Internal Revenue Bulletin 2012-24 (PDF rendition): IRS Notices

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Bulletin No. 201
2-24
June 11, 2012
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
INCOME TAX
Rev. Rul. 2012–14, page 1012.
Income from discharge of indebtedness.This ruling am-
plifies Revenue Ruling 92–53, 1992–2 C.B. 48, by describing
how discharged partnership excess nonrecourse debt is taken
into account in measuring the insolvency of the partners un-
der section 108(d)(3) of the Code. The ruling provides that to
the extent discharged excess nonrecourse debt generates can-
cellation of indebtedness (COD) income that is allocated under
section 704(b) (and the regulations thereunder), each partner
treats its portion of the discharged excess nonrecourse debt
related to such COD income as a liability in measuring insol-
vency under section 108(d)(3). Rev. Rul. 92–53 amplified.
T.D. 9590, page 986.
Final regulations under section 36B of the Code relate to the
premium tax credit, enacted by section 1401 of the Affordable
Care Act.
Notice 2012–37, page 1014.
This notice extends interim guidance under section 833 of the
Code provided in Notice 2010–79 and Notice 2011–51 on the
modification of section 833 treatment of certain health organi-
zations. Notice 2011–51 modified and superseded.
ADMINISTRATIVE
Notice 2012–38, page 1014.
This notice solicits public comments on what additional guid-
ance may be needed after Rev. Rul. 2006–57, which pro-
vides guidance on the use of smartcards, debit or credit cards,
or other electronic media to provide qualified transportation
fringes under sections 132(a)(5) and (f) of the Code, became
effective on January 1, 2012. In particular, the notice requests
public comments on a number of issues surrounding an em-
ployer’s provision of transit benefits in light of changes in tech-
nology in transit benefit administration.
Finding Lists begin on page ii.

The IRS Mission
Provide Americ
a’s taxpayers top-quality service by helping
them understa
nd and meet their tax responsibilities and en-
force the law wi
th integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Secre-
tary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
June 11, 20122012–24 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 36B.—
Refundable
Credit for Cov
erage Under
a Qualified Health Plan
26 CFR 1.36B–0: Table of contents.
T.D. 9590
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Parts 1 and 602
Health Insurance Premium
Tax Credit
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations.
SUMMARY: This document contains final
regulations relating to the health insurance
premium tax credit enacted by the Patient
Protection and Affordable Care Act and
the Health Care and Education Reconcilia-
tion Act of 2010, as amended by the Medi-
care and Medicaid Extenders Act of 2010,
the Comprehensive 1099 Taxpayer Pro-
tection and Repayment of Exchange Sub-
sidy Overpayments Act of 2011, the De-
partment of Defense and Full-Year Con-
tinuing Appropriations Act, 2011, and the
3% Withholding Repeal and Job Creation
Act. These final regulations provide guid-
ance to individuals who enroll in qualified
health plans through Affordable Insurance
Exchanges (Exchanges) and claim the pre-
miumtaxcredit,andtoExchangesthat
make qualified health plans available to in-
dividuals and employers.
DATES:Effective Date:These regulations
are effective on May 23, 2012.
Comment Date:Comments will be ac-
cepted until August 21, 2012.
Applicability Date:For date of applica-
bility, see §1.36B–1(o).
ADDRE
SSES: Comments should be
subm
itted to Internal Revenue Service,
CC:P
A:LPD:PR(REG–131491–10),
Room
5203, P.O. Box 7604, Ben Franklin
Stat
ion, Washington, DC 20044, or
electronical
ly towww.regulations.gov
(IRS REG–1314
91–10). Alternatively,
comments may b
e hand delivered between
the hours of 8
:00 a.m. and 4:00 p.m.
MondaytoFri
daytoCC:PA:LPD:PR
(REG–131491
–10), Courier’s Desk,
Internal Rev
enue Service, 1111
Constituti
on Avenue NW, Washington,
D.C. All com
ments will be available for
public insp
ection and copying.
