2) of the 2015 proposed

regulations to apply to related individuals.

7

Thus, §1.36B-6(a)(2)(ii) of the proposed

regulations would provide that an eligible

employer-sponsored plan provides minimum value to a related individual only if,

in addition to covering at least 60 percent

of the total allowed costs of benefits provided to the related individual, the plan

benefits include substantial coverage of

inpatient hospital services and physician

services.

IV. Premium Refunds Affecting the PTC

Computation

Section 1.36B-3(d)(1)(i) provides that,

in determining a taxpayer’s premium assistance amount7 for a coverage month,

the taxpayer’s enrollment premiums

for the month are 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. Questions have arisen concerning refunds paid to a taxpayer in a

taxable year that is after the taxable year

the premium is paid and whether those refunds should be considered in determining

the taxpayer’s premium assistance amount

for the month to which the refund relates.

A medical loss ratio rebate under section

2718 of the Public Health Service Act is

an example of a premium refund that may

be paid to a taxpayer in a taxable year that

is after the taxable year the taxpayer paid

the premium.

Tax liability for a taxable year generally is determined based on events

occurring in that taxable year (the current taxable year). Events occurring in

a later taxable year, such as a refund of

a deductible amount paid in the current

taxable year, generally don’t affect the

tax liability of the current taxable year.

Thus, a taxpayer’s premium assistance

amount for a month in the current taxable year should not be affected by a

premium refund that was paid in a later

taxable year.

Consequently, the proposed regulations would clarify that, in computing the

premium assistance amount for a coverage month, a taxpayer’s enrollment premiums for the month are the premiums for

the month, reduced by any amounts that

were refunded in the same taxable year the

taxpayer incurred the premium liability.

V. 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

§§1.36B-2, 1.36B-3, and 1.36B-6(a)(2)

are proposed to apply for taxable years

beginning after the date these regulations

are published as final regulations in the

Federal Register. As of the publication

date of these proposed regulations, the

proposed regulations are expected to be

finalized no later than the end of this year.

The Treasury Department and the IRS

have been working closely with HHS to

ensure that the federally-facilitated Exchange would be ready to implement the

proposed changes before the open enrollment for 2023 coverage. HHS, in coordination with the Treasury Department and

the IRS, intends to take all necessary steps

to support efforts by state-based Exchanges to implement any changes before the

open enrollment for 2023 coverage.

The proposed regulations under

§1.36B-6(a)(1)(i) are proposed to apply

for taxable years ending after December

31, 2013.

The proposed regulations under

§1.36B-6(a)(1)(ii) are proposed to apply

The terms “premium assistance amount” and “premium tax credit” (or PTC) have the same meaning.

Bulletin No. 2022–17

1035

April 25, 2022

for plan years beginning after November

3, 2014.

Special Analyses

I. Regulatory Planning and Review –

Economic Analysis

EOs 12866 and 13563 direct agencies

to assess costs and benefits of available

regulatory alternatives and, if regulation is

necessary, to select regulatory approaches

that maximize net benefits (including potential economic, environmental, public

health and safety effects, distributive impacts, and equity). EO 13563 emphasizes

the importance of quantifying both costs

and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility.

These proposed regulations have been

designated as subject to review under EO

12866 pursuant to the Memorandum of

Agreement (April 11, 2018) (MOA) between the Treasury Department and the

Office of Management and Budget (OMB)

regarding review of tax regulations.

A. Background

1. Affordability of Employer Coverage for

Family Members of an Employee

As noted earlier in this preamble, section 36B provides a PTC for applicable

taxpayers who meet certain eligibility requirements, including that the taxpayer or

one or more family members is enrolled

in a QHP through an Exchange (Exchange

coverage) for one or more months in

which they are not eligible for other MEC.

However, an individual who is eligible to

enroll in employer coverage, but chooses

not to, is not considered eligible for the

employer coverage if it is “unaffordable.”

Section 36B defines employer coverage as

unaffordable for an employee if the employee’s share of the self-only premium is

more than 9.5 percent of the employee’s

household income.

Section 1.36B-2(c)(3)(v)(A)(2) provides that affordability of employer coverage for each related individual of the

employee is determined by the cost of

self-only coverage. Thus, the employee

and any related individuals included in the

employee’s family, within the meaning

of §1.36B-1(d), are eligible for MEC and

April 25, 2022

are ineligible for the PTC if (1) the plan

provides minimum value and (2) the employee’s share of the self-only coverage

is not more than 9.5 percent of household

income (that is, the self-only coverage for

the employee is “affordable”).

