26 USC 36 - Refundable credit for coverage under a qualified health plan

View all text of Subpart C [§ 31 - § 37]

§ 36B. Refundable credit for coverage under a qualified health plan

(a) In general

(b) Premium assistance credit amountFor purposes of this section—

(1) In general

(2) Premium assistance amountThe premium assistance amount determined under this subsection with respect to any coverage month is the amount equal to the lesser of—

(A) the monthly premiums for such month for 1 or more qualified health plans offered in the individual market within a State which cover the taxpayer, the taxpayer’s spouse, or any dependent (as defined in section 152) of the taxpayer and which were enrolled in through an Exchange established by the State under 1311 1

1 So in original. Probably should be preceded by “section”.

of the Patient Protection and Affordable Care Act, or

(B) the excess (if any) of—

(i) the adjusted monthly premium for such month for the applicable second lowest cost silver plan with respect to the taxpayer, over

(ii) an amount equal to 1/12 of the product of the applicable percentage and the taxpayer’s household income for the taxable year.

(3) Other terms and rules relating to premium assistance amountsFor purposes of paragraph (2)—

(A) Applicable percentage

(i) In general

(ii) Indexing(I) In general(II) Additional adjustment(III) Failsafe

(iii) Temporary percentages for 2021 through 2025In the case of a taxable year beginning after December 31, 2020, and before January 1, 2026—(I) clause (ii) shall not apply for purposes of adjusting premium percentages under this subparagraph, and(II) the following table shall be applied in lieu of the table contained in clause (i):

In the case of household income (expressed as a percent of poverty line) within the following income tier:	The initial premium percentage is—	The final premium percentage is—
Up to 150.0 percent	0.0	0.0
150.0 percent up to 200.0 percent	0.0	2.0
200.0 percent up to 250.0 percent	2.0	4.0
250.0 percent up to 300.0 percent	4.0	6.0
300.0 percent up to 400.0 percent	6.0	8.5
400.0 percent and higher	8.5	8.5

(B) Applicable second lowest cost silver planThe applicable second lowest cost silver plan with respect to any applicable taxpayer is the second lowest cost silver plan of the individual market in the rating area in which the taxpayer resides which—

(i) is offered through the same Exchange through which the qualified health plans taken into account under paragraph (2)(A) were offered, and

(ii) provides—(I) self-only coverage in the case of an applicable taxpayer—(aa) whose tax for the taxable year is determined under section 1(c) 2

2 See References in Text note below.

(relating to unmarried individuals other than surviving spouses and heads of households) and who is not allowed a deduction under section 151 for the taxable year with respect to a dependent, or(bb) who is not described in item (aa) but who purchases only self-only coverage, and(II) family coverage in the case of any other applicable taxpayer.

If a taxpayer files a joint return and no credit is allowed under this section with respect to 1 of the spouses by reason of subsection (e), the taxpayer shall be treated as described in clause (ii)(I) unless a deduction is allowed under section 151 for the taxable year with respect to a dependent other than either spouse and subsection (e) does not apply to the dependent.

(D) Additional benefitsIf—

(i) a qualified health plan under section 1302(b)(5) of the Patient Protection and Affordable Care Act offers benefits in addition to the essential health benefits required to be provided by the plan, or

(ii) a State requires a qualified health plan under section 1311(d)(3)(B) of such Act to cover benefits in addition to the essential health benefits required to be provided by the plan,

the portion of the premium for the plan properly allocable (under rules prescribed by the Secretary of Health and Human Services) to such additional benefits shall not be taken into account in determining either the monthly premium or the adjusted monthly premium under paragraph (2).

(E) Special rule for pediatric dental coverage

(c) Definition and rules relating to applicable taxpayers, coverage months, and qualified health planFor purposes of this section—

(1) Applicable taxpayer

(A) In general

(B) Special rule for certain individuals lawfully present in the United StatesIf—

(i) a taxpayer has a household income which is not greater than 100 percent of an amount equal to the poverty line for a family of the size involved, and

(ii) the taxpayer is an alien lawfully present in the United States, but is not eligible for the medicaid program under title XIX of the Social Security Act by reason of such alien status,

the taxpayer shall, for purposes of the credit under this section, be treated as an applicable taxpayer with a household income which is equal to 100 percent of the poverty line for a family of the size involved.