FOR FURTHER
INFORMATION
CONTACT: Sh
areen S. Pflanz, (202)
622–4920,
or Andrew S. Braden, (202)
622–4960 (
not toll-free numbers).
SUPPLEMEN
TARY INFORMATION:
Paperwork
Reduction Act
The collec
tion of information contained
in these re
gulations has been reviewed and
approved b
y the Office of Management
and Budget
in accordance with the Paper-
work Redu
ction Act (44 U.S.C. 3507(d))
under con
trol number 1545–2232.
The colle
ction of information in these
final reg
ulations is in §1.36B–5. The infor-
mation wi
ll help the IRS properly recon-
cile the a
mount of the premium tax credit
with adva
nce credit payments made under
section
1412 of the Patient Protection and
Afforda
ble Care Act (42 U.S.C. 18082).
The coll
ection of information is required
to compl
y with the provisions of section
36B(f)(
3) of the Internal Revenue Code
(Code)
. An agency may not conduct or
sponso
r, and a person is not required to re-
spond t
o, a collection of information un-
less th
e collection of information displays
avalid
control number assigned by the Of-
fice o
f Management and Budget.
The est
imated total annual reporting
burde
n is 250,000 hours. The estimated
annua
l burden per respondent is 5,000
hours
. The estimated number of respon-
dents
is 50.
Comme
nts concerning the accuracy
of thi
s burden estimate and sugges-
tions
for reducing this burden should be
sent
to theInternal Revenue Service,
Attn
: IRS Reports Clearance Officer,
SE:W
:CAR:MP:T:M:S, Washington, DC
2022
4,andtotheOffice of Manage-
ment
and Budget, Attn: Desk Officer for
the Departmen
t of the Treasury, Office
of Informatio
n and Regulatory Affairs,
Washington, D
C 20503.
Books or recor
ds relating to a collection
of informatio
n must be retained as long
as their cont
ents may become material in
the administ
ration of any internal revenue
law. General
ly, tax returns and return in-
formation ar
e confidential, as required by
26 U.S.C. 61
03.
Background
This document contains final regula-
tions that amend the Income Tax Regula-
tions (26 CFR part 1) under section 36B
relating to the premium tax credit. Section
36B was enacted by the Patient Protec-
tion and Affordable Care Act, Public Law
111–148 (124 Stat. 119 (2010)), and the
Health Care and Education Reconcilia-
tion Act of 2010, Public Law 111–152
(124 Stat. 1029 (2010)) (collectively, the
Affordable Care Act). On August 17,
2011, a notice of proposed rulemaking
(REG–131491–10) was published in the
Federal Register(76 FR 50931). Writ-
ten comments responding to the notice
of proposed rulemaking were received.
The comments are available for public
inspection atwww.regulations.govor on
request. A public hearing was held on
November 17, 2011. After consideration
of all the comments, the proposed
regulations are adopted as amended by
this Treasury decision. The comments and
revisions are discussed in the preamble.
Expla
nation of Provisions and
Summa
ry of Comments
1.Premium Tax Credit Definitions
a.Family size
The pr
oposed regulations define a tax-
payer
’s family as the individuals for whom
ataxp
ayer claims a deduction for a per-
sonal
exemption under section 151 for
the ta
xable year, which may include the
taxp
ayer, the taxpayer’s spouse, and de-
pend
ents. The proposed regulations also
clar
ify that the family includes individuals
who a
re not applicable individuals under
sect
ion 5000A(d) and thus are not subject
2012–24 I.R.B.986June 11, 2012

to the penalty for failing to maintain mini-
mum essential coverage.
Commentators recommended clari-
fying that the family also includes indi-
viduals who are exempt under section
5000A(e) from the requirement to main-
tain minimum essential coverage. Ac-
cordingly, the final regulations clarify that
a family may include all individuals not
subject to the section 5000A penalty.