2. Description of the Proposed

Regulations

The proposed regulations would revise §1.36B-2(c)(3)(v)(A)(2) to provide a

separate affordability test for related individuals based on the cost to the employee

of family coverage. The proposed regulations do not change the affordability test

for the employee. As a result, whenever

a family applies for Exchange coverage

and one or more family members has an

offer of employer coverage, the Exchange

will perform the following affordability

determinations: one determination for the

employee based on the cost of self-only

coverage, one determination for the related individuals based on the cost of family

coverage, and additional determinations

for any related individuals who have an

offer of coverage from another employer.

It is therefore possible that family members would be eligible for PTC but the employee would not. In this case, if the entire family chooses to enroll in Exchange

coverage with advance payments of the

premium tax credit (APTC), the APTC

would be paid only for coverage of the

employee’s family members but would

not be paid for coverage of the employee.

B. Baseline

The Treasury Department and the IRS

have assessed the benefits and costs of the

proposed regulations relative to a no-action baseline reflecting anticipated Federal income tax-related behavior in the absence of these regulations.

C. Affected Entities

Some families with an offer of employer coverage to the employee and at least

one other family member would be newly

eligible for a PTC for the Exchange coverage of the non-employee family members.

The proposed regulations would have

no effect on families for whom self-only

employer coverage costs more than 9.5

1036

percent of household income – given that

family coverage is more expensive than

self-only coverage – because the affordability status of their employer coverage

is unchanged. Similarly, the proposed

regulations would not affect families

for whom the cost of family employer

coverage does not exceed 9.5 percent of

household income because their coverage is determined to be affordable either

way. In contrast, the proposed regulations

would affect only family members – other than the employee – for whom the employee’s cost for the available employer

coverage does not exceed 9.5 percent of

household income for a self-only plan but

exceeds 9.5 percent of household income

for a family plan or for whom the offer of

the family plan is affordable but doesn’t

provide minimum value. The Treasury

Department and the IRS are unable to estimate the size of the population affected

by the proposed regulations because contribution amounts for family coverage are

not observed in the tax data.

Employers may see a shift for some

of their employees from family coverage

to self-only coverage when family members newly qualify for PTC. The cost per

enrollee could increase or decrease depending on the characteristics of those

that remain covered. However, this shift

would likely lead to a decrease in the total

amount employers are spending on health

insurance as the Federal government increases spending on PTC for the non-employee family members.

D. Economic Analysis of the Proposed

Regulations

1. Overview

For some families, the proposed regulations would lower the premium contributions required to purchase coverage

for all family members by allowing family members other than the employee to

qualify for a PTC. For some families with

offers of employer coverage who will be

newly eligible for the PTC, the combined

cost of split coverage (self-only employer

coverage for the employee plus PTC-subsidized Exchange coverage for related individuals) would be lower than what they

pay for family coverage through the employer. Some low-income families with

Bulletin No. 2022–17

uninsured individuals where the employee is offered low-cost, self-only employer

coverage and relatively high-cost family

employer coverage would gain access to

a lower-cost option through eligibility for

the PTC on behalf of one or more related

individuals.

However, the cost for families to purchase Exchange coverage with APTC is

determined in part by the applicable percentage and household income, which are

the same regardless of the number of individuals actually covered. Therefore, if the

number of individuals needing Exchange

coverage is small – such as when some

family members have access to other

MEC – the cost of Exchange coverage per

enrollee is relatively high when added to

the cost of the employee share of self-only employer coverage. Furthermore, split

coverage also means multiple deductibles

and maximum out-of-pocket limits for the

family, which potentially increases outof-pocket costs for families. As a result of

these features, many families with offers

of employer coverage who would be newly eligible for the PTC under the proposed

regulations – including families with some

uninsured individuals – would not see any

savings in the combined cost of out-ofpocket premiums and cost sharing. Lastly,

many families may prefer the benefits and

provider networks of employer coverage,

compared to Exchange coverage. Taking

all these factors into account, the Treasury

Department and the IRS have determined

that new take-up of Exchange coverage

may be modest for eligible families because many would either still prefer employer coverage or prefer to purchase other goods and services, or save or invest,

rather than insure all family members.

2. Benefits

Gain of health insurance coverage. For

those individuals who are uninsured because the premiums for family coverage

through a family member’s employer are

unaffordable, gaining access to PTC for

the purchase of Exchange coverage may

be more affordable and prompt some of

them to take up coverage.

Additional health insurance option. For

those individuals who are covered by family coverage through a family member’s

employer that costs more than 9.5 percent

Bulletin No. 2022–17

of their household income, the proposed

regulations would, by providing access to

a PTC, give them an additional option that

could provide coverage at a lower cost or

with more comprehensive benefits.

