# Bulletin No. 2022–45

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URL: https://www.frixlaw.com/law-library/documents/agency%3Airs%3Ae2a33afeb39385d0

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

HIGHLIGHTS
OF THIS ISSUE




Bulletin No. 2022–45
November 7, 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.

ADMINISTRATIVE
REG-100719-21, page 457.
This guidance contains proposed amendments to the
regulations relating to the user fees for the new enrollment and renewal enrollment of enrolled actuaries. In
accordance with the guidelines in OMB Circular A-25,
the IRS has re-calculated its cost of administering the
new enrollment and renewal enrollment processes for
enrolled actuaries and determined the full cost has
increased to $680.00 per new enrollment or renewal
enrollment. Therefore, the Treasury Department and
the IRS propose to increase the amount of the user fee
for enrolled actuary new enrollment or renewal enrollment from $250.00 to $680.00.

ADMINISTRATIVE, INCOME TAX
Rev. Proc. 2022-38, page 445.
This revenue procedure sets forth inflation-adjusted
items for 2023 for various Code provisions as in effect
on October 18, 2022. The inflation adjusted items for
the Code sections set forth in section 3 of this revenue
procedure are generally determined by reference to §
1(f) of the Code. To the extent amendments to the Code
are enacted for 2023 after October 18, 2022, taxpayers should consult additional guidance to determine
whether these adjustments remain applicable for 2023.

EMPLOYEE PLANS
Notice 2022-54, page 439.
This notice sets forth updates on the corporate bond
monthly yield curve, the corresponding spot segment
rates for October 2022 used under § 417(e)(3)(D), the
Finding Lists begin on page ii.

24-month average segment rates applicable for October 2022, and the 30-year Treasury rates, as reflected
by the application of § 430(h)(2)(C)(iv).
Notice 2022-55, page 443.
Section 415 of the Internal Revenue Code (the Code)
provides for dollar limitations on benefits and contributions under qualified retirement plans. Section 415(d)
requires that the Secretary of the Treasury annually
adjust these limits for cost of living increases. Other
limitations applicable to deferred compensation plans
are also affected by these adjustments under § 415.
Under § 415(d), the adjustments are to be made under
adjustment procedures similar to those used to adjust
benefit amounts under § 215(i)(2)(A) of the Social Security Act.

EMPLOYEE PLANS, EXCISE TAX
Notice 2022-53, page 437.
This notice announces that the Department of the Treasury and the Internal Revenue Service intend to issue
final regulations related to required minimum distributions under section 401(a)(9) of the Internal Revenue
Code that will apply no earlier than the 2023 distribution calendar year. In addition, this notice provides guidance related to certain provisions of section 401(a)(9)
that apply for 2021 and 2022 and the related excise
tax under section 4974.

INCOME TAX
REG-121509-00, page 463.
This document withdraws a notice of proposed rulemaking published in the Federal Register on August 29,
2006. The notice of proposed rulemaking relates to

the exclusion from gross income of previously taxed
earnings and profits under section 959 of the Internal
Revenue Code (the “Code”) and related basis adjustments under section 961 of the Code.
Rev. Rul. 2022-20, page 407.
Federal rates; adjusted federal rates; adjusted federal
long-term rate, and the long-term tax exempt rate. For
purposes of sections 382, 1274, 1288, 7872 and
other sections of the Code, tables set forth the rates
for November 2022.

T.D. 9968, page 409.
These final regulations under section 36B of the Internal Revenue Code amend the regulations regarding
eligibility for the premium tax credit to provide that
affordability of employer-sponsored 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 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
deleted to prevent unwarranted invasions of privacy and to
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.

November 7, 2022 

Bulletin No. 2022–45

Part I
Section 1274.—
Determination of Issue
Price in the Case of Certain
Debt Instruments Issued for
Property
(Also Sections 42, 280G, 382, 467, 468, 482, 483,
1288, 7520, 7872.)

Rev. Rul. 2022-20
This revenue ruling provides various
prescribed rates for federal income tax

AFR
110% AFR
120% AFR
130% AFR
AFR
110% AFR
120% AFR
130% AFR
150% AFR
175% AFR
AFR
110% AFR
120% AFR
130% AFR

Short-term adjusted AFR
Mid-term adjusted AFR
Long-term adjusted AFR

Bulletin No. 2022–45

purposes for November 2022 (the current month). Table 1 contains the shortterm, mid-term, and long-term applicable federal rates (AFR) for the current
month for purposes of section 1274(d)
of the Internal Revenue Code. Table 2
contains the short-term, mid-term, and
long-term adjusted applicable federal
rates (adjusted AFR) for the current
month for purposes of section 1288(b).
Table 3 sets forth the adjusted federal long-term rate and the long-term
tax-exempt rate described in section
382(f). Table 4 contains the appropriate

percentages for determining the low-income housing credit described in section 42(b)(1) for buildings placed in
service during the current month. However, under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service
after July 30, 2008, shall not be less
than 9%. Finally, Table 5 contains the
federal rate for determining the present
value of an annuity, an interest for life
or for a term of years, or a remainder or
a reversionary interest for purposes of
section 7520.

REV. RUL. 2022-20 TABLE 1
Applicable Federal Rates (AFR) for November 2022
Period for Compounding
Annual
Semiannual
Quarterly
Short-term
4.10%
4.06%
4.04%
4.52%
4.47%
4.45%
4.93%
4.87%
4.84%
5.35%
5.28%
5.25%
Mid-term
3.97%
3.93%
3.91%
4.37%
4.32%
4.30%
4.78%
4.72%
4.69%
5.18%
5.11%
5.08%
5.99%
5.90%
5.86%
7.00%
6.88%
6.82%
Long-term
3.92%
3.88%
3.86%
4.32%
4.27%
4.25%
4.71%
4.66%
4.63%
5.10%
5.04%
5.01%

REV. RUL. 2022-20 TABLE 2
Adjusted AFR for November 2022
Period for Compounding
Annual
Semiannual
3.10%
3.08%
3.00%
2.98%
2.97%
2.95%

407

Quarterly
3.07%
2.97%
2.94%

Monthly
4.03%
4.43%
4.82%
5.22%
3.90%
4.28%
4.67%
5.06%
5.83%
6.78%
3.85%
4.23%
4.62%
4.99%

Monthly
3.06%
2.96%
2.93%

November 7, 2022

REV. RUL. 2022-20 TABLE 3
Rates Under Section 382 for November 2022
Adjusted federal long-term rate for the current month
Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted federal
long-term rates for the current month and the prior two months.)

2.97%
2.97%

REV. RUL. 2022-20 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for November 2022
Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July
30, 2008, shall not be less than 9%.
Appropriate percentage for the 70% present value low-income housing credit
7.91%
Appropriate percentage for the 30% present value low-income housing credit
3.39%

REV. RUL. 2022-20 TABLE 5
Rate Under Section 7520 for November 2022
Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years, or a
remainder or reversionary interest

Section 42.—Low-Income
Housing Credit
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
November 2022. See Rev. Rul. 2022-20, page 407.

Section 280G.—Golden
Parachute Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
November 2022. See Rev. Rul. 2022-20, page 407.

Section 382.—Limitation
on Net Operating Loss
Carryforwards and
Certain Built-In Losses
Following Ownership
Change
The adjusted applicable federal long-term rate
is set forth for the month of November 2022. See
Rev. Rul. 2022-20, page 407.

Section 467.—Certain
Payments for the Use of
Property or Services
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
November 2022. See Rev. Rul. 2022-20, page 407.

Section 468.—Special
Rules for Mining and Solid
Waste Reclamation and
Closing Costs
The applicable federal short-term rates are set
forth for the month of November 2022. See Rev.
Rul. 2022-20, page 407.

Section 482.—Allocation
of Income and Deductions
Among Taxpayers
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
November 2022. See Rev. Rul. 2022-20, page 407.

4.80%

Section 483.—Interest on
Certain Deferred Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
November 2022. See Rev. Rul. 2022-20, page 407.

Section 1288.—Treatment
of Original Issue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term,
mid-term, and long-term rates are set forth for the
month of November 2022. See Rev. Rul. 2022-20,
page 407.

Section 7520.—Valuation
Tables
The applicable federal mid-term rates are set
forth for the month of November 2022. See Rev.
Rul. 2022-20, page 407.

Section 7872.—Treatment
of Loans With BelowMarket Interest Rates
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
November 2022. See Rev. Rul. 2022-20, page 407.

November 7, 2022

408

Bulletin No. 2022–45

26 CFR § 301.6104(c)-1

SUPPLEMENTARY INFORMATION:

T.D. 9968

Background

DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1
Affordability of Employer
Coverage for Family
Members of Employees
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations.
SUMMARY: This document contains
final regulations under section 36B of
the Internal Revenue Code (Code) that
amend the 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 final regulations
also add a minimum value rule for family members of employees based on the
benefits provided to the family members.
The final regulations 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.
DATES: These final regulations are effective on December 12, 2022.
FOR FURTHER INFORMATION
CONTACT: Clara Raymond at (202)
317-4718 (not a toll-free number).

I. Overview
This document amends the Income Tax
Regulations (26 CFR part 1) under section 36B of the Code. On April 7, 2022,
the Department of the Treasury (Treasury Department) and the IRS published
a notice of proposed rulemaking (REG114339-21) in the Federal Register (87
FR 20354) under section 36B (proposed
regulations). A public hearing was held
on June 27, 2022. The Treasury Department and the IRS also received written
comments on the proposed regulations.
After consideration of the testimony heard
at the public hearing and the comments
received, the proposed regulations are
adopted as amended by this Treasury decision (final regulations).
These final regulations provide that,
for purposes of determining eligibility
for PTC, affordability of employer coverage for individuals eligible to enroll in
the coverage because of their relationship to an employee of the employer
(related individuals) is determined based
on the employee’s share of the cost of
covering the employee and the related
individuals. As further explained in the
Summary of Comments and Explanation
of Revisions, the affordability rule for
related individuals in these final regulations represents the better reading of
the relevant statutes and is consistent
with Congress’s purpose in the Affordable Care Act (ACA)1 to expand access
to affordable health care coverage. The
final regulations also include amendments to the rules relating to the determination of whether employer coverage
provides a minimum level of benefits,
referred to as minimum value; conforming amendments to the current regulations; and clarification of the treatment
of premium refunds.