Some commentators disagreed with
the rule in the proposed regulations that
a taxpayer’s family includes a child only
if the taxpayer is allowed a dependency
exemption deduction for the child. Com-
mentators suggested that taxpayers should
be able to compute a premium tax credit
based on premiums for a child for whom
the person is not allowed a dependency
exemption deduction.Section 36B(d)(1)
defines the family as the individuals for
whom the taxpayer is allowed a personal
exemption deduction under section 151.
Accordingly, the final regulations do not
adopt these comments. We note however,
that the non-dependent child may be able
to claim a premium tax credit if otherwise
eligible. See §1.36B–3(h).
b.Requirement to file a return for
purposes of household income
Under section 36B, household income
includes the modified adjusted gross in-
come of a dependent who is required to
file a return of tax imposed by section 1.
The final regulations conform to this statu-
tory language, thus clarifying that house-
hold income does not include the modified
adjusted gross income of a family member
whoisrequiredtofileataxreturnsolely
to report tax imposed under Code sections
other than section 1 (for example, the early
distribution penaltyimposed under section
72(q) or self-employment tax under sec-
tion 1401).
c.Modified adjusted gross income
Under the proposed regulations, mod-
ified adjusted gross income is adjusted
gross income increased by amounts ex-
cluded from gross income under section
911 and tax-exempt interest a taxpayer
receives or accrues during the taxable
year. The 3% Withholding Repeal and
Job Creation Act, Public Law 112–56
(125 Stat. 711 (2011)), which was enacted
after the proposed regulations were pub-
lished, amended the definition of modified
adjusted gross income to include Social
Security benefits (as defined in section
86(d)) not included in gross income under
section 86. The final regulations reflect
this amendment.
d.Lawfully present
Under section 36B(c)(1)(B) and the
proposed regulations, a taxpayer who is an
individual lawfully present in the United
States may be treated as an applicable tax-
payer if the taxpayer’s household income
is under 100 percent of the Federal poverty
line (FPL) and the taxpayer is not eligible
for Medicaid. Under section 1321(f)(3)
of the Affordable Care Act, an individual
who is not lawfully present in the United
States may not enroll in a qualified health
plan through an Exchange. The proposed
regulations definelawfully presentby
referencing 45 CFR 152.2, which also is
referenced in defininglawfully presentin
proposed regulations on Exchanges under
45 CFR 155.20 issued by the Department
of Health and Human Services (HHS).
Commentators requested that the final
regulations expand the definition of law-
fully present to include the categories of
immigrants described in the Children’s
Health Insurance Program Reauthoriza-
tion Act. One commentator stated that the
final regulations should allow States to
use existing administrative mechanisms to
determine eligibility if those mechanisms
are not more restrictive than Federal law.
To maintain consistency with the HHS
Exchange final regulations, the final regu-
lations definelawfully presentby referenc-
ing 45 CFR 155.20, the definition in the
HHS Exchange final regulations.
e.Federal poverty line
The proposed regulations defineFed-
eral poverty lineby reference to the Fed-
eral poverty guidelines published annually
by HHS. The Federal poverty guidelines
for Alaska and Hawaii differ from the
guidelines for the 48 contiguous states
and the District of Columbia. The final
regulations clarify that, if married taxpay-
ers reside in separate States with different
Federal poverty guidelines, or if a taxpayer
resides in States with different Federal
poverty guidelines during the year, the
Federal poverty line that applies for pur-
poses of section 36B and the associated
regulations is the higher Federal poverty
line (resulting in a lower percentage of
the Federal poverty lineforthetaxpayers’
household income and family size).
f.Federally-facilitated Exchange
Under the proposed regulations, the
termExchangehas the same meaning as
in 45 CFR 155.20, which provides that the
termExchangerefers to a State Exchange,
regional Exchange, subsidiary Exchange,
and Federally-facilitated Exchange.