The Treasury Department and the IRS

are unable to estimate the size of the benefits of the proposed regulations because

contribution amounts for family coverage

are not observed in the tax data. The Treasury Department and the IRS request comments that provide data, other evidence, or

models that provide insight on this issue.

3. Costs

Administrative costs. Adding this new

option for eligibility for PTC increases the

cost to the IRS to evaluate PTC claims.

The IRS’s PTC infrastructure will require

one-time changes to certain processes,

forms, and instructions to be implemented in time for the 2023 tax year, and the

cost of these changes is expected to be

negligible. The Centers for Medicare &

Medicaid Services (“CMS”), as the administrator of the Federally-facilitated

Exchanges and the federal Exchange eligibility and enrollment platform, and the

State-based Exchanges that operate their

own Exchange eligibility and enrollment

platforms will also incur administrative

costs as the Exchanges will have primary

responsibility for implementing the rule

as part of the eligibility and enrollment

process when families are applying for

Exchange coverage with APTC. Exchanges will incur one-time costs to update Exchange eligibility systems to account for

the new treatment of family contribution

amounts for employer coverage for purposes of determining eligibility for APTC,

and CMS, State-based Exchanges, State

Medicaid Agencies, and CMS-approved

Enhanced Direct Enrollment partners will

incur administrative costs to make conforming updates to their respective consumer applications and consumer-facing

affordability tools. The Treasury Department and the IRS anticipate total administrative costs to CMS, Exchanges, State

Medicaid Agencies, and Enhanced Direct

Enrollment partners associated with the

proposed regulation to be modest, and

request comments from impacted stakeholders to inform administrative cost

estimates.

1037

4. Transfers

Increased PTC costs for new Exchange

enrollees. Because some individuals may

be newly eligible for PTC, some individuals may move from employer coverage

or uninsured status to Exchange coverage. Thus, the proposed regulations may

increase the amount of PTC being paid

by the government and reduce employer

contributions.

Decreased employer exclusion for people who drop employer coverage. If individuals drop their employer coverage, or

do not enroll when they otherwise would

have, to take up Exchange coverage, the

amount of money that was going toward

their employer coverage, which provides

tax-preferred health benefits, will go into

the employee’s wages, other employees’

wages, and employer profits and will no

longer be tax exempt. Thus, the proposed

regulations may increase the amount of

tax revenue received from income and

payroll taxes.

The Treasury Department and the IRS

are unable to estimate the size of the population affected by the proposed regulations

because contribution amounts for family

coverage are not observed in the tax data.

The Treasury Department and the IRS request comments that provide data, other

evidence, or models that provide insight

on this issue.

5. Impact on Small Entities

When an agency issues a proposed

rulemaking, the Regulatory Flexibility

Act (5 U.S.C. chapter 6) (the “Act”) 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 (titled “Small Business Size

April 25, 2022

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, § 121.201 of the Code

of Federal Regulations for the Small Business Size Standards by NAICS Industry.

Section 605 of the Act 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.

6. Impact on Small Business

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.

II. Unfunded Mandates Reform Act

Section 202 of the Unfunded Mandates

Reform Act of 1995 (“UMRA”) 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.

III. Executive Order 13132: Federalism

EO 13132 (titled “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

April 25, 2022

state law, unless the agency meets the consultation and funding requirements of section 6 of the EO. 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 EO.

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 has been scheduled

for June 27, 2022, beginning at 10:00 a.m.

EDT. Announcement 2020-4, 2020-17

IRB 1, provides that until further notice,

public hearings conducted by the IRS will

be held telephonically.

The rules of 26 CFR 601.601(a)(3) apply to the hearing. Individuals who wish

to testify (by telephone) at the public

hearing must send an email to publichearings@irs.gov to receive the telephone

number and access code for the hearing.

The subject line of the email must contain

the regulation number (REG-114339-21)

for the hearing and the word TESTIFY.

For example, the subject line may say:

Request to TESTIFY at Hearing for REG114339-21. The email should also include

a copy of the speaker’s outline of topics.

The email requesting to speak must be

received by June 13, 2022. Speakers will

have up to ten minutes to testify and may

be asked questions by the panel.

Individuals who want to attend the

public hearing by telephone must also

send an email to publichearings@irs.gov

to receive the telephone number and access code for the hearing. The subject line

of the email must contain the regulation

number (REG-114339-21) and the word

ATTEND. For example, the subject line

may say: Request to ATTEND Hearing for

REG-114339-21. Email requests to attend

1038

the public hearing must be received by

5:00 p.m. EDT on June 23, 2022.