II. Eligibility for Employer Coverage
Under Section 36B
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 through an Exchange
(QHP or Exchange coverage) for one or
more “coverage months.” Under §1.36B1(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 full calendar 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 treated as
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

The term ACA in this preamble means the Patient Protection and Affordable Care Act, Pub. L. 111-148, 124 Stat. 119 (2010), as amended by the Health Care and Education Reconciliation
Act of 2010, Pub. L. 111-152, 124 Stat. 1029 (2010).
1

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November 7, 2022

value. See section 36B(c)(2)(C)(iii) and
§1.36B-2(c)(3)(vii).
Under the affordability test in section
36B(c)(2)(C)(i)(II), an employee who
does not enroll in employer coverage is
not treated as 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.”2 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.”
Section 5000A generally requires
applicable individuals3 to make an individual shared responsibility payment4
with their tax return if they do not maintain minimum essential coverage for
themselves and any dependents. Section 5000A(e)(1) establishes exemptions
from the individual shared responsibility
payment that would otherwise apply for
“individuals who cannot afford coverage,” which the statute defines in section
5000A(e)(1)(A) to be applicable individuals whose required contribution for coverage exceeds a specified percentage of
their household income. Section 5000A(e)
(1)(B)(i) 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 applicable individual is eligible for minimum essential
coverage through an employer by reason of a relationship to an employee, the
determination [of affordability] 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) regarding coverage for related individuals to
take into account the cost of covering the
employee and the related individuals, not
just the employee. Specifically, for related
individuals, §1.5000A-3(e)(3)(ii)(B) provides that the required contribution is the
amount an employee must pay to cover
the employee and the related individuals
who are included in the employee’s family.5 Thus, under §1.5000A-3(e)(3)(ii)
(B), employer coverage is affordable for
those related individuals if the share of
the annual premium the employee must
pay to cover the employee and the related
individuals is not greater than the required
contribution percentage of household
income.
In contrast to the affordability rule for
related individuals in §1.5000A-3(e)(3)(ii)
(B), the Treasury Department and the IRS
issued final regulations in 2013 for purposes of the PTC providing that employer
coverage is affordable for the related individuals if the share of the annual premium
the employee must pay for self-only coverage is not greater than the required contribution percentage of household income,
regardless of how expensive the annual
premium for family coverage would be.
See §1.36B-2(c)(3)(v)(A)(2) (the 2013
regulations or 2013 affordability rule).
Thus, under the 2013 affordability rule,
the employee’s share of the premium for
family coverage, as defined in §1.36B1(m),6 was not considered in determining
whether employer coverage is affordable
for related individuals.
When the 2013 regulations were issued,
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). In the preamble to those regulations, the Treasury Department and the
IRS interpreted the language of section
36B, through the cross-reference to section 5000A(e)(1)(B), to provide that the
affordability test for related individuals is
based on the cost of self-only coverage.
Thus, if the cost of self-only coverage
is affordable, no PTC is allowed for the
Exchange coverage of related individuals even if family coverage through the
employer costs more than 9.5 percent of
household income.
As noted above, section 36B(c)(2)(C)
generally provides that an individual is
not treated as eligible for employer coverage if the coverage offered is unaffordable or does not provide minimum value.
An eligible employer-sponsored plan
provides minimum value under section
36B(c)(2)(C)(ii) and §1.36B-6(a)(1) 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 201469, 2014-48 I.R.B. 903, which advised
employers of the intent to propose regulations providing that group health plans
that fail to provide substantial coverage
for inpatient hospitalization or physician
services 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
would 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

This required contribution percentage of 9.5 is indexed annually under section 36B(c)(2)(C)(iv). For simplicity, this preamble refers to 9.5 percent as the required contribution percentage.
Section 5000A(d)(1) defines an applicable individual as any individual other than an individual with a religious conscience exemption, an individual who is not lawfully present or an
individual who is incarcerated.
4
Public Law 115-97 (2017), commonly referred to as the Tax Cuts and Jobs Act, reduced the individual shared responsibility payment amount to zero for months beginning after December
31, 2018.
5
For purposes of this exemption for unaffordable coverage, an employee or related individual who is otherwise exempt under §1.5000A–3 is not included in determining the required
contribution.
6
Section 1.36B-1(m) defines family coverage as health insurance that covers more than one individual and provides coverage for the essential health benefits as defined in section 1302(b)
(1) of the ACA.
2
3

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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)
to incorporate the substance of the HHS
final regulations regarding the minimum
value rule. The 2015 proposed regulations
issued by the Treasury Department and
the IRS relating to substantial coverage of
inpatient hospital services and physician
services have not been finalized.
III. EO 14009
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 directed 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 and, 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. Consistent
with the EO, the Treasury Department and
the IRS reviewed the regulations under
section 36B, including §1.36B-2(c)(3)(v)
(A)(2).
IV. Proposed Regulations
On April 7, 2022, the Treasury Department and the IRS published proposed regulations proposing to amend §1.36B-2(c)
(3)(v)(A)(2) to change the rule regarding
the affordability of employer coverage for
related individuals. The proposed regulations provided that, for purposes of determining eligibility for PTC, affordability of
employer coverage for related individuals
in the employee’s family would be determined based on the cost of covering the
employee and those related individuals—
just as affordability is determined in the

7

regulations implementing section 5000A.
For this purpose, affordability for related
individuals would be based on 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, within the meaning of
§1.36B-1(d), who are offered the coverage. Although some individuals who are
not part of the family might be offered the
employer coverage through the employee,
the cost of covering individuals not in the
family would not be considered in determining whether the related individuals in
the employee’s family have an offer of
affordable employer coverage.
The proposed regulations would not
change the affordability rule for employees. As required by statute, employees
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.
The proposed regulations also
addressed the minimum value rules in section 36B. Under the proposed regulations,
a separate minimum value rule would be
provided for related individuals that is
based on the level of coverage provided
to related individuals under an eligible
employer-sponsored plan. In addition, the
proposed regulations withdrew the 2015
proposed regulations and re-proposed
the rule regarding substantial coverage of
inpatient hospitalization services and physician services. Thus, under the proposed
regulations, an eligible employer-sponsored plan would provide minimum value
only if the plan covers at least 60 percent
of the total allowed costs of benefits provided to an employee under the plan and
the plan benefits include substantial coverage of inpatient hospital services and
physician services.
Finally, the proposed regulations
would amend §1.36B-3(d)(1)(i) to clarify
that, in computing the PTC 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.

Summary of Comments and
Explanation of Revisions
I. Overview
The Treasury Department and the IRS
received 3,888 comments on the proposed
regulations, the overwhelming majority
of which were in support of the rules in
the proposed regulations, including the
affordability test for related individuals
that is based on the cost of family coverage offered to the related individuals.
Many commenters recounted personal
stories of family members being uninsured due to the unaffordability of family
coverage offered by an employer and the
unavailability of a PTC for Exchange coverage. One married couple even testified
to a state legislature that they divorced
solely to retain the husband’s eligibility
for the PTC after his wife got a new job
with an offer of family coverage at a cost
of $16,000, over half of the husband’s
annual earnings.7 Some commenters made
the point that an affordability test for
related individuals that is based on the cost
of the coverage offered to the employee
and related individuals is family-friendly
because it is more likely to provide all
family members with access to affordable
coverage. Many commenters agreed with
the analysis in the preamble to the proposed regulations that the language of section 36B(c)(2)(C)(i) is best interpreted to
require a separate affordability determination for related individuals that is based on
the employee’s cost to cover the employee
and related individuals rather than a single affordability determination for both
employees and related individuals that is
based on the cost of self-only coverage to
employees, and provided persuasive legal
support for this position. Commenters also
overwhelmingly supported the minimum
value rules provided in the proposed regulations and agreed that a failure to provide
a separate minimum value rule for related
individuals could undermine the separate
affordability rule for related individuals.
Other commenters expressed the view
that the separate affordability test and minimum value rule for related individuals in
the proposed regulations are contrary to

See https://legislature.maine.gov/legis/bills/getTestimonyDoc.asp?id=161949.

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November 7, 2022

the language of section 36B, and that the
Treasury Department and the IRS do not
have the authority to change those rules.
Several of these commenters provided
legal analyses in support of their position
as well as policy arguments against the
proposed affordability test and minimum
value rule for related individuals. For reasons explained in sections II and III of this
Summary of Comments and Explanation
of Revisions, the Treasury Department
and the IRS are not persuaded by these
arguments.
Some commenters suggested that the
Treasury Department and the IRS adopt
various changes to the rules in the proposed regulations. Other commenters
requested outreach by HHS, the Treasury
Department, and the IRS to educate individuals, employers, and other stakeholders about the final regulations once they
are issued. Several commenters requested
clarification on certain issues related to
employers, including information reporting requirements under section 6056 of
the Code and the effect of the final regulations on individuals enrolled in non-calendar year plans. These comments are
addressed in sections IV, V, and VI of the
Summary of Comments and Explanation
of Revisions.
Finally, many commenters supported
the minimum value rule in the proposed
regulations under which an eligible
employer-sponsored plan would provide
minimum value to an employee 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’s benefits include substantial coverage of inpatient hospitalization
services and physician services. In addition, many commenters supported the
proposed amendment to §1.36B-3(d)(1)
(i) to clarify that, in computing the PTC
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. Because commenters supported these rules and did not request any

modifications to them, both the proposed
minimum value rule for employees related
to inpatient hospitalization services and
physician services and the proposed clarification of the premium refund rule are
being finalized without change.
II. Comments on Legal Analysis
A. Statutory analysis of affordability rule
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.”
As discussed in the preamble to the
proposed regulations, the flush language
in section 36B(c)(2)(C)(i) does not state
clearly and expressly how section 36B(c)
(2)(C)(i)(II) applies to related individuals or how the cross-reference to section
5000A(e)(1)(B) applies to coverage for
related individuals. Section 5000A(e)
(1)(B)(i) 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 applicable individual is eligible for minimum essential coverage through an
employer by reason of a relationship to
an employee, the determination under
[section 5000(e)(1)(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) for coverage for a related individual
to provide that the determination under
section 5000A(e)(1)(A) is made by reference to the required contribution of the
employee for coverage for the employee
and that related individual. Specifically,
for 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 all related individuals who are included in the employee’s
family.8 This long-standing rule under
section 5000A was proposed in February
20139 and did not generate any critical
comments. The proposed rule was finalized without change in August 201310 and
has never been challenged.
Similar to the regulations implementing section 5000A, the proposed regulations provided an affordability rule for
related individuals for section 36B purposes that looks to the cost of coverage for
the employee and related individuals and
is separate from the affordability rule for
employees of the employer offering the
coverage. Under the proposed regulations,
affordability for related individuals would
be based on 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,
within the meaning of §1.36B-1(d), who
are offered the coverage.
Some commenters expressed the view
that the affordability rule in the proposed
regulations conflicts with the language in
section 36B, that the 2013 affordability
rule is correct, and that the affordability
rule for related individuals in the proposed regulations should be withdrawn.
These commenters argued that section
36B unambiguously establishes a single affordability test for both employees and related individuals that is based
on the cost of self-only coverage to the
employee. As explained later in this section II.A. of the Summary of Comments
and Explanation of Revisions, however,
the proposed rule’s approach represents

