<img height="1" width="1" style="display:none;" alt="" src="https://dc.ads.linkedin.com/collect/?pid=118459&amp;fmt=gif">
Show all

Fixing the Family Glitch in Premium Tax Eligibility

 Family Glitch in Premium Tax Eligibility

2 minute read

Last year, the IRS released a final rule that changed the eligibility rules for the premium tax credit (PTC) for family members beginning with the 2023 tax year. The credit lowers the monthly premiums for eligible individuals who purchase health insurance through an Exchange. Individuals aren’t eligible for PTC if they have access to employer-sponsored coverage.

Before 2023, the affordability of employer-sponsored coverage was determined based on the lowest-cost self-only coverage available to the employee rather than the cost of family coverage. This glitch made it more difficult for family members to receive a PTC. The final rule fixes the glitch by basing affordability of employer-sponsored coverage for family members on the cost of family coverage.

The IRS also issued Notices 2022-41 to expand permitted midyear election changes for Section 125 cafeteria plans. Starting in 2023, employers can permit employees to revoke their elections from family coverage to allow one or more family members to enroll in an Exchange plan if certain requirements are met.

 

Employer Impact

Due to these changes, more family members may be eligible for the PTC for coverage purchased through an Exchange. But affordability rules for employees are still based on the employer’s required contribution for self-only coverage. An employer’s health coverage may be unaffordable for a family member even though it’s affordable for the employee. Employers may see some employees move from family coverage to self-only coverage.

In addition, employers that decide to expand their cafeteria plan’s midyear election change events based on the new guidance, should amend their plan documents by the deadline.

Download the bulletin for more details.

New call-to-action

 

National Insurance Services is not a law firm and no opinion, suggestion, or recommendation of the firm or its employees shall constitute legal advice. Readers are advised to consult with their own attorney for a determination of their legal rights, responsibilities and liabilities, including the interpretation of any statute or regulation, or its application to the readers’ business activities.

COVID-19 Emergency Period Ending
COVID-19 Emergency Period Ending – The Impact to Your Health Plan
February 21, 2023
Record Number of Americans Delayed Medical Care in 2022
February 21, 2023
Erin Woulfe

Erin Woulfe

Erin Woulfe likes to write about things that matter. Keeping her finger on the pulse of what’s happening in the public sector world, she blogs about the latest legislative news and employee benefit trends that affect our school, city and county clients. She’s been with NIS since 2002. “I love connecting to our clients and providing them with the tools they need in order to administrate their plan,” says Erin. “Whether that be materials to educate their employees on certain benefits, how to effectively communicate change within an organization, or providing tips and how-to’s to help them make their job easier.”