The telephonic hearing will be made

accessible to people with disabilities. To

request special assistance during the telephonic hearing, please contact the Publications and Regulations Branch of the

Office of Associate Chief Counsel (Procedure and Administration) by sending

an email to publichearings@irs.gov (preferred) or by telephone at (202) 317-5177

(not a toll-free number) by June 22, 2022.

Any questions regarding speaking at or

attending the public hearing may also be

emailed to publichearings@irs.gov.

Drafting Information

The principal author of these proposed

regulations is Suzanne R. Sinno 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.

Withdrawal of Notice of Proposed

Rulemaking

Accordingly, under the authority of

26 U.S.C. 7805, the notice of proposed

rulemaking (REG-143800-14) that was

published in the Federal Register on

September 1, 2015 (80 FR 52678), is

withdrawn.

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the

Regulations

Accordingly, 26 CFR part 1 is proposed to be 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. Section 1.36B-2 is amended by:

1. Revising the first sentence and adding

a sentence following the first sentence

of paragraph (c)(3)(v)(A)(2).

2. Adding paragraph (c)(3)(v)(A)(8).

Bulletin No. 2022–17

3.

4.

5.

Revising the second sentence of paragraph (c)(3)(v)(B).

In paragraph (c)(3)(v)(D), Examples

1 through 9 are designated as paragraphs (c)(3)(v)(D)(1) through (9),

respectively.

In newly designated paragraphs (c)

(3)(v)(D)(3), (5), (6), (7), and (9),

redesignating the paragraphs in the

first column as the paragraphs in the

second column:

Old paragraphs

(c)(3)(v)(D)(3)(i)

through (ii)

(c)(3)(v)(D)(5)(i)

through (ii)

(c)(3)(v)(D)(6)(i)

through (ii)

(c)(3)(v)(D)(7)(i)

through (iv)

(c)(3)(v)(D)(9)(i)

through (ii)

New paragraphs

(c)(3)(v)(D)(3)(i)

through (ii)

(c)(3)(v)(D)(5)(i)

through (ii)

(c)(3)(v)(D)(6)(i)

through (ii)

(c)(3)(v)(D)(7)(i)

through (iv)

(c)(3)(v)(D)(9)(i)

through (ii)

6.

Revising newly designated paragraphs (c)(3)(v)(D)(1) and (2).

7. Redesignating paragraphs (c)(3)

(v)(D)(3) through (9) as paragraphs (c)(3)(v)(D)(7) through (13),

respectively.

8. Adding new paragraphs (c)(3)(v)(D)

(3) through (6);

9. Revising the heading for newly

redesignated paragraph (c)(3)(v)(D)

(7), the heading and first sentence

of newly redesignated paragraph (c)

(3)(v)(D)(8), the heading of newly

redesignated paragraph (c)(3)(v)(D)

(9), and the first sentence of newly

redesignated paragraph (c)(3)(v)(D)

(9)(i).

10. In the headings for newly redesignated paragraphs (c)(3)(v)(D)(10)

through (13), removing the first

period and adding a colon in its place.

11. Revising paragraph (e)(1).

12. Adding paragraph (e)(5).

The revisions and additions read as

follows:

§1.36B-2 Eligibility for premium tax

credit.

*****

(c) * * *

Bulletin No. 2022–17

(3) * * *

(v) * * *

(A) * * *

(2) * * * Except as provided in paragraph (c)(3)(v)(A)(3) of this section, an

eligible employer-sponsored plan is affordable for a related individual if the employee’s required contribution for family

coverage under the plan does not exceed

the required contribution percentage,

as defined in paragraph (c)(3)(v)(C) of

this section, of the applicable taxpayer’s

household income for the taxable year.

For purposes of this paragraph (c)(3)(v)

(A)(2), an employee’s required contribution for family coverage is the portion of

the annual premium the employee must

pay for coverage of the employee and all

other individuals included in the employee’s family, as defined in §1.36B-1(d),

who are offered coverage under the eligible employer-sponsored plan. * * *

*****

(8) Multiple offers of coverage. An individual who has offers of coverage under

eligible employer-sponsored plans from

multiple employers, either as an employee or a related individual, has an offer of

affordable coverage if at least one of the

offers of coverage is affordable under

paragraph (c)(3)(v)(A)(1) or (2) of this

section.