For purposes of this exemption for unaffordable coverage, an employee or related individual who is otherwise exempt under §1.5000A–3 is not included in determining the required
contribution.
9
REG-148500-12 (78 FR 7314).
10
TD 9632 (78 FR 53646).
8

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the better reading of the statute and the
better means of implementing it. After
careful consideration, the Treasury
Department and the IRS are adopting the
affordability test as proposed.
The Treasury Department and the IRS
are of the view that section 36B(c)(2)
(C)(i), including the flush language that
follows section 36B(c)(2)(C)(i)(II), is
correctly interpreted to provide that the
affordability test for a related individual
is based on the cost of coverage for the
employee and the related individual. The
flush language provides as follows: “[t]
his clause shall also apply to a [related
individual].” Thus, taking into account the
flush language, section 36B(c)(2)(C)(i)
may be read to apply to a related individual as follows:
[A related individual] shall not be
treated as eligible for minimum essential
coverage if such coverage (I) consists of
an eligible employer-sponsored plan [ ],
and (II) the employee’s11 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.
This language includes four references
to the coverage provided by the employee’s employer: “minimum essential coverage,” “such coverage,” “eligible employer-sponsored plan,” and “the plan.”
Without question, “such coverage” refers
to the minimum essential coverage offered
by the employee’s employer to the related
individual, as do references to “employer-sponsored plan” and “the plan.” Unless
a related individual is also employed by
that employer, the related individual may
not enroll in the employer’s coverage on a
self-only basis. Thus, the minimum essential coverage referred to in section 36B(c)
(2)(C)(i), as it applies to related individuals, is the coverage the related individual
may enroll in, which is the family coverage offered by the employer. Under this
reading, the reference to “the employee’s
required contribution . . . with respect to
the plan” is the required contribution for
family coverage.

This reading gives full effect to section 36B(c)(2)(C)(i)(II)’s cross reference
to section 5000A(e)(1)(B). As noted earlier in this section II.A of the Summary of
Comments and Explanation of Revisions,
section 36B(c)(2)(C)(i) specifies rules to
determine the affordability of coverage
under an eligible employer-sponsored
plan both for an employee and for related
individuals. Taken in isolation, section
5000A(e)(1)(B) would specify a rule for
determining the affordability of a required
contribution only with respect to coverage
for an employee, even though the flush language in section 36B(c)(2)(C)(i) requires
a calculation to be performed for related
individuals as well. Section 5000A(e)(1)
(C) provides a rule for that calculation by
specifying a ”special rule” for purposes of
the calculation of the employee’s required
contribution for coverage that includes the
related individual. As explained earlier in
this section II.A. of the Summary of Comments and Explanation of Revisions, the
Treasury Department and the IRS have
long understood section 5000A(e)(1)(C)
in this way. See § 1.5000A-3(e)(3)(ii)(B),
promulgated in 2013.
As noted in section I of this Summary
of Comments and Explanation of Revisions, the vast majority of commenters
supported the proposed affordability rule
for related individuals, and several of these
commenters provided detailed technical
analyses in support of this interpretation
of the statute. Some of those commenters
argued that section 36B unambiguously
establishes a separate affordability test
for related individuals that is based on
the cost of family coverage. For example,
one commenter asserted that the proposed
affordability rule for related individuals
follows the plain language of the statute
and that section 5000A(c)(1)(C) states on
its face that it must be read into 5000A(c)
(1)(B). Another commenter argued that
the plain text of the statute indicates that
a related individual’s eligibility for the
PTC is based on the cost of family coverage and that the affordability rule in
the 2013 regulations reflected a strained

reading of the statute. One commenter
supported the proposed affordability rule
for related individuals but disagreed that
the rule adopts an “alternative” reading of
the statute. Instead, the commenter opined
that the interpretation in the proposed regulations is correct and that the affordability rule in the 2013 regulations reflected
an erroneous interpretation of the ACA.
Finally, one commenter stated that the
2013 regulations implementing section
36B badly misinterpret the statute and
that section 36B mandates a family-based
affordability test. The commenter noted
that if Congress had intended a self-only
test, it would have mandated that coverage be deemed affordable for a related
family member so long as the employee
can afford self-only coverage, rather than
obliquely stating that the special rule
applies to related family members as well.
For reasons explained in section III of
this Summary of Comments and Explanation of Revisions, the Treasury Department and the IRS have concluded that the
affordability rule for related individuals in
the proposed regulations, as finalized in
these regulations, is the better reading of
the statute and the better means of implementing the statute. Further, the Treasury
Department and the IRS believe that the
affordability rule in these final regulations
is consistent with the goal of the ACA
to provide access to affordable, quality
health care for all Americans.12 Indeed,
under the 2013 regulations, some family
members of employees could not access
any PTC for Exchange coverage even if
their only offer of employer coverage was
a family plan with exorbitant premiums
(about 16% of income, on average),13
solely because the employee had access to
affordable self-only coverage.
As explained earlier in this section
II.A of the Summary of Comments and
Explanation of Revisions, the Treasury
Department and the IRS disagree with
commenters who argued that section
36B unambiguously establishes a single
affordability test for both employees and
related individuals that is based on the cost

The term “employee” would not be replaced with “related individual” here because it is the employee who makes contributions (through salary reduction or otherwise) to pay for employer
coverage, even if the employer coverage includes family members of the employee.
12
See H.R. Rep. No. 111-443 (2009).
13
https://www.healthaffairs.org/doi/10.1377/hlthaff.2015.1491.
11

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November 7, 2022

of self-only coverage to the employee.
Some of these commenters argued that,
because section 36B(c)(2)(C)(i)(II) does
not cross-reference section 5000A(e)(1)
(C) in defining the term “required contribution,” section 5000A(e)(1)(C) cannot
be considered in determining whether a
related individual has been offered affordable employer coverage for purposes of
section 36B. One of those commenters
also argued that, under the negative-implication canon of statutory interpretation,14
the reference to section 5000A(e)(1)(A) in
section 5000A(e)(1)(C) precludes the use
of the rule in section 5000A(e)(1)(C) for
other purposes, such as providing a rationale for an affordability test in section
36B for related individuals that is separate
from the test for employees.
The Treasury Department and the IRS
disagree. As noted in the Background section and earlier in this section II.A. of the
Summary of Comments and Explanation
of Revisions, the definition of “required
contribution” in section 5000A(e)(1)(B)
(i) is modified by a “special rule” in section 5000A(e)(1)(C) that is applicable to
related individuals. Section 5000A(e)(1)
(C) provides that “[f]or purposes of [section 5000A(e)(1)](B)(i), if an applicable
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) regarding coverage for related individuals to take into
account the cost of covering the employee
and the related individuals, not just the
employee. Specifically, §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 who
are included in the employee’s family.15
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) incorporates the special rule in section 5000A(e)
(1)(C) and modifies section 5000A(e)(1)
(B)(i) when the coverage in question is for
related individuals. Accordingly, a specific reference to section 5000A(e)(1)(C)
in the flush language of section 36B(c)(2)
(C)(i) is not necessary to require the consideration of section 5000A(e)(1)(C) for
determining whether coverage offered
to related individuals is affordable under
section 36B.
In addition, the Treasury Department
and the IRS disagree that the negative-implication canon of statutory construction
compels the conclusion that the reference to section 5000A(e)(1)(A) in section
5000A(e)(1)(C) precludes the use of the
rule in section 5000A(e)(1)(C) for section
36B purposes. As the Supreme Court has
emphasized in numerous cases, the force
of any negative implication depends on
the context, and the negative-implication canon applies only when circumstances support a sensible inference that
the term left out must have been meant
to be excluded. See, for example, Chevron U.S.A. Inc. v. Echazabal, 536 U.S. 73,
81 (2002) (“The [negative-implication
canon] is fine when it applies, but this case
joins some others in showing when it does
not.”); United States v. Vonn, 535 U.S.
55, 65 (2002) (“At best, as we have said
before, the [negative-implication canon]
is only a guide, whose fallibility can be
shown by contrary indications that adopting a particular rule or statute was probably not meant to signal any exclusion of
its common relatives”); United Dominion Industries v. United States, 532 U.S.
822, 836 (2001) (“But here, as always,

the soundness of the [negative-implication canon] is a function of timing”).16
See also Antonin Scalia & Bryan Garner,
Reading Law: The Interpretation of Legal
Texts 107 (2012), stating that the negative-implication canon “must be applied
with great caution since its application
depends so much on context.” Here, the
context points in favor of not restricting
the use of section 5000A(e)(1)(C) to the
determination in 5000A(e)(1)(A). Instead,
the context points in favor of reading the
reference in section 36B(c)(2)(C)(i) to
section 5000A(e)(1)(B) as incorporating
the modification of that subparagraph in
section 5000A(e)(1)(C). This reading creates a clear and consistent rule for determining the affordability of coverage for
related individuals for purposes of both
section 36B and section 5000A. And, as
explained earlier in this section II.A. of
the Summary of Comments and Explanation of Revisions, without incorporating
section 5000A(e)(1)(C), the statute would
point only to a calculation of affordability for the employee’s coverage, even
though section 36B requires a calculation
of affordability for the related individuals
as well.
Moreover, had Congress intended section 5000A(e)(1)(C) to apply only to the
affordability determination under section
5000A, excluding all other provisions,
it could have done so through explicit
means, such as using the language “solely
for purposes of the determination under
section 5000A(e)(1)(A).” See, for example, section 4980H(c)(2)(D) and section
4980H(c)(2)(E), also enacted under the
ACA and which provide “solely for purposes of” limiting language. No such
limiting language is included in section
5000A(e)(1)(C). More generally, had
Congress intended a self-only affordability test for related individuals, it could
have explicitly provided that coverage
is affordable for a related individual so

The negative-implication canon of construction – expressio unius est exclusio alterius — means the expression of one thing implies the exclusion of the other.
For purposes of this exemption for unaffordable coverage, an employee or related individual who is otherwise exempt under §1.5000A–3 is not included in determining the required
contribution.
16
Notably, in U.S. Venture, Inc. v. United States, 2 F.4th 1034 (7th Cir. 2021), the court rejected an argument by a taxpayer that the negative-implication canon of statutory interpretation
required an outcome consistent with the taxpayer’s interpretation of a provision of the Internal Revenue Code. The question considered by the court was whether a taxpayer’s sale of a butane
and gasoline mix qualified for the alternative fuel mixture credit in section 6426 of the Code. In discussing whether the sale of the butane and gasoline mix should qualify for the credit, the
court rejected the taxpayer’s argument that a specific cross reference in section 6426(e) to section 4083(a)(1) for the definition of a term in section 6426(e) forecloses using a third provision,
section 4083(a)(2), to further illuminate the definition in section 4083(a)(1). The court “decline[d]” the taxpayer’s invitation “to follow a congressionally mandated cross-reference only part
of the way. Instead, we must accept and follow the cross-referenced definition in full.” U.S. Venture, Inc., 2 F.4th at 1042. “Whether the cross-reference is to the individual sub-paragraphs or
to the whole statute does not change the meaning that Congress chose to give “gasoline” in § 4083 and, consequently, in § 6426(e).” Id.
14
15

