On October 11, 2022, the Treasury Department and Internal Revenue Service (“IRS”) finalized regulations that expand the availability of Marketplace premium tax credits for employees’ family members. The final rule generally follows the proposed rule issued in April 2022. To qualify for a premium tax credit, the final rule provides that:
- Affordability of employer-sponsored coverage for family members would be determined based on the employee’s cost to cover the employee and the family members.
- The determination of whether employer-sponsored coverage for family members provides minimum value would also be based on the coverage available to family members.
The rule takes effect for plan years beginning on and after January 1, 2023.
These regulations do not affect the affordability determination for purposes of the Affordable Care Act’s (“ACA”) employer mandate; however, they may indirectly impact employer plans as more family members may qualify for premium tax credits and choose to enroll in coverage through the Marketplace.
Simultaneously, the IRS released Notice 2022-41, creating a new permitted election change under the Section 125 cafeteria plan rules. The Notice permits, but does not require, an employer with a non-calendar year plan to allow an employee to prospectively revoke a pre-tax election for family coverage under a group health plan to enable one or more family members to enroll in Marketplace coverage.
Please see the attached for further details Final Regulations To Fix The ACAs Affordability Family Glitch – 101422U