(B) * * * Coverage under an eligible

employer-sponsored plan is affordable for a

part-year period if the annualized required

contribution for self-only coverage, in the

case of an employee, or family coverage,

in the case of a related individual, under the

plan for the part-year period does not exceed the required contribution percentage

of the applicable taxpayer’s household income for the taxable year. * * *

*****

(D) * * *

(1) Example 1: Basic determination of affordability. For all of 2023, taxpayer C works for an employer, X, that offers its employees and their spouses a health insurance plan under which, to enroll in

self-only coverage, C must contribute an amount for

2023 that does not exceed the required contribution

percentage of C’s 2023 household income. Because

C’s required contribution for self-only coverage does

not exceed the required contribution percentage of

C’s household income, under paragraph (c)(3)(v)(A)

(1) of this section, X’s plan is affordable for C, and

C is eligible for minimum essential coverage for all

months in 2023.

(2) Example 2: Basic determination of affordability for a related individual. (i) The facts are the

1039

same as in paragraph (c)(3)(v)(D)(1) of this section

(Example 1), except that C is married to J, they file a

joint return, and to enroll C and J, X’s plan requires

C to contribute an amount for coverage for C and

J for 2023 that exceeds the required contribution

percentage of C’s and J’s household income. J does

not work for an employer that offers employer-sponsored coverage.

(ii) J is a member of C’s family as defined in

§1.36B-1(d). Because C’s required contribution for

coverage of C and J exceeds the required contribution percentage of C’s and J’s household income,

under paragraph (c)(3)(v)(A)(2) of this section, X’s

plan is unaffordable for J. Accordingly, J is not eligible for minimum essential coverage for 2023. However, under paragraph (c)(3)(v)(A)(1) of this section,

X’s plan is affordable for C, and C is eligible for

minimum essential coverage for all months in 2023.

(3) Example 3: Multiple offers of coverage. The

facts are the same as in paragraph (c)(3)(v)(D)(2) of

this section (Example 2), except that J works all year

for an employer that offers employer-sponsored coverage to employees. J’s required contribution for the

cost of self-only coverage from J’s employer does

not exceed the required contribution percentage of

C’s and J’s household income. Although the coverage offered by C’s employer for C and J is unaffordable for J, the coverage offered by J’s employer is

affordable for J. Consequently, under paragraphs (c)

(3)(v)(A)(1) and (8) of this section, J is eligible for

minimum essential coverage for all months in 2023.

(4) Example 4: Cost of covering individuals not

part of taxpayer’s family. (i) D and E are married,

file a joint return, and have two children, F and G,

under age 26. F is a dependent of D and E, but G

is not. D works all year for an employer that offers

employer-sponsored coverage to employees, their

spouses, and their children under age 26. E, F, and G

do not work for employers offering coverage. D’s required contribution for self-only coverage under D’s

employer’s coverage does not exceed the required

contribution percentage of D’s and E’s household

income. D’s required contribution for coverage of D,

E, F, and G exceeds the required contribution percentage of D’s and E’s household income, but D’s

required contribution for coverage of D, E, and F

does not exceed the required contribution percentage

of the household income.

(ii) E and F are members of D’s family as defined

in §1.36B-1(d). G is not a member of D’s family

under §1.36B-1(d), because G is not D’s dependent.

Under paragraph (c)(3)(v)(A)(1) of this section, D’s

employer’s coverage is affordable for D because D’s

required contribution for self-only coverage does not

exceed the required contribution percentage of D’s

and E’s household income. D’s employer’s coverage

also is affordable for E and F, because, under paragraph (c)(3)(v)(A)(2) of this section, D’s required

contribution for coverage of D, E, and F does not

exceed the required contribution percentage of D’s

and E’s household income. Although D’s cost to cover D, E, F, and G exceeds the required contribution

percentage of D’s and E’s household income, under

paragraph (c)(3)(v)(A)(2) of this section, the cost to

cover G is not considered in determining whether D’s

employer’s coverage is affordable for E and F, regardless of whether G actually enrolls in the plan, because G is not in D’s family. D, E, and F are eligible

April 25, 2022

for minimum essential coverage for all months in

2023. Under paragraph (c)(4)(i) of this section, G is

considered eligible for the coverage offered by D’s

employer only if G enrolls in the coverage.

(5) Example 5: More than one family member

with an employer offering coverage. (i) K and L are

married, file a joint return, and have one dependent

child, M. K works all year for an employer that offers

coverage to employees, spouses, and children under

age 26. L works all year for an employer that offers

coverage to employees only. K’s required contribution for self-only coverage under K’s employer’s

coverage does not exceed the required contribution percentage of K’s and L’s household income.

Likewise, L’s required contribution for self-only

coverage under L’s employer’s coverage does not

exceed the required contribution percentage of K’s

and L’s household income. However, K’s required

contribution for coverage of K, L, and M exceeds

the required contribution percentage of K’s and L’s

household income.