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long as the employee is offered affordable self-only coverage. Congress did
just that in 2016 when it enacted section
36B(c)(4), relating to the affordability of
employer coverage under a qualified small
employer health reimbursement arrangement (QSEHRA).
Under section 36B(c)(4)(A), a PTC is
not allowed for a month for the Exchange
coverage of “an employee (or any spouse
or dependent of such employee) if for
such month the employee is provided a
[QSEHRA] which constitutes affordable
coverage.” A QSEHRA is affordable for
a month if the excess of (1) the monthly
premium for the second lowest cost silver plan for self-only coverage of the
employee offered in the Exchange for the
rating area in which the employee resides,
over (2) 1/12 of the employee’s permitted
benefit (as defined in section 9831(d)(3)
(C)) under the QSEHRA, does not exceed
1/12 of 9.5 percent of the employee’s
household income.
In contrast to the language in section
36B(c)(2)(C)(i)(II), section 36B(c)(4)
(A) does not reference section 5000A(e)
(1)(B) for the QSEHRA affordability
determination or provide that “this clause
shall also apply” to a related individual.
Instead, it provides the same affordability rule for both employees and related
individuals by stating that affordability
for coverage under a QSEHRA for “an
employee (or any spouse or dependent of
such employee)” is based on the cost of
self-only coverage of the employee. That
is far different from the language in section 36B(c)(2)(C)(i)(II) and, therefore, it
is reasonable to conclude that the affordability rule in section 36B(c)(2)(C)(i)(II)
for related individuals is not the same as
the affordability rule for related individuals in section 36B(c)(4)(A).
Additionally, the structure and context
of sections 36B and 5000A suggest that
Congress did not intend to preclude the
use of section 5000A(e)(1)(C) in determining the affordability of employer coverage for related individuals for purposes
of PTC eligibility under section 36B.
Foremost, when the coverage in question
is for related individuals, section 36B(c)

17
18

(2)(C)(i)(II) specifically refers to the definition of required contribution in section
5000A(e)(1)(B)(i), and section 5000A
in turn specifically incorporates the special rule in section 5000A(e)(1)(C) “for
purposes of” section 5000A(e)(1)(B)
(i). Under this statutory structure, a specific reference to section 5000A(e)(1)(C)
in the flush language of section 36B(c)
(2)(C)(i) is not necessary to require the
consideration of section 5000A(e)(1)(C)
in determining affordability for related
individuals for section 36B purposes. This
consideration of section 5000A(e)(1)(C)
is particularly sensible given the flush language in section 36B(c)(2)(C)(i)(II). That
is, the flush language evinces Congress’s
intent to provide an affordability rule for
related individuals. Given that there are
numerous cross references in section 36B
to section 5000A and that section 5000A
confronts a similar situation relating to
affordability for related individuals that is
resolved through section 5000A(e)(1)(C),
it is logical to consider section 5000A(e)
(1)(C) for purposes of the affordability rule
for related individuals under section 36B.
Finally, using the rule in section 5000A(e)
(1)(C) in determining the affordability of
employer coverage for related individuals
for section 36B purposes supports the goal
of the ACA to provide affordable, quality
health care for all Americans. See H.R.
Rep. No. 111-443 (2009).

family members is generally based on the
amount an employee must pay to cover
the employee and the related individuals
included in the employee’s family. Thus,
these final regulations promote consistency between these two affordability
rules.
One commenter argued that Congress
did not intend the affordability rules of
section 36B and section 5000A to be consistent, suggesting that it instead sought
to make it easier for a taxpayer to avoid
a section 5000A individual shared responsibility payment for a related individual
than to qualify for a PTC for such individual. In other words, the commenter
seems to be suggesting that Congress’s
intent was to make it easier to go without
health insurance coverage than to qualify
for subsidized Exchange coverage. However, the commenter does not point to any
evidence of this beyond the assertion that
the statutory text compels this result. As
explained above, the Treasury Department and the IRS disagree with the commenter’s reading of the statutory text. The
commenter’s argument also ignores Congress’s broader goal of expanding access
to affordable health insurance coverage
through the ACA, which goal is advanced
by the affordability rule for related individuals in these final regulations.

B. Consistency between the affordability
rules of sections 36B and 5000A

One commenter also argued that the
legislative history underlying the ACA
shows that Congress intended that the
rule for affordability of employer coverage for family members be the same as
the affordability rule for employees and
that both determinations are intended to
be based on the cost of self-only coverage
to the employee. The argument is that S.
1796, the America’s Healthy Future Act
of 200917 (one of the Senate bills that
became the ACA through consolidation
with another bill18 and amendment), as
introduced, based the determination of
the affordability of employer-sponsored
coverage on the employee’s required contribution, as defined by (what was in that
version of the bill) section 5000A(e)(2),

The preamble to the proposed regulations noted that the proposed affordability rule under section 36B would create
greater consistency between the section
36B affordability rules and the rules in
section 5000A used to determine whether
an individual is exempt from the individual shared responsibility payment under
section 5000A because employer coverage is unaffordable. With the finalization
of the proposed section 36B affordability
rule in these final regulations, both rules
provide that affordability for employees
is based on the employee’s cost for selfonly coverage and that affordability for

C. Legislative history of ACA

111th Congress (2009).
H.R. 3590, 111th Congress (2009).

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November 7, 2022

which would have set affordability tests
for both self-only and family coverage.
The commenter further argued that,
when the bill that became the ACA was
introduced on the Senate floor, it altered
the language of S. 1796 to reflect the language currently in the statute, in which
the required contribution is described as
“within the meaning of section 5000A(e)
(1)(B).” In the commenter’s view, this
change demonstrates that the required
contribution rule in section 5000A(e)(1)
(C) does not apply to the section 36B
affordability test for related individuals.
The commenter asserted that the proposed
regulations fail to consider the changes
to S. 1796 because the affordability test
under the proposed regulations reflects
exactly how the required contribution
for related individuals would have been
determined had these changes not been
made.
The Treasury Department and the IRS
disagree that the change in legislative language on the Senate floor described by
the commenter indicates that Congress
intended that affordability for related
individuals must be based on the cost of
self-only coverage to the employee. At
the same time that the legislative sponsors
added the language to section 36B that
cross-references section 5000A(e)(1)(B),
they also added the introductory phrase
to section 5000A(e)(1)(C) clarifying that
that subparagraph applies “for purposes
of” subparagraph (e)(1)(B). The fact that
the legislative sponsors made both of these
changes at the same time indicates that
they understood that section 36B would
incorporate both subparagraphs into its
affordability rule. Moreover, as noted by
a number of commenters supportive of
the proposed regulations, had Congress
intended an identical affordability rule
for employees and related individuals, the
flush language in section 36B(c)(2)(C)(i)
would not have been necessary. For example, Congress could simply have stated
that affordability for an employee (or any
spouse or dependent of such employee) is
based on the cost of self-only coverage of
the employee. Indeed, as explained in section II.A. of this Summary of Comments
and Explanation of Revisions, Congress
did exactly that when it enacted the affordability rules for QSEHRAs in section
36B(c)(2)(4). That, however, is not the

November 7, 2022

direction that Congress chose to take with
its changes to S. 1796. Instead, Congress
enacted two rules, one for employees and
one for related individuals. Consequently,
it is reasonable to conclude that Congress’s use of separate rules for employees
and related individuals indicates an intent
to provide separate tests for an employee,
based on the cost of self-only coverage to
the employee, and for related individuals,
based on the cost of the coverage for the
employee and those related individuals.
D. Legislative proposals to change
affordability rule
Several commenters also argued that a
change to the affordability rule for related
individuals should be accomplished by
legislative action, rather than regulatory action. They argued that, despite
requests to amend section 36B to provide
that affordability of employer coverage
for related individuals is based on the
employee’s cost for family coverage, Congress has not amended section 36B to specifically command this result. In addition,
they noted that Congress has included language in various bills to amend the affordability rule, but the proposed legislation
has not been enacted. The commenters
asserted that this Congressional inaction means that the Treasury Department
and the IRS are not empowered to issue
regulations to address a matter that Congress acknowledges must be addressed in
legislation.
Although the commenters are correct
that members of Congress have included
language in various bills to address the
section 36B affordability rule in section
36B(c)(2)(C)(i), the introduction of proposed legislation is not an acknowledgement by Congress that the section 36B
affordability test for related individuals
must be addressed in legislation and not
by regulation. As the Supreme Court has
emphasized, “failed legislative proposals
are a particularly dangerous ground on
which to rest an interpretation of a prior
statute [internal quotations omitted] . . .
Congressional inaction lacks persuasive
significance because several equally tenable inferences may be drawn from that
inaction, including the inference that the
existing legislation already incorporated
the offered change.” Central Bank of

416

Denver, N.A. v. First Interstate Bank of
Denver, N.A., 511 U.S. 164, 187 (1994)
(quoting Pension Benefit Guaranty Corporation v. LTV Corp., 496 U.S. 633, 650
(1990)). Here, for instance, it is possible
that legislative proposals were introduced
not because of insufficient language in
the ACA, but because members of Congress believed that the 2013 regulations
had incorrectly interpreted the existing
language of the ACA. Although Congress
may not have enacted legislation specifically and unequivocally mandating the
approach taken in these final regulations,
the Treasury Department and the IRS have
determined that existing section 36B(c)
(2)(C)(i) is better interpreted to require
separate affordability determinations for
employees and for family members, as set
forth in §1.36B-2(c)(3)(v)(A)(2) of these
final regulations.
E. Interpretation of Joint Committee on
Taxation report
In a footnote in the preamble to the
proposed regulations, the Treasury
Department and the IRS observed that in
the Joint Committee on Taxation report,
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
(JCT report), the staff of the Joint Committee on Taxation (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 Joint Committee
staff later revised the quoted language,
after the enactment of the ACA, 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.” ERRATA for JCX18-10, (JCX-27-10), May 4, 2010 (May
2010 Errata).
A few commenters expressed the view
that the original JCT report was in error
and should not be viewed as evidence
that the statutory language in section
36B(c)(2)(C)(i)(II) supports a separate

