Family Members of Covered Employee May Be Eligible for PTC

In case you missed it, Treasury and the IRS recently published final regulations, which aim to fix the so-called “family glitch” under the premium tax credit.

Glitches Gonna Glitch

The final regulations (TD 9968) under §36b of the Affordable Care Act published last month largely adopt with some amendments the proposed regs released last April (REG-114339-21). Most notably, the final regs revise the affordability test for family members of an employee with health insurance received through their employer. Previously, if the employee’s share of the cost of self-only insurance was less than 9.5% of household income (9.12% for 2023), family members were ineligible for a premium tax credit on an exchange. This was true even if the cost of family coverage exceeded the 9.5% threshold.

The final rules provide that the affordability test for family coverage is based on the employee’s share of the cost for the employee and all other members of the employee’s family. Thus, the new regulations eliminate the “family glitch” by allowing family members of an employee who has affordable minimum essential coverage for a self-only plan, but not a family plan, to obtain health insurance on an exchange and receive a premium tax credit. The new rules are effective starting in 2023.

Note. Treasury and the IRS clarified in the regulations that nothing in these new rules affects any information reporting requirements for employers, including the reporting required under sections 6055 and 6056, which is done on Form 1095-B, Health Coverage, and Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, respectively.


TD 9968 Code:

TD 9968 by Western CPE on Scribd

REG 114339 21 Code:

REG 114339 by Western CPE on Scribd

As Western CPE’s VP of Tax Policy and Strategic Partnerships, Jessica keeps her finger on the pulse of Congress and the IRS. She has an extensive background in analyzing and writing on issues related to federal tax policy and IRS administration and has regularly attended congressional hearings and markups on Capitol Hill, as well as public hearings at IRS headquarters. Jessica’s legislative and regulatory procedural knowledge, coupled with her tax law expertise, make her well-versed in the complex worlds of tax policy and administration.

Before her years analyzing tax law with Wolters Kluwer Tax & Accounting (CCH) and Bloomberg BNA, Jessica represented taxpayers in a wide range of matters before the IRS. Immediately prior to joining Western CPE, Jessica was the acting CEO and managing director of public policy of a national organization for accountants where she was instrumental in leading the organization’s nonpartisan policy agendas, education, and advocacy efforts.

Jessica holds a J.D., cum laude, from the University of the District of Columbia David A. Clarke School of Law and a B.S. from the University of Maryland, College Park.

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Mark Seid, EA, CPA has over 25 years of experience in field of taxation focused on tax controversy. A National Tax Practice Institute graduate, Mark is admitted to practice before the U.S. Tax Court. He has served as an Internal Revenue Agent with the IRS in San Jose and San Luis Obispo, California, a state director for the California Society of Enrolled Agents, and the chair for the society’s Finance and Budget committee. He regularly presents courses to tax professionals on issues affecting small businesses.

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