(ii) L and M are members of K’s family as defined

in §1.36B-1(d). Under paragraph (c)(3)(v)(A)(1) of

this section, K’s employer’s coverage is affordable

for K because K’s required contribution for self-only

coverage does not exceed the required contribution

percentage of K’s and L’s household income. Similarly, L’s employer’s coverage is affordable for L,

because L’s required contribution for self-only coverage does not exceed the required contribution percentage of K’s and L’s household income. Thus, K

and L are eligible for minimum essential coverage

for all months in 2023. However, under paragraph

(c)(3)(v)(A)(2) of this section, K’s employer’s coverage is unaffordable for M, because K’s required

contribution for coverage of K, L, and M exceeds

the required contribution percentage of K’s and L’s

household income. Accordingly, M is not eligible for

minimum essential coverage for 2023.

(6) Example 6: Multiple offers of coverage for

a related individual. (i) The facts are the same as in

paragraph (c)(3)(v)(D)(5) of this section (Example

5), except that L works all year for an employer that

offers coverage to employees, spouses, and children

under age 26. L’s required contribution for coverage

of K, L, and M does not exceed the required contribution percentage of K’s and L’s household income.

(ii) Although M is not eligible for affordable

employer coverage under K’s employer’s coverage,

paragraph (c)(3)(v)(A)(8) of this section dictates that

L’s employer coverage must be evaluated to determine whether L’s employer coverage is affordable

for M. Under paragraph (c)(3)(v)(A)(2) of this section, L’s employer’s coverage is affordable for M,

because L’s required contribution for K, L, and M

does not exceed the required contribution percentage of K’s and L’s household income. Accordingly,

M is eligible for minimum essential coverage for all

months in 2023.

(7) Example 7: Determination of unaffordability

at enrollment. * * *

April 25, 2022

(8) Example 8: Determination of unaffordability

for plan year. The facts are the same as in paragraph

(c)(3)(v)(D)(7) of this section (Example 7), except

that X’s employee health insurance plan year is September 1 to August 31. * * *

(9) Example 9: No affordability information affirmatively provided for annual redetermination. (i)

The facts are the same as in paragraph (c)(3)(v)(D)

(7) of this section (Example 7), except the Exchange

redetermines D’s eligibility for advance credit payments for 2015. * * *

*****

(e) * * *

(1) Except as provided in paragraphs

(e)(2) through (5) of this section, this section applies to taxable years ending after

December 31, 2013.

*****

(5) The first two sentences of paragraph (c)(3)(v)(A)(2), paragraph (c)(3)(v)

(A)(8), the second sentence of paragraph

(c)(3)(v)(B), paragraphs (c)(3)(v)(D)(1)

through (6), and the first sentences of

paragraphs (c)(3)(v)(D)(8) and (9) of this

section apply to taxable years beginning

after [date final regulations are published

in the Federal Register].

Par. 3. Section 1.36B-3 is amended

by revising paragraphs (d)(1)(i) and (n)

(1) and adding paragraph (n)(3) to read as

follows:

§1.36B-3 Computing the premium

assistance credit amount.

*****

(d) * * *

(1) * * *

(i) The premiums for the month, reduced by any amounts that were refunded

in the same taxable year as the premium

liability is incurred, for one or more qualified health plans in which a taxpayer or a

member of the taxpayer’s family enrolls

(enrollment premiums); or

*****

(n) * * * (1) Except as provided in

paragraphs (n)(2) and (3) of this section,

this section applies to taxable years ending after December 31, 2013.

*****

(3) Paragraph (d)(1)(i) of this section

applies to taxable years beginning after

1040

[the date final regulations are published in

the Federal Register].

Par. 4. Section 1.36B-6 is amended by

revising paragraphs (a) and (g)(2) to read

as follows:

§1.36B-6 Minimum value.

(a) In general--(1) Employees. An eligible employer-sponsored plan provides

minimum value (MV) for an employee of

the employer offering the coverage only

if-(i) The plan’s MV percentage, as defined in paragraph (c) of this section, is at

least 60 percent based on the plan’s share

of the total allowed costs of benefits provided to the employee; and

(ii) The plan provides substantial coverage of inpatient hospital services and

physician services.

(2) Related individuals. An eligible employer-sponsored plan provides MV for

an individual who may enroll in the plan

because of a relationship to an employee

of the employer offering the coverage (a

related individual) only if-(i) The plan’s MV percentage, as defined in paragraph (c) of this section, is at

least 60 percent based on the plan’s share

of the total allowed costs of benefits provided to the related individual; and

(ii) The plan provides substantial coverage of inpatient hospital services and

physician services.