(D) Denial of credit to dependents

(E) Temporary rule for 2021 through 2025

(2) Coverage monthFor purposes of this subsection—

(A) In generalThe term “coverage month” means, with respect to an applicable taxpayer, any month if—

(i) as of the first day of such month the taxpayer, the taxpayer’s spouse, or any dependent of the taxpayer is covered by a qualified health plan described in subsection (b)(2)(A) that was enrolled in through an Exchange established by the State under section 1311 of the Patient Protection and Affordable Care Act, and

(ii) the premium for coverage under such plan for such month is paid by the taxpayer (or through advance payment of the credit under subsection (a) under section 1412 of the Patient Protection and Affordable Care Act).

(B) Exception for minimum essential coverage

(i) In general

(ii) Minimum essential coverage

(i) Coverage must be affordableExcept as provided in clause (iii), an employee shall not be treated as eligible for minimum essential coverage if such coverage—(I) consists of an eligible employer-sponsored plan (as defined in section 5000A(f)(2)), and(II) 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.

This 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.

(ii) Coverage must provide minimum value

(iii) Employee or family must not be covered under employer plan

(iv) Indexing

(3) Definitions and other rules

(A) Qualified health plan

(B) Grandfathered health plan

(4) Special rules for qualified small employer health reimbursement arrangements

(A) In general

(B) Denial of double benefit

(C) Affordable coverageFor purposes of subparagraph (A), a qualified small employer health reimbursement arrangement shall be treated as constituting affordable coverage for a month if—

(i) the excess of—(I) the amount that would be paid by the employee as the premium for such month for self-only coverage under the second lowest cost silver plan offered in the relevant individual health insurance market, over(II)1⁄12 of the employee’s permitted benefit (as defined in section 9831(d)(3)(C)) under such arrangement, does not exceed—

(ii)1⁄12 of 9.5 percent of the employee’s household income.

(D) Qualified small employer health reimbursement arrangement

(E) Coverage for less than entire year

(F) Indexing

(d) Terms relating to income and familiesFor purposes of this section—

(1) Family size

(2) Household income

(A) Household incomeThe term “household income” means, with respect to any taxpayer, an amount equal to the sum of—

(i) the modified adjusted gross income of the taxpayer, plus

(ii) the aggregate modified adjusted gross incomes of all other individuals who—(I) were taken into account in determining the taxpayer’s family size under paragraph (1), and(II) were required to file a return of tax imposed by section 1 for the taxable year.

(B) Modified adjusted gross incomeThe term “modified adjusted gross income” means adjusted gross income increased by—

(i) any amount excluded from gross income under section 911,

(ii) any amount of interest received or accrued by the taxpayer during the taxable year which is exempt from tax, and

(iii) an amount equal to the portion of the taxpayer’s social security benefits (as defined in section 86(d)) which is not included in gross income under section 86 for the taxable year.

(3) Poverty line

(A) In general

(B) Poverty line used

(e) Rules for individuals not lawfully present

(1) In generalIf 1 or more individuals for whom a taxpayer is allowed a deduction under section 151 (relating to allowance of deduction for personal exemptions) for the taxable year (including the taxpayer or his spouse) are individuals who are not lawfully present—

(A) the aggregate amount of premiums otherwise taken into account under clauses (i) and (ii) of subsection (b)(2)(A) shall be reduced by the portion (if any) of such premiums which is attributable to such individuals, and

(B) for purposes of applying this section, the determination as to what percentage a taxpayer’s household income bears to the poverty level for a family of the size involved shall be made under one of the following methods:

(i) A method under which—(I) the taxpayer’s family size is determined by not taking such individuals into account, and(II) the taxpayer’s household income is equal to the product of the taxpayer’s household income (determined without regard to this subsection) and a fraction—(aa) the numerator of which is the poverty line for the taxpayer’s family size determined after application of subclause (I), and(bb) the denominator of which is the poverty line for the taxpayer’s family size determined without regard to subclause (I).