Bulletin No. 2022–45

affordability rule based on the cost of family coverage; these commenters noted that
the May 2010 Errata corrected the error.
The Treasury Department and the IRS
acknowledge that the Joint Committee
staff characterized the May 2010 Errata as
a correction of an error but disagree with
the commenters as to the relevance of that
observation. The May 2010 Errata was not
before Congress at the time that the ACA
was enacted in March 2010. In any event,
neither the JCT report nor the May 2010
Errata is considered part of the legislative
history, and neither is dispositive of any
particular statutory interpretation.
F. Relevance of section 18081
The preamble to the proposed regulations noted that the proposed regulations
would promote consistency between the
affordability rules in sections 36B and
5000A and the rule in 42 U.S.C. 18081(b)
(4)(C) (section 18081(b)(4)(C)). Section
18081(b)(4)(C) relates to information
that a QHP enrollee must provide as part
of the enrollee’s QHP application if the
enrollee wants to be determined eligible
for advance payments of the PTC (APTC)
or cost-sharing reductions. Under section
18081(b)(4)(C), if an employer offers
minimum essential coverage to an individual seeking to enroll in a QHP, and
the individual asserts that the offer does
not preclude the individual from qualifying for APTC or cost-sharing reductions
because it is not affordable, the QHP applicant must provide to the Exchange information on “the lowest cost option for the
enrollee’s or [related] individual’s enrollment status and the enrollee’s or [related]
individual’s required contribution (within
the meaning of section 5000A(e)(1)(B)
of title 26) under the employer-sponsored
plan.”
Certain commenters opined that they
saw no inconsistency between the 2013
affordability rule under section 36B, the
affordability rule under section 5000A,
and the QHP applicant information rule
in section 18081(b)(4)(C). One commenter stated that section 18081(b)(4)
(C), by referencing section 5000A(e)
(1)(B), merely instructs Exchanges to
determine “the portion of the annual premium which would be paid by the individual … for self-only coverage” under

Bulletin No. 2022–45

the employer-sponsored plan. Another
commenter argued that section 18081(b)
(4)(C), by using the term “or” and not
“and,” requires the submission of information on the required contribution
solely for the employee who is offered
employer coverage, meaning the individual who would pay the required contribution, but that the individual enrolling in the QHP could be the employee
or someone related to the employee. This
commenter further argued that in either
case, the only information required by
section 18081(b)(4)(C) is the lowest cost
option for self-only coverage and the
required contribution for the applicable
employee.
The Treasury Department and the IRS
agree with the commenter who noted
that section 18081(b)(4)(C) requires
the submission of information on the
required contribution solely for the
employee who is offered employer coverage and that the individual enrolling
in the QHP could be the employee or
someone related to the employee. However, the Treasury Department and the
IRS disagree with the conclusion of both
commenters that section 18081(b)(4)(C)
requires Exchanges to collect information on only the portion of the annual
premium that would be paid by the
employee for self-only coverage under
the employer-sponsored plan.
Section 18081 requires Exchanges to
collect information from enrollees who
are offered coverage under an employer
plan on “the lowest cost option” that the
employee, whether the enrollee or an
individual related to the enrollee, must
contribute for the employee’s or individual’s enrollment status. The language
“lowest cost option for the . . . enrollment
status” indicates that the amount may
vary depending on whether the employee’s enrollment status would be for selfonly or family coverage. Otherwise, section 18081(b)(4)(C) would refer to “the
lowest cost option for the enrollee for
self-only coverage.” Thus, the Treasury
Department and the IRS are of the view
that the amendment to §1.36B-2(c)(3)(v)
(A)(2) in these final regulations and the
similar affordability rule in §1.5000A3(e)(3)(ii)(B) are consistent with the
QHP applicant information rule in section 18081(b)(4)(C).

417

G. Coordination with section 4980H
One commenter asserted that the
framework of section 4980H supports
the view that a separate affordability test
under section 36B for related individuals
is not warranted. Section 4980H provides
that an applicable large employer (ALE)
generally must offer coverage to full-time
employees and their dependents or potentially be subject to an employer shared
responsibility payment. As the commenter
noted, although ALEs are required to
offer coverage to full-time employees and
dependents, only the coverage offered
to the full-time employees is required to
be affordable. There is no comparable
affordability rule for the coverage offered
to dependents. In addition, an employer’s
obligation to make a payment under section 4980H is triggered only when a fulltime employee is allowed a PTC.
The commenter stated that the affordability of self-only coverage is the key
determinant in whether an employer of
a full-time employee must make a section 4980H payment and in whether the
full-time employee and his or her dependents are allowed a PTC. The commenter
argued that this framework shows Congress’s intent that section 36B and section
4980H have just one affordability test
based on the cost of self-only coverage
to the employee and that providing an
affordability test for related individuals
based on the cost of family coverage is not
consistent with that framework.
The Treasury Department and the IRS
disagree. Section 36B and section 4980H
apply to different types of taxpayers and
have different purposes. Section 36B provides a PTC to taxpayers and their families who meet certain requirements, one
of which is that they are not eligible for
affordable, minimum value coverage from
their employer. The amount of the PTC
is determined based on family size and
household income, among other factors,
in recognition of the fact that affordability of coverage depends on the cost to
the family. The PTC is integral to ensuring that individuals and their families
can access affordable coverage through
an Exchange. In contrast, section 4980H
imposes a payment on ALEs if they fail to
offer minimum essential coverage to their
full-time employees and their dependents,

November 7, 2022

and at least one full-time employee is
allowed a PTC. Section 4980H does not
require that employer coverage be offered
to an employee’s spouse, and it does
not require that any coverage offered to
spouses or dependents be affordable. Further, employers do not owe a payment
under section 4980H if a PTC is allowed
for an employee’s spouse or dependent.
The purpose of this provision is to ensure
that large employers share responsibility
under the ACA for providing affordable
health coverage to employees, but this
responsibility does not extend to affordable coverage for spouses or dependents.
Given these differing purposes, there is
nothing in this framework that suggests
Congress intended for section 36B and
section 4980H to have a single affordability test based on the cost of self-only coverage to the employee.
In addition, the goal of the ACA is to
provide affordable, quality health care
for all Americans,19 not just to full-time
employees of ALEs, and these final regulations further that goal. In light of that
goal, and contrary to the suggestion of the
commenter, the lack of any requirement
under section 4980H for ALEs to offer
affordable coverage to family members of
employees indicates that a PTC should be
allowed for family members offered unaffordable coverage.
H. Minimum value rule
As noted in the Background section of
this preamble, an employee generally is not
treated as eligible for coverage under an
eligible employer-sponsored plan unless
the coverage provides minimum value, as
defined in section 36B(c)(2)(C)(ii). Under
section 36B(c)(2)(C)(ii) and §1.36B-6(a)
(1), an eligible employer-sponsored plan
provides minimum value if the plan’s
share of the total allowed costs of benefits
provided to an employee is at least 60 percent, regardless of the total allowed costs
of benefits.
The proposed regulations provided
a minimum value rule for related individuals that is based on the plan’s share
of the total allowed cost of benefits provided to the related individuals. Under the

19

proposed regulations, an eligible employer-sponsored plan satisfies the minimum
value requirement for related individuals
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.
The vast majority of commenters supported the separate minimum value rule
for related individuals in the proposed
regulations. However, two commenters
stated that the minimum value requirement
in section 36B applies only to employees
and that the Treasury Department and the
IRS have no authority to provide a minimum value rule for related individuals.
In the view of these commenters, related
individuals are eligible for employer coverage if the coverage is affordable, even if
the plan’s share of the total allowed costs
of benefits provided to related individuals
is below 60 percent. This approach, however, is contrary to the approach taken in
current §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
an individual who may enroll in the plan
because of a relationship to the employee
(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 coverage that does not provide minimum value
is deemed to be ineligible for the coverage, and a PTC may be allowed for the
related individual provided that the related
individual does not enroll in the coverage.
The proposed regulations did not propose
to revisit this long-standing rule.
Further, as stated in the preamble to the
proposed regulations, 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 provided minimum value only to
employees and not to related individuals.
This outcome would diminish the benefit
a related individual would derive from the
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 the
affordable coverage offered to the related
individuals provided a minimum value of
benefits to the related individuals.
Moreover, as described by commenters supportive of the minimum value rule
for related individuals, it is extremely rare
for an employer plan to provide a different level of coverage for family members than the coverage level provided to
the employee enrolled in the plan. This is
because most employers that offer multiple benefits packages offer family coverage on the condition that the employee
and the employee’s family must enroll
in the same benefits package, which will
then have the same minimum value for
the entire family. Thus, if an employer
plan offered to employees provides minimum value, and that plan is also offered
to related individuals, the plan generally
will also provide minimum value to the
family members. Nevertheless, because
the lack of a separate minimum value rule
for related individuals would be inconsistent with the goals of the ACA in providing comprehensive health coverage and
improving access to quality and affordable health care, the final regulations provide that an eligible employer-sponsored
plan provides minimum value for related
individuals only if the plan’s share of the
total allowed costs of benefits provided to
related individuals is at least 60 percent
and the plan benefits include substantial
coverage of inpatient hospital services and
physician services.
III. Rationale for change
At the time that the Treasury Department and the IRS promulgated the 2013
regulations, limited information was
available to model the effects of an

See H.R. Rep. No. 111-443 (2009).

November 7, 2022

418

Bulletin No. 2022–45

affordability rule for related individuals
based on the cost of family coverage.
In the years since the 2013 regulations
became effective in 2014, however, the
Treasury Department and the IRS have
learned more about how the ACA is
affecting individuals, families, employers, group health plans, health insurance markets, and other stakeholders.
For example, in 2017, the Congressional
Budget Office (CBO) determined that
2010 reports by CBO and JCT on the
budgetary effects of the ACA dramatically overstated the cost of the PTC.20
In the 2017 report, the CBO noted that,
to a great extent, the differences arose
because actual results deviated from the
agencies’ expectations about how the
economy would change and how people
and employers would respond to the law,
and that, to a lesser extent, the differences
were caused by judicial decisions, statutory changes, and administrative actions
that followed the ACA’s enactment.
Despite the initial uncertainty about
the ACA’s effects, there has been substantial progress over the past several
years toward meeting the goal of the ACA
to give all Americans the opportunity to
enroll in comprehensive health insurance
at an affordable price. For individuals
who were previously uninsured, the ACA
expanded eligibility for Medicaid and created new Exchanges for eligible individuals to purchase QHPs subsidized by the
PTC. Research has shown that these policies increased access to affordable health
insurance and helped reduce the share of
the population that was uninsured.21
Despite this progress, roughly 26 million people still lack health insurance coverage. About 8 percent of the population
is still uninsured.22 Because these people
without health coverage face large, unpredictable bills when they seek medical care,
many forgo necessary treatments. The key
challenge for these families in obtaining