*****

(g) * * *

(2) Exceptions. (i) Paragraph (a)(1)(ii)

of this section applies for plan years beginning after November 3, 2014; and

(ii) Paragraph (a)(2) of this section applies to taxable years beginning after [date

final regulations are published in the Federal Register].

Douglas W. O’Donnell,

Deputy Commissioner for

Services and Enforcement.

(Filed by the Office of the Federal Register on April

5, 2022, 8:45 a.m., and published in the issue of the

Federal Register for April 7, 2022, 87 F.R. 20354)

Bulletin No. 2022–17

Definition of Terms

Revenue rulings and revenue procedures

(hereinafter referred to as “rulings”) that

have an effect on previous rulings use the

following defined terms to describe the

­effect:

Amplified describes a situation where

no change is being made in a prior published position, but the prior position is

being extended to apply to a variation of

the fact situation set forth therein. Thus, if

an earlier ruling held that a principle applied to A, and the new ruling holds that

the same principle also applies to B, the

earlier ruling is amplified. (Compare with

modified, below).

Clarified is used in those instances

where the language in a prior ruling is being made clear because the language has

caused, or may cause, some confusion. It

is not used where a position in a prior ruling is being changed.

Distinguished describes a situation

where a ruling mentions a previously published ruling and points out an essential

difference between them.

Modified is used where the substance

of a previously published position is being

changed. Thus, if a prior ruling held that a

principle applied to A but not to B, and the

new ruling holds that it applies to both A

and B, the prior ruling is modified because

it corrects a published position. (Compare

with amplified and clarified, above).

Obsoleted describes a previously published ruling that is not considered determinative with respect to future transactions.

This term is most commonly used in a ruling

that lists previously published rulings that

are obsoleted because of changes in laws or

regulations. A ruling may also be obsoleted

because the substance has been included in

regulations subsequently adopted.

Revoked describes situations where the

position in the previously published ruling

is not correct and the correct position is

being stated in a new ruling.

Superseded describes a situation where

the new ruling does nothing more than

restate the substance and situation of a

previously published ruling (or rulings).

Thus, the term is used to republish under

the 1986 Code and regulations the same

position published under the 1939 Code

and regulations. The term is also used

when it is desired to republish in a single

ruling a series of situations, names, etc.,

that were previously published over a

period of time in separate rulings. If the

new ruling does more than restate the substance of a prior ruling, a combination of

terms is used. For example, modified and

superseded describes a situation where the

substance of a previously published ruling

is being changed in part and is continued

without change in part and it is desired to

restate the valid portion of the previously published ruling in a new ruling that is

self contained. In this case, the previously

published ruling is first modified and then,

as modified, is superseded.

Supplemented is used in situations in

which a list, such as a list of the names of

countries, is published in a ruling and that

list is expanded by adding further names

in subsequent rulings. After the original

ruling has been supplemented several

times, a new ruling may be published that

includes the list in the original ruling and

the additions, and supersedes all prior rulings in the series.

Suspended is used in rare situations to

show that the previous published rulings

will not be applied pending some future

action such as the issuance of new or

amended regulations, the outcome of cases in litigation, or the outcome of a Service study.

Abbreviations

The following abbreviations in current

use and formerly used will appear in

material published in the Bulletin.

A—Individual.

Acq.—Acquiescence.

B—Individual.

BE—Beneficiary.

BK—Bank.

B.T.A.—Board of Tax Appeals.

C—Individual.

C.B.—Cumulative Bulletin.

CFR—Code of Federal Regulations.

CI—City.

COOP—Cooperative.

Ct.D.—Court Decision.

CY—County.

D—Decedent.

DC—Dummy Corporation.

DE—Donee.

Del. Order—Delegation Order.

DISC—Domestic International Sales Corporation.

DR—Donor.

E—Estate.

EE—Employee.

E.O.—Executive Order.

ER—Employer.

Bulletin No. 2022–17

ERISA—Employee Retirement Income Security Act.

EX—Executor.

F—Fiduciary.

FC—Foreign Country.

FICA—Federal Insurance Contributions Act.

FISC—Foreign International Sales Company.

FPH—Foreign Personal Holding Company.

F.R.—Federal Register.

FUTA—Federal Unemployment Tax Act.

FX—Foreign corporation.

G.C.M.—Chief Counsel’s Memorandum.

GE—Grantee.

GP—General Partner.

GR—Grantor.

IC—Insurance Company.

I.R.B.—Internal Revenue Bulletin.

LE—Lessee.

LP—Limited Partner.

LR—Lessor.

M—Minor.