(ii) A comparable method reaching the same result as the method under clause (i).

(2) Lawfully present

(3) Secretarial authority

(f) Reconciliation of credit and advance credit

(1) In general

(2) Excess advance payments

(A) In general

(B) Limitation on increase

(i) In general

(ii) Indexing of amountIn the case of any calendar year beginning after 2014, each of the dollar amounts in the table contained under clause (i) shall be increased by an amount equal to—(I) such dollar amount, multiplied by(II) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting “calendar year 2013” for “calendar year 2016” in subparagraph (A)(ii) thereof.

If the amount of any increase under clause (i) is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50.

(iii) Temporary modification of limitation on increase

(3) Information requirementEach Exchange (or any person carrying out 1 or more responsibilities of an Exchange under section 1311(f)(3) or 1321(c) of the Patient Protection and Affordable Care Act) shall provide the following information to the Secretary and to the taxpayer with respect to any health plan provided through the Exchange:

(A) The level of coverage described in section 1302(d) of the Patient Protection and Affordable Care Act and the period such coverage was in effect.

(B) The total premium for the coverage without regard to the credit under this section or cost-sharing reductions under section 1402 of such Act.

(D) The name, address, and TIN of the primary insured and the name and TIN of each other individual obtaining coverage under the policy.

(E) Any information provided to the Exchange, including any change of circumstances, necessary to determine eligibility for, and the amount of, such credit.

(F) Information necessary to determine whether a taxpayer has received excess advance payments.

(g) Special rule for individuals who receive unemployment compensation during 2021

(1) In generalFor purposes of this section, in the case of a taxpayer who has received, or has been approved to receive, unemployment compensation for any week beginning during 2021, for the taxable year in which such week begins—

(A) such taxpayer shall be treated as an applicable taxpayer, and

(B) there shall not be taken into account any household income of the taxpayer in excess of 133 percent of the poverty line for a family of the size involved.

(2) Unemployment compensation

(3) Evidence of unemployment compensation

(4) Clarification of rules remaining applicable

(A) Joint return requirement

(B) Household income and affordabillity 3

3 So in original. Probably should be “affordability”.

(h) RegulationsThe Secretary shall prescribe such regulations as may be necessary to carry out the provisions of this section, including regulations which provide for—

(1) the coordination of the credit allowed under this section with the program for advance payment of the credit under section 1412 of the Patient Protection and Affordable Care Act, and

(2) the application of subsection (f) where the filing status of the taxpayer for a taxable year is different from such status used for determining the advance payment of the credit.

(Added and amended Pub. L. 111–148, title I, § 1401(a), title X, §§ 10105(a)–(c), 10108(h)(1), Mar. 23, 2010, 124 Stat. 213, 906, 914; Pub. L. 111–152, title I, §§ 1001(a), 1004(a)(1)(A), (2)(A), (c), Mar. 30, 2010, 124 Stat. 1030, 1034, 1035; Pub. L. 111–309, title II, § 208(a), (b), Dec. 15, 2010, 124 Stat. 3291, 3292; Pub. L. 112–9, § 4(a), Apr. 14, 2011, 125 Stat. 36; Pub. L. 112–10, div. B, title VIII, § 1858(b)(1), Apr. 15, 2011, 125 Stat. 168; Pub. L. 112–56, title IV, § 401(a), Nov. 21, 2011, 125 Stat. 734; Pub. L. 114–255, div. C, title XVIII, § 18001(a)(3), Dec. 13, 2016, 130 Stat. 1341; Pub. L. 115–97, title I, § 11002(d)(1)(E), Dec. 22, 2017, 131 Stat. 2060; Pub. L. 117–2, title IX, §§ 9661(a), (b), 9662(a), 9663(a), Mar. 11, 2021, 135 Stat. 182, 183; Pub. L. 117–169, title I, § 12001(a), (b), Aug. 16, 2022, 136 Stat. 1905.)