coverage is the cost of coverage. According to the National Health Interview Survey, nearly 75 percent of uninsured adults
reported the main reason they were uninsured was because the coverage options
available to them were not affordable.23
Additionally, millions of adults reported
that in order to save money, they did not
get needed medical care or take medication as prescribed.24
Premium costs are particularly challenging for families enrolling in employer
coverage. Since the 2013 regulations
were promulgated, the average annual
employee contribution for family coverage has increased by over 30 percent
— a growth rate that is nearly double the
rate at which the Consumer Price Index
increased over the same period.25 In 2021,
the average annual employee contribution
for a family plan offered by the employer
was $5,969. Contributions were even
higher for employees at small firms who
faced an average cost of $7,710. Roughly
12 percent of workers offered health coverage would have had to pay over $10,000
to cover their entire family.26 Under the
2013 regulations, these families are not
eligible for the PTC if the self-only coverage offer is affordable, even if the cost
of family coverage exceeds their annual
income. Without access to affordable coverage from either their employer or the
Exchange, some low- and middle-income
families are unable to obtain coverage and
must go uninsured.
For families that can afford employer
coverage, the coverage is sometimes of
limited value because of high levels of
cost-sharing. In 2020, roughly 90 percent of employer plans had a deductible.27
Among family plans offered by employers
with a deductible, the average amount of
the deductible was roughly $3,722. After
families reach their deductible, they are
usually liable for co-insurance or co-payments until they hit their out-of-pocket

maximum. For 2020, the average outof-pocket maximum for a family plan
offered by employers was $8,867. There
is also clear evidence that high levels of
cost-sharing can restrict access to necessary medical care and lead to adverse
health outcomes.28
Thus, although the ACA has succeeded in providing affordable health
care to millions of Americans, some still
cannot afford coverage. With increasingly higher premiums and out-of-pocket
costs, the cost of family coverage offered
by employers has become particularly
unaffordable for some employees’ family members. The self-only affordability
rule for related individuals in the 2013
regulations exacerbates that problem.
Although the Treasury Department and
the IRS could speculate in 2010-2013
that the self-only affordability rule might
adversely affect certain families, the data
and subsequent analysis have now borne
out those adverse effects.
In addition to the data provided in the
studies cited above, numerous health care
advocates have written articles over the
years describing the adverse effects of
the 2013 affordability rule and recommending a rule change.29 Most recently,
the proposed regulations themselves generated over 3,800 comments in support
of the proposed rule. As noted earlier in
this preamble, many of these commenters recounted personal stories of family
members being uninsured due to the unaffordability of family coverage offered
by an employer and the unavailability of
a PTC for Exchange coverage. Finally,
individuals have shared stories in other
forums regarding the negative impact of
the 2013 affordability rule on their lives.
For example, one married couple testified
to a state legislature that they divorced
solely to retain the husband’s eligibility
for the PTC after his wife got a new job
with an offer of family coverage at a cost

See https://www.cbo.gov/system/files/115th-congress-2017-2018/reports/53094-acaprojections.pdf.
https://onlinelibrary.wiley.com/doi/epdf/10.1002/pam.22158.
https://aspe.hhs.gov/reports/2022-uninsurance-at-all-time-low.
23
https://www.cdc.gov/nchs/data/databriefs/db382-H.pdf.
24
https://www.cdc.gov/nchs/data/nhis/earlyrelease/earlyrelease202204.pdf.
25
https://www.bls.gov/cpi/data.htm.
26
https://www.kff.org/health-costs/report/2021-employer-health-benefits-survey/.
27
https://www.meps.ahrq.gov/data_files/publications/cb25/cb25.pdf.
28
https://academic.oup.com/qje/article-abstract/132/3/1261/3769421; https://www.nber.org/papers/w28439.
29
See, for example, Trapped by the Firewall: Policy Changes Are Needed to Improve Health Coverage for Low-Income Workers | Center on Budget and Policy Priorities (cbpp.org); https://
www.healthaffairs.org/do/10.1377/forefront.20210520.564880/.
20
21
22

Bulletin No. 2022–45

419

November 7, 2022

of $16,000, over half of the husband’s
annual earnings.30
Consistent with EO 14009, issued in
January 2021, the Treasury Department
and the IRS undertook a review of the
affordability rule for family members in
the 2013 regulations at §1.36B-2(c)(3)(v)
(A)(2). As part of this review, the Treasury
Department and the IRS reconsidered the
text of the relevant statutes and whether
the 2013 affordability rule represents the
best reading of that text. As explained
above, the Treasury Department and
the IRS now believe (in contrast to their
view in 2013) that the 2013 affordability rule did not represent the best reading of the statutory text. The Treasury
Department and the IRS also considered
the evidence described above from the
intervening years and evaluated whether
the 2013 affordability rule is 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.31 This evaluation was informed by
the experience of the intervening years
since Exchange coverage and the PTC
first became available. The evaluation
demonstrated adverse impacts of the 2013
regulations on families and prompted the
Treasury Department and the IRS to issue
the proposed regulations and solicit public
comments.
In addition, the Treasury Department
and the IRS now have a clearer idea of
the potential cost and the coverage benefits of changing the affordability rule, in
part because of the time that has elapsed
since the issue was last considered and
the experiences of different insurance
markets during that time. For example,

analysis has shown how adopting the policies in the final rule would increase access
to affordable Exchange coverage.32 Newly
insured individuals will receive substantial benefits. Recent academic research
suggests that enrollment in Exchange
coverage provides financial protection
and improves health outcomes.33 Several commenters on the proposed regulations also cited publicly available studies
that estimate the impact of the proposed
affordability rule for related individuals
on Federal outlays and revenues.
In addition, several commenters cited
publicly available studies that estimate
how changing the affordability rule for
related individuals could affect the number of people with health insurance coverage.34 One commenter presented estimates
based on their own simulation of health
insurance coverage decisions. Another
commenter cited a study that focused specifically on the state of California.35 Since
the comment period on the proposed regulations ended, analysts have continued
to estimate the impact of changing the
affordability rule.36
The studies cited by commenters
found that implementing a policy similar
to the affordability rule described in the
proposed regulations would increase the
number of individuals eligible for financial assistance by between 3 million and
5.1 million. Other studies project that, out
of those newly eligible, between 600,000
and 2.3 million individuals would choose
to enroll in Exchange coverage.37 Estimates of the number of people who would
be newly insured range from 80,000
to 700,000. These studies estimate that
this change in eligibility and subsequent
enrollment would increase the Federal

deficit by between approximately $2.6 billion and $4.5 billion per year on average.
The studies also discussed which types
of families would be most likely to benefit from the proposed affordability rule
for related individuals. Families with
incomes below 250 percent of the Federal
poverty level and families with employees who work for small employers were
expected to benefit the most. One study
found that workers in industries such as
service, agriculture, mining, and construction were more likely to be eligible for a
PTC.38 Another study estimated that families switching from employer coverage to
Exchange coverage would save an average of about $400 per person in premiums
per year.39 The studies also discussed how
certain qualifying individuals would benefit from cost-sharing reductions that are
available for certain qualified individuals
enrolling in Exchange coverage.
These studies provide a range of estimated impacts on health coverage status
and the Federal deficit. Each study relies
on different data sources, modeling techniques, behavioral assumptions, and budgetary baselines. Additionally, the policies
they simulate are different than the exact
set of policies being adopted in the final
regulations. The Treasury Department and
the IRS also note that there is a substantial
amount of uncertainty in estimating the
impact of the policy change.40
In addition to these studies – those cited
by commenters, as well as others reviewed
by the Treasury Department and the IRS –
the Treasury Department’s Office of Tax
Analysis has conducted its own analysis
as to the effect of the policy change on
health insurance coverage decisions and
the Federal deficit. The policy change is

See https://legislature.maine.gov/legis/bills/getTestimonyDoc.asp?id=161949.
See H.R. Rep. No. 111-443 (2009).
32
https://www.healthaffairs.org/do/10.1377/forefront.20220420.498595/.
33
https://academic.oup.com/qje/article/136/1/1/5911132; https://www.sciencedirect.com/science/article/abs/pii/S0047272718302408.
34
See https://www.kff.org/health-reform/issue-brief/the-aca-family-glitch-and-affordability-of-employer-coverage/; https://www.kff.org/health-reform/issue-brief/many-workers-particularly-at-small-firms-face-high-premiums-to-enroll-in-family-coverage-leaving-many-in-the-family-glitch/; https://www.cbo.gov/system/files/2020-06/Patient_Protection_and_Affordable_
Care_Enhancement_Act_0.pdf; https://www.urban.org/research/publication/changing-family-glitch-would-make-health-coverage-more-affordable-many-families; https://www.urban.org/
research/publication/marketplace-subsidies-changing-family-glitch-reduces-family-health-spending-increases-government-costs; https://www.rand.org/pubs/research_reports/RR1296.html;
https://www.healthaffairs.org/doi/10.1377/hlthaff.2015.1491.
35
https://laborcenter.berkeley.edu/wp-content/uploads/2022/06/Fact-Sheet-Family-Glitch.pdf.
36
https://www.cbo.gov/system/files?file=2022-07/58313-Crapo_letter.pdf.
37
Some studies estimated any Exchange enrollment while other studies estimated only subsidized Exchange enrollment.
38
https://www.kff.org/health-reform/issue-brief/many-workers-particularly-at-small-firms-face-high-premiums-to-enroll-in-family-coverage-leaving-many-in-the-family-glitch/.
39
https://www.urban.org/sites/default/files/publication/104223/changing-the-family-glitch-would-make-health-coverage-more-affordable-for-many-families_1.pdf.
40
None of the studies reviewed by the Treasury Department and the IRS provided a quantitative measure of the level of uncertainty associated with their estimates. For example, the studies
did not report sensitivity checks describing how their results would change under different modeling assumptions. Additionally, none of the studies reported standard errors, a statistic that
researchers use to quantify sampling error and the significance of any differences.
30
31