Nonacq.—Nonacquiescence.

O—Organization.

P—Parent Corporation.

PHC—Personal Holding Company.

PO—Possession of the U.S.

PR—Partner.

PRS—Partnership.

i

PTE—Prohibited Transaction Exemption.

Pub. L.—Public Law.

REIT—Real Estate Investment Trust.

Rev. Proc.—Revenue Procedure.

Rev. Rul.—Revenue Ruling.

S—Subsidiary.

S.P.R.—Statement of Procedural Rules.

Stat.—Statutes at Large.

T—Target Corporation.

T.C.—Tax Court.

T.D.—Treasury Decision.

TFE—Transferee.

TFR—Transferor.

T.I.R.—Technical Information Release.

TP—Taxpayer.

TR—Trust.

TT—Trustee.

U.S.C.—United States Code.

X—Corporation.

Y—Corporation.

Z—Corporation.

April 25, 2022

Numerical Finding List1

Revenue Procedures:—Continued

Bulletin 2022–17

2022-20, 2022-14 I.R.B. 945

2022-21, 2022-16 I.R.B. 1015

Announcements:

2022-3, 2022-8 I.R.B. 788

2022-4, 2022-9 I.R.B. 789

2022-5, 2022-11 I.R.B. 825

2022-6, 2022-13 I.R.B. 934

2022-7, 2022-15 I.R.B. 946

AOD:

2022-1, 2022-06 I.R.B. 466

2022-2, 2022-12 I.R.B. 903

Notices:

2022-1, 2022-02 I.R.B. 304

2022-2, 2022-02 I.R.B. 304

2022-3, 2022-02 I.R.B. 308

2022-4, 2022-02 I.R.B. 309

2022-5, 2022-05 I.R.B. 457

2022-6, 2022-05 I.R.B. 460

2022-7, 2022-06 I.R.B. 469

2022-8, 2022-07 I.R.B. 491

2022-9, 2022-10 I.R.B. 811

2022-10, 2022-10 I.R.B. 815

2022-12, 2022-12 I.R.B. 906

2022-11, 2022-14 I.R.B. 939

2022-13, 2022-14 I.R.B. 940

2022-14, 2022-14 I.R.B. 941

Revenue Rulings:

2022-1, 2022-02 I.R.B. 301

2022-2, 2022-04 I.R.B. 451

2022-3, 2022-06 I.R.B. 467

2022-4, 2022-10 I.R.B. 790

2022-5, 2022-10 I.R.B. 792

2022-6, 2022-12 I.R.B. 904

2022-7, 2022-14 I.R.B. 935

2022-8, 2022-14 I.R.B. 936

Treasury Decisions:

9959, 2022-03 I.R.B. 328

9961, 2022-03 I.R.B. 430

9960, 2022-07 I.R.B. 481

9962, 2022-11 I.R.B. 823

Proposed Regulations:

REG-118250-20, 2022-07 I.R.B. 753

REG-105954-20, 2022-11 I.R.B. 828

REG-114209-21, 2022-11 I.R.B. 898

REG-114209-21, 2022-11 I.R.B. 898

REG-121508-18, 2022-15 I.R.B. 996

REG-114339-21, 2022-17 I.R.B. 1030

Revenue Procedures:

2022-1, 2022-01 I.R.B. 1

2022-2, 2022-01 I.R.B. 120

2022-3, 2022-01 I.R.B. 144

2022-4, 2022-01 I.R.B. 161

2022-5, 2022-01 I.R.B. 256

2022-7, 2022-01 I.R.B. 297

2022-9, 2022-02 I.R.B. 310

2022-11, 2022-03 I.R.B. 449

2022-8, 2022-04 I.R.B. 451

2022-10, 2022-06 I.R.B. 473

2022-13, 2022-06 I.R.B. 477

2022-12, 2022-07 I.R.B. 494

2022-14, 2022-07 I.R.B. 502

2022-15, 2022-13 I.R.B. 908

2022-17, 2022-13 I.R.B. 930

2022-17, 2022-13 I.R.B. 933

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2020–27 through 2020–52 is in Internal Revenue Bulletin

2020–52, dated December 27, 2021.

1

April 25, 2022

ii

Bulletin No. 2022–17

Finding List of Current Actions on

Previously Published Items1

Bulletin 2022–17

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2020–27 through 2020–52 is in Internal Revenue Bulletin

2020–52, dated December 27, 2021.

1

Bulletin No. 2022–17

iii

April 25, 2022

Internal Revenue Service

Washington, DC 20224

Official Business

Penalty for Private Use, $300

INTERNAL REVENUE BULLETIN

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