Commentators disagreed on whether
the language in section 36B(b)(2)(A) lim-
its the availability of the premium tax
credit only to taxpayers who enroll in
qualified health plans on State Exchanges.
The statutory language of section 36B
and other provisions of the Affordable
Care Act support the interpretation that
credits are available to taxpayers who ob-
tain coverage through a State Exchange,
regional Exchange, subsidiary Exchange,
and the Federally-facilitated Exchange.
Moreover, the relevant legislative history
does not demonstrate that Congress in-
tended to limit the premium tax credit to
State Exchanges. Accordingly, the final
regulations maintain the rule in the pro-
posed regulations because it is consistent
with the language, purpose, and structure
of section 36B and the Affordable Care
Act as a whole.
g.Rating area
The proposed regulations definerating
areaas an Exchange service area, as de-
scribed in 45 CFR 155.20. Commentators
suggested that an Exchange service area is
different than a rating area as that term is
used in section 36B(b)(3) for determining
the applicable benchmark plan. The final
regulations reserve the definition of rating
area.
2.Eligibility for the Premium Tax Credit
a.Applicable taxpayer
Under section 36B(c)(1) and the pro-
posed regulations, in general a taxpayer is
an applicable taxpayer for a taxable year
only if the taxpayer’s household income
for the taxable year is at least 100 percent
but not more than 400 percent of the FPL
June 11, 20129872012–24 I.R.B.

for the taxpayer’s family size. Commen-
tators requested that the final regulations
treat a taxpayer whose household income
exceeds 400 percent of the FPL for the tax-
payer’s family size as an applicable tax-
payer if, at enrollment, the Exchange es-
timates that the taxpayer’s household in-
come will be between 100 and 400 per-
cent of the FPL for the taxpayer’s fam-
ily size and approves advance credit pay-
ments. Other commentators advocated al-
lowing taxpayers with household income
above 400 percent of the FPL for their fam-
ily size to be treated as eligible for a pre-
mium tax credit for the months before a
change in circumstances affecting house-
hold income occurs or for the months for
which the taxpayer receives advance pay-
ments.
The final regulations do not adopt these
comments because they are contrary to the
language of section 36B limiting the pre-
mium tax credit to taxpayers with house-
hold income for the taxable year at or be-
low 400 percent of the FPL for the tax-
payer’s family size.
Commentators requested that the final
regulations clarify that a taxpayer who has
household income between 100 percent
and 133 percent of the FPL but is not eligi-
ble for Medicaid qualifies for the premium
tax credit. Under section 36B(c)(1)(A)
and the proposed regulations, an applica-
ble taxpayer who may claim the premium
tax credit is a taxpayer with household in-
come between 100 and 400 percent of the
FPL for the family size. Thus, it is clear
that a taxpayer with household income
between 100 percent and 133 percent of
the FPL for the taxpayer’s family size may
be an applicable taxpayer.
Commentators requested that the final
regulations allow an individual who may
be claimed as a dependent by another tax-
payer to qualify as an applicable taxpayer
for a taxable year if, for the taxable year,
another taxpayer does not claim the indi-
vidual as a dependent. The final regula-
tions do not adopt this comment because it
is inconsistent with section 36B(c)(1)(D),
which provides that a premium tax credit is
not allowed to any individual for whom a
deduction under section 151 is “allowable
to another taxpayer” for the taxable year.
b.Incarceration
Under section 1312(f) of the Affordable
Care Act, individuals who are incarcerated
(other than pending disposition of charges)
may not enroll in a qualified health plan
through an Exchange. The proposed reg-
ulations provide, however, that an individ-
ual who is incarcerated may be allowed a
premium tax credit if a family member is
enrolled in a qualified health plan.