November 7, 2022

420

Bulletin No. 2022–45

projected to increase the number of individuals with PTC-subsidized Exchange
coverage by about 1 million and increase
the Federal deficit by an average of $3.8
billion per year over the next 10 years.
The projections from this analysis are
within the range of predictions reported in
the cited studies. The evaluation focused
on direct, predictable effects of the regulation. Although some studies predict
the affordability rule may incidentally
increase enrollment in Medicaid or CHIP,
these effects are indirect and speculative.
Taken as whole, the Treasury Department
and the IRS conclude that these analyses
provide compelling evidence that the new
affordability rule for related individuals
will increase the affordability and accessibility of health insurance. Although the
range of numbers indicate there is uncertainty in the precise number of individuals
who will be affected, the studies suggest
that the final regulations will succeed in
achieving two key policy goals of the
ACA: increasing coverage and reducing
costs for consumers. These studies, and
the Treasury Department’s own analysis,
lead the Treasury Department and the IRS
to believe that the proposed affordability
rule, as finalized in these regulations, is
consistent with the overall goals of the
ACA and is based on sound reasons for a
revision to the affordability rule. Further,
as explained in section II of this Summary
of Comments and Explanation of Revisions, the Treasury Department and the
IRS are of the view that section 36B(c)
(2)(C)(i) is better 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. Thus, the Treasury
Department and the IRS adopt in these
final regulations the proposed affordability rule for related individuals that is based
on the cost of family coverage because
they have concluded that such a rule is
the better reading of the statute. For the
reasons stated in section II of this Summary of Comments and Explanation of
Revisions, the Treasury Department and
the IRS have also concluded that, to the

extent there is ambiguity in the statute, the
proposed affordability rule would be the
better alternative to resolve that ambiguity
and to implement the statute in a way consistent with Congress’s purposes in enacting the ACA.
IV. Recommended Amendments to
Proposed Rules
A. Cost of family coverage
Under the proposed regulations, an
eligible employer-sponsored plan would
be treated as 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,
§1.36B-2(c)(3)(v)(A)(2) of the proposed
regulations provided that 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. Under §1.36B-1(d),
an employee’s family consists of the
employee, the employee’s spouse filing
a joint return with the employee, and the
employee’s dependents.
A few commenters requested a change
to §1.36B-2(c)(3)(v)(A)(2) of the proposed regulations. Under the rule suggested by the commenters, an employee’s
required contribution for family coverage
under §1.36B-2(c)(3)(v)(A)(2) would be
the portion of the annual premium the
employee must pay for coverage of the
employee and all other individuals offered
the employer coverage as a result of their
relationship to the employee, including
non-dependents of the employee who may
enroll in the employer coverage (non-family members). As noted by the commenters, many employers offer coverage to
employees’ children up to age 26 without regard to whether a child is a dependent of the employee.41 The commenters
argued that including the cost to cover

all individuals offered the coverage in
an employee’s required contribution will
ensure that all of these individuals, including non-family members, have access to
affordable coverage.
The Treasury Department and the IRS
do not adopt this comment. Under the
final regulations, as in the proposed regulations, the cost of covering individuals who are offered the coverage but are
non-family members is not considered in
determining whether the employee’s family members have an offer of affordable
employer coverage. Under §1.36B-2(c)
(4)(i), an individual who may enroll in
employer coverage as a result of the individual’s relationship to an employee, but
who is a non-family member, is treated as
eligible for the employer coverage only if
he or she is enrolled in the coverage. Consequently, an individual who may enroll in
employer coverage, but who is a non-family member, does not need a determination of unaffordable coverage to enroll
in a QHP and be eligible for the PTC, if
the individual otherwise qualifies. Unlike
family members, a non-family member
may enroll in a QHP and be eligible for
the PTC, if the individual is otherwise
eligible, by simply not enrolling in the
offered employer coverage. Accordingly,
the cost of covering non-family members
should not be considered in determining
whether other related individuals have an
offer of affordable employer coverage.
B. Determine affordability for employees
based on the cost of family coverage
Under §1.36B-2(c)(3)(v)(A)(1), an eligible employer-sponsored plan is considered affordable for an employee offered
coverage under the plan if the employee’s
required contribution for self-only coverage does not exceed 9.5 percent of household income. The proposed regulations
do not change the affordability rule for
employees.
Several commenters requested that the
final regulations amend the affordability
rule for employees to provide that, if an
offer of employer coverage is unaffordable for an employee’s family members,

Under Public Health Service Act section 2714, which is incorporated into the Code through Code section 9815 and into the Employee Retirement Income Security Act (ERISA) through
section 715 of ERISA, group health plans and health insurance issuers offering group or individual health insurance coverage that offer dependent coverage for children must make that
coverage available to employees’ children until they attain age 26. See 26 CFR 54.9815-2714, 29 CFR 2590.715-2714, and 45 CFR 147.120.
41

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November 7, 2022

the offer would also be considered unaffordable for the employee. The commenters noted that separate affordability rules
for employees and family members will
sometimes result in a spouse or dependent of an employee having an offer of
employer coverage that is unaffordable
even though the employee has an affordable offer of self-only coverage. This
could cause families to enroll in multiple plans or policies, the employee in the
employer plan and the family members in
a QHP, which would be burdensome and
costly for families who must navigate different provider networks and drug formularies and incur separate deductibles and
caps on out-of-pocket spending.
Although the Treasury Department and
the IRS understand the concerns raised
by the commenters, the affordability rule
for employees is specifically provided
in section 36B(c)(2)(C)(i) and cannot be
changed by regulation. Under section
36B(c)(2)(C)(i), an employee is not eligible for minimum essential coverage
under an employer plan 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 household income. Section 5000A(e)(1)(B) provides that the term “required contribution”
means, “in the case of an individual eligible to purchase minimum essential coverage consisting of coverage through an
eligible employer-sponsored plan, the portion of the annual premium which would
be paid by the individual (without regard
to whether paid through salary reduction
or otherwise) for self-only coverage.”
Further, the affordability rule in section
5000A(e)(1)(C) applies only to related
individuals and not to employees. Consequently, the final regulations do not amend
the affordability rule for employees.
C. Multiple offers of coverage
The proposed regulations provided that
an individual who has offers of employer
coverage from multiple employers has an
offer of affordable coverage if at least one
of the offers of coverage is affordable. For
example, if X has an offer of employer

coverage from X’s employer and also
from the employer of X’s spouse, Y, for a
year for which X and Y file a joint return,
X has an offer of affordable coverage if
either X’s required contribution for selfonly coverage under X’s employer’s plan
does not exceed 9.5 percent of X’s and
Y’s household income, or if Y’s required
contribution for family coverage under
Y’s employer’s plan does not exceed 9.5
percent of X’s and Y’s household income.
One commenter suggested that the Treasury Department and the IRS reconsider
this multiple coverage rule as it may be
confusing for individuals with multiple
offers of coverage; however, the commenter did not include a recommendation
for a specific change to the regulations.
The final regulations do not change the
rule provided in the proposed regulations
regarding affordability for individuals
with multiple offers of coverage. Although
the current section 36B regulations do not
explicitly address situations involving
multiple offers of employer coverage, as
noted in the Background section of this
preamble, a month is a coverage month
for an individual only if the individual
is not eligible for MEC, other than individual market coverage, for the month.
Therefore, under the current regulations,
an individual with multiple employer
coverage offers for a month is eligible
for MEC for that month if at least one of
the offers of coverage is affordable and
provides minimum value. The rule in the
proposed regulations relating to multiple
offers of coverage simply states expressly
how the affordability rule in the current
regulations applies to an individual with
multiple offers of employer coverage.
Furthermore, an individual with multiple offers of employer coverage seeking to
enroll in a QHP with APTC would provide
information to the applicable Exchange
concerning the required contribution for
each coverage offer. The Exchange will
determine if at least one of the offers is
affordable, in which case APTC would not
be allowed for the individual’s Exchange
coverage. This process should minimize any burden or confusion relating
to whether an individual with multiple

offers of coverage has an affordable offer
that would deny the individual APTC and
PTC for his or her Exchange coverage. In
addition, for taxpayers for whom APTC
is not paid for their or their family’s QHP
coverage, the IRS will update the instructions for Form 8962, Premium Tax Credit
(PTC), and Publication 974, Premium Tax
Credit (PTC), to address multiple offers of
employer coverage.
D. Comments requiring legislative
changes
One commenter suggested that the
final regulations include a rule under
which an employee and the employee’s
family members are not considered to
have an offer of affordable coverage if
the cost of coverage for the entire family is more than 15 percent of household
income. One commenter asked that the
rule in section 36B(c)(2)(B) be amended
and that all individuals offered coverage
under an employer plan be permitted
to choose between the employer coverage and Exchange coverage with a PTC.
Another commenter requested that the
Treasury Department and the IRS make
permanent the rule in section 36B(c)(1)
(E) under which taxpayers with household
income above 400 percent of the applicable Federal poverty line may qualify for a
PTC for taxable years beginning in 2021
and 2022.42 One commenter requested
that the rules of section 36B be amended
so that a PTC for a child may be claimed
by the taxpayer who pays for the health
insurance coverage of the child, not to the
taxpayer claiming the child as a dependent. Finally, one commenter suggested
that the final regulations include a rule
under which excess APTC repayments
would be waived for taxable year 2023
while the Exchanges adjust and reeducate
consumers on the affordability calculation
for family members.
The Treasury Department and the IRS
appreciate these comments but note that
these changes would require legislative
action and cannot be made by regulation.
Thus, the final regulations do not include
these recommended rules.

Section 12001 of Public Law 117-169, 136 Stat. 1818 (August 16, 2022), commonly known as the Inflation Reduction Act of 2022 (IRA), extended through 2025 the rule in section 36B(c)
(1)(E) under which taxpayers with household income above 400 percent of the applicable Federal poverty line may qualify for a PTC.
42

November 7, 2022

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Bulletin No. 2022–45

E. ICHRA and QSEHRA comments
In
general,
§1.36B-2(c)(3)(i)(B)
provides affordability rules related to
employees who are offered a health reimbursement arrangement (HRA) or other
account-based group health plan that
would be integrated with individual health
insurance coverage if the employee enrolls
in individual health insurance coverage
(an individual coverage health reimbursement arrangement or ICHRA). Those rules
provide that an individual who is offered
an ICHRA because of a relationship to
the employee (a related HRA individual)
is eligible for minimum essential coverage under an eligible employer-sponsored
plan for any month for which the ICHRA
is offered if (1) the ICHRA is affordable,
or (2) the employee does not opt out of
and waive future reimbursements from
the ICHRA, regardless of whether the
ICHRA is affordable. Under §1.36B-2(c)
(5), an ICHRA is affordable for a month
if the employee’s required HRA contribution does not exceed 9.5 percent of the
employee’s household income for the taxable year, divided by 12. An employee’s
required HRA contribution is the excess of
the monthly premium for the lowest cost
silver plan for self-only coverage of the
employee offered in the Exchange for the
rating area in which the employee resides,
over the monthly self-only ICHRA amount
(or the monthly maximum amount available to the employee under the ICHRA if
the ICHRA provides for reimbursements
up to a single dollar amount regardless of
whether an employee has self-only or other-than-self-only coverage).
One commenter stated it was unclear
whether the affordability rule for related
individuals in the proposed regulations
applies to ICHRAs. The commenter
also suggested that the final regulations
include a rule under which family coverage amounts, not self-only coverage
amounts, are used to determine whether
an ICHRA offer to a related HRA individual is affordable.
The proposed regulations do not
address the affordability rules relating
to an ICHRA offer, and, consequently,
the final regulations also do not address
ICHRAs. Therefore, the rules for determining affordability of an ICHRA remain
unchanged. However, the Treasury

