IRS Updates FAQ for Premium Tax Credit

The IRS updated its frequently asked questions document addressing the Premium Tax Credit on February 9. The update supersedes an earlier update from February 2022 and clarifies items on eligibility and affordability.

The premium tax credit is a refundable credit to help lower-income households afford health care purchased through the Health Insurance Marketplace.

Eligibility

Question 5 was updated to reflect that an individual or couple is eligible for the credit if their income is between 100% and 400% of the federal poverty line or they were eligible for unemployment compensation in 2021. They must also not file separately, and the claimant cannot be claimed as a dependent on other returns.

The release added in Question 45 clarified that if the only person that claimed unemployment in 2021 in a household is being claimed as a dependent, then one may not claim the tax credit.

Affordability

The IRS also updated the maximum percent that an employee can pay on annual premiums for self-only coverage in order to satisfy the minimum value requirement. For 2023, that is 8.39%, a decline from 9.61% in 2022. This was updated by Question 11.

Question 15 added that a sponsored plan “provides minimum value if the plan covers at least 60 percent of the expected total allowed costs for covered services.”

Employees who have coverage offers from more than one employer “are generally considered to have an offer of affordable coverage if at least one of the offers of coverage is affordable,” per Question 13.