Bulletin No. 2022–45

Department and the IRS, in coordination with HHS and the U.S. Department
of Labor (DOL), will consider whether
future guidance should be issued to change
the ICHRA affordability rules for related
HRA individuals in the manner suggested
by the commenter.
Other commenters suggested that a
PTC be allowed for family members in
situations in which an employee is offered
an affordable HRA, whether an ICHRA
or a QSEHRA, and does not opt-out of
the HRA. The commenters recommended
that, in these situations, the employee and
the family members would enroll in an
Exchange family plan and the employee
would not be allowed a PTC because of
the affordable HRA, but the family members would be allowed a PTC.
The rules relating to QSEHRAs are
specifically provided by statute in section
36B(c)(4). Because the Treasury Department and the IRS cannot amend those
rules by regulation, QSEHRAs are not
addressed in these final regulations.
Under the rules for ICHRAs, if the
terms of the ICHRA provide that reimbursements are allowed only for the medical expenses of the employee and not for
the expenses of related individuals, a PTC
may be allowed for the Exchange coverage
of the related individuals, irrespective of
whether the ICHRA is considered affordable under §1.36B-2(c)(5), or whether the
employee opts out of the ICHRA. However, if the ICHRA offer includes reimbursements of the medical expenses of
related HRA individuals, a PTC is generally not allowed for the Exchange coverage of the employee or the related HRA
individuals if the ICHRA offer is affordable or if the employee does not opt out
of the ICHRA. This is because an ICHRA
is an eligible employer-sponsored plan
under section 5000A(f)(2) and, therefore,
under section 36B(c)(2)(C), if the coverage is affordable and provides minimum
value, a PTC is generally not allowed
for the Exchange coverage of an individual to whom the ICHRA offer extends
or who does not opt out of the ICHRA.
Consequently, this rule relating to offers
of employer coverage in section 36B(c)
(2)(C) cannot be amended by regulation.
However, as noted in connection with
the prior comment concerning ICHRAs,
the Treasury Department and the IRS, in

423

coordination with HHS and DOL, will
consider whether future guidance should
be issued to provide an ICHRA affordability rule for related individuals that is
separate from the affordability rule for
employees.
F. Minimum value
1. Minimum value rule for related
individuals
The proposed regulations provided
that an employer plan meets the minimum
value requirement for related individuals
if the plan’s share of the total allowed
costs of benefits provided to related individuals is at least 60 percent, similar
to the minimum value requirement for
employees. One commenter requested
that the final regulations include a minimum value safe harbor rule under which
an employer plan is considered to provide
minimum value to related individuals if
the coverage provided to employees under
the plan meets minimum value requirements and the same benefits are provided
to employees and family members. Other
commenters recommended that the final
regulations allow for the calculation of
minimum value using a standard population that includes both employees and
dependents to calculate a single, composite, minimum value for an employee and
dependents, and that separate populations
not be required for coverage provided
to employees and coverage provided to
related individuals.
As in the proposed regulations, the
final regulations provide a minimum value
rule for related individuals that is separate
from the minimum value rule for employees, and that requires a plan’s share of the
total allowed costs of benefits provided to
related individuals to be at least 60 percent. This minimum value rule for related
individuals is not intended to require the
use of a standard population for family
members that is separate from the standard population for employees. Rather,
the intent of the rule is to ensure that
employers continue to provide a plan that
has the same benefit design for employees and related individuals, and not to
burden employers with having to offer
different benefit packages for employees
and related individuals. Consequently, the

November 7, 2022

final regulations include a rule providing
that an employer plan that provides minimum value to an employee also provides
minimum value to related individuals
if the scope of benefits and cost sharing
(including deductibles, co-payments,
coinsurance, and out-of-pocket maximums) under the plan are the same for
employees and family members. If cost
sharing varies based on whether related
individuals are enrolled and/or the number of related individuals enrolled (that
is, the tier of coverage), minimum value
for related individuals is based on the tier
of coverage that would, if elected, cover
the employee and all related individuals
(disregarding any differences in deductibles or out-of-pocket maximums that are
attributable to a different tier of coverage,
such as self plus one versus family coverage.) In addition, the final regulations do
not require a departure from the practice
of computing minimum value for employees and related individuals based on the
provision of benefits to a standard population that includes both employees and
related individuals.
2. Require coverage of all essential health
benefits
The proposed regulations provided
that, to be considered to provide minimum
value, an eligible employer-sponsored
plan must include substantial coverage of
inpatient hospital services and physician
services. One commenter asked that final
regulations provide that an employer plan
does not meet the minimum value requirements unless it provides coverage of all
10 essential health benefits that, under
the ACA, certain plans must cover, not
just inpatient hospital services and physician services. This comment requesting
an expansion of the minimum value rule
is outside the scope of these final regulations. Thus, as in the proposed regulations, the final regulations provide that an
eligible employer-sponsored plan does
not meet minimum value requirements
unless it includes substantial coverage of
inpatient hospital services and physician
services.

3. Minimum value calculator
Under 45 CFR 156.145(a)(1), a minimum value calculator is to be made available by HHS and the IRS that an employer
plan may use to determine whether the
percentage of total allowed costs under
the plan is at least 60 percent. Several
commenters requested that the minimum
value calculator be updated to reflect more
current large group data and to incorporate
appropriate model changes that have been
made to the actuarial value calculator.43
Although the commenters’ request concerning the minimum value calculator is
outside the scope of the final regulations,
the Treasury Department and the IRS
have shared these comments with HHS to
determine the best way to address these
comments relating to the calculator.
G. Applicability date of final regulations
The proposed regulations provided that
the changes to §§1.36B-2, 1.36B-3, and
1.36B-6(a)(2) in the proposed regulations,
if finalized, were expected to apply for
taxable years beginning after December
31, 2022. Several commenters requested
instead that the final regulations apply for
taxable years beginning after December
31, 2023. These commenters expressed
concern that taxpayers will be faced with
a number of health care-related changes in
2022, including the end of the temporary
applicable percentages for 2021 and 2022
in section 36B(b)(3)(A)(iii) that increased
PTC amounts.44 Commenters also noted
that at the end of the COVID-19 public
health emergency, states will no longer
be required to comply with a Medicaid
continuous enrollment requirement in
order to receive a temporary increase in
Federal Medicaid matching funds under
the Families First Coronavirus Response
Act. The commenters stated that these
changes, along with the changes in the
proposed regulations, will result in much
uncertainty for QHP enrollees for the
open enrollment period that begins on
November 1, 2022, and will lead to substantial confusion for QHP enrollees and

likely inaccurate APTC determinations by
Exchanges.
Although the commenters’ concerns
are appreciated, the Treasury Department
and the IRS are of the view that those
concerns are outweighed by the goal of
allowing spouses and dependents, some
of whom have been negatively affected
by the 2013 affordability rule, to be able
to access affordable Exchange coverage beginning in the 2023 plan year. For
this reason, many commenters urged
the Treasury Department and the IRS to
implement the changes to the affordability rule for related individuals in time for
QHP open enrollment for the 2023 plan
year. Although 2023 QHP enrollment
may present some new challenges, as
discussed more fully in section IV of this
Summary of Comments and Explanation
of Revisions, HHS has informed the Treasury Department and the IRS that HHS
will engage in thorough implementation
efforts, including revising the Exchange
application and providing resources and
technical assistance education for State
Exchanges, Navigators, agents, brokers, and other assisters to help enrollees
understand their options for 2023. In addition, the IRS will be making changes to
its forms, instructions, publications, and
website, in an effort to educate taxpayers about any changes for the 2023 plan
year. Therefore, the Treasury Department
and the IRS do not adopt the commenters’
request that the applicability date of the
final regulations be delayed until taxable
years beginning after December 31, 2023.
Instead, the final regulations apply for taxable years beginning after December 31,
2022.
Another commenter urged that the
Treasury Department and the IRS consider the effective date implications of
this rule for the State Innovation Waiver
program under section 1332 of the ACA
(section 1332 waivers). The commenter
requested that the Administration consider the implications of the final regulations on states with approved section 1332
waivers and, if necessary, identify a plan
to mitigate potential harm to accessing
affordable coverage for individuals. For

Under 45 CFR 156.135, HHS is responsible for developing and updating an actuarial value calculator that issuers may use to determine the actuarial value of a health plan.
Under section 12001 of the IRA, the temporary applicable percentages for 2021 and 2022 in section 36B(b)(3)(A)(iii) were extended through 2025 so taxpayers will not see a change in
their PTC amount due to the potential policy change described by commenters.
43
44

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Bulletin No. 2022–45

example, the commenter expressed concern that states would need to develop
and update actuarial analyses for section
1332 waivers and that there would be
an impact on states leveraging Federal
pass-through funding under section 1332
waivers, mostly through reinsurance programs, given that the proposed regulations
would modify who is eligible for the PTC
and APTC. The commenter also was concerned that there may be implications for
states exploring other innovative opportunities, such as public health insurance
options that enhance affordable options
by leveraging section 1332 Federal passthrough funding.
The section 1332 waiver program
permits states to apply to waive certain
provisions of the ACA, including section
36B of the Code, to undertake their own
state-specific reforms to provide residents
with access to high quality, affordable
health insurance while retaining the basic
protections of the ACA. A state applying
for a section 1332 waiver must include
in its application actuarial and economic
analyses that demonstrate that the waiver
proposal meets the statutory requirements
for section 1332 waivers.45,46 If a waiver
yields Federal savings on certain forms
of Federal financial assistance under the
ACA (such as the PTC), those savings are
passed through to the state to help implement the state’s approved waiver plan.
Federal pass-through funding amounts
are calculated annually by the Treasury
Department and HHS. Pass-through
amounts reflect current law and policy
at the time of the calculation but can be
updated, as necessary, to reflect applicable changes in Federal or state law.47
The Treasury Department plans to work
with HHS to communicate any implications of these final regulations, including
any associated requirements for states,
to affected stakeholders and to states that
have approved section 1332 waivers or
that are considering section 1332 waivers. The Treasury Department and the IRS
recognize that the final regulations may
affect states in different ways but believe
that any negative effects related to the
effective date are outweighed by the goal,

45
46
47

supported by numerous commenters, of
allowing more spouses and dependents
to be able to access affordable Exchange
coverage beginning in 2023. The Treasury
Department and the IRS also note that further innovation under section 1332 of the
ACA is speculative, and that, in any event,
section 1332 waiver policies are outside
the scope of these regulations.
V. Comments regarding outreach
Several commenters requested that
HHS, the Treasury Department, and the
IRS provide clear resources aimed at helping various individuals and employers.
Many of the commenters who requested
that HHS, the Treasury Department, and
the IRS provide outreach about the new
rules were concerned about families
understanding the trade-offs if they are
considering “split coverage,” meaning that
the employee would enroll in employer
coverage and the family members would
enroll in Exchange coverage. Some commenters noted that split coverage could
lead to lower premiums for the family or
could lead to uninsured individuals gaining coverage. Those commenters also
noted, however, that some families with
split coverage will need to contend with
different provider networks, deductibles,
out-of-pocket limits, open enrollment
periods, appeals and grievance procedures, and other parameters unique to their
different health plans. Another commenter
added that for some families, moving family members from employer coverage to
Exchange coverage could mean lower
HRA or health savings account contributions from employers. One commenter
stated that confusion about split coverage
could present particular difficulties for
those with limited English

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3Ae2a33afeb39385d0. Public record. Not legal advice.