A commentator suggested that the rules
relating to incarcerated individuals should
apply to individualsincarcerated pending
disposition of charges, as is the case under
the Medicaid program. The comment ad-
dresses an issue beyond the scope of the
premium tax credit regulations. Standards
for enrollment in a qualified health plan
fall under rules within the jurisdiction of
HHS.
c.Minimum essential coverage
i. Government-Sponsored Coverage
A. Time of eligibility
The proposed regulations provide that
an individual generally is treated as eligi-
ble for a government-sponsored program
on the first day of the first full month
in which the individual may receive ben-
efits under the program. The proposed
regulations further provide that an indi-
vidual who fails to complete the require-
ments necessary to receive benefits avail-
able under a government-sponsored pro-
gram (other than a veteran’s health care
program) reasonably promptly is treated as
eligible for the coverage on the first day of
the second calendar month following the
event that establishes eligibility.
Commentators asked that the final reg-
ulations allow individuals a certain amount
of time to complete the requirements (such
as submitting an application) necessary to
obtain government-sponsored minimum
essential coverage. Some commentators
suggested that the final regulations could
provide this period by defining “reason-
ably promptly” as 90 days after the event
that establishes eligibility. Commentators
requested that the final regulations allow
exemptions from the 90-day period, how-
ever, when additional delay in receiving
benefits occurs despite the good faith ef-
forts of the taxpayer, for example as a
result of inaction of a government agency
or official.
To provide greater clarity, the final reg-
ulations delete the language “reasonably
promptly” and extend this time period.
Under the final regulations, an individual
who fails to complete the requirements
necessary to receive benefits available
under a government-sponsored program
by the last day of the third full calendar
month following the event that establishes
eligibility is treated as eligible for the cov-
erage on the first day of the fourth calendar
month. Because an individual who timely
completes the necessary requirements is
treated as eligible for government-spon-
sored minimum essential coverage no ear-
lier than the first month that the individual
may receive benefits, this 3-month time
period does not include the time needed
for a government agency to process an
application.
The proposed regulations request com-
ments on whether rules should provide
flexibility if operational challenges pre-
vent timely transition from coverage under
a qualified health plan to coverage under
a government-sponsored program. Com-
mentators stated that the final regulations
should provide that an individual tran-
sitioning from a qualified health plan to
coverage under a government-sponsored
program should not be treated as eligi-
ble for government-sponsored minimum
essential coverage until the individual is
able to effectively terminate his or her
qualified health plan coverage. They ex-
pressed concern that an individual may
be unable to discontinue advance credit
payments by the beginning of a month for
which the individual is eligible for gov-
ernment-sponsored coverage and could be
responsible for an excess advance pay-
ment for that month.
The concerns expressed in these
comments are addressed in the HHS
final regulations on Exchanges. Un-
der 45 CFR 155.430, an Exchange
must permit an enrollee to terminate
coverage in a qualified health plan no later
than 14 days after the enrollee requests
termination. For an enrollee who is newly
eligible for Medicaid or the Children’s
Health Insurance Program (CHIP),
45 CFR 155.430(d)(2)(iv) provides that
qualified health plan coverage terminates
on the last day before Medicaid or CHIP
coverage begins. These termination
2012–24 I.R.B.988June 11, 2012

rules enable individuals transitioning to
coverage under a government-sponsored
program to effectively terminate qualified
health plan coverage (and liability for
advance credit payments) before they
are eligible for government-sponsored
minimum essential coverage.
B. Definition of “eligible”
The proposed regulations provide
that an individual is eligible for gov-
ernment-sponsored minimum essential
coverage when an individual meets the
requirements for coverage under the pro-
gram. For administrative convenience,
however, because the standards for eligi-
bility in veterans’ programs do not allow
Exchanges to identify everyone who may
be eligible for veterans’ coverage at the
time he or she is seeking an eligibility de-
termination for advance payments of the
premium tax credit, the proposed regula-
tions provide that an individual is eligible
for minimum essential coverage under the
veteran’s health care program authorized
under chapter 17 or 18 of Title 38, U.S.C.
only if the individual is enrolled in a vet-
eran’s health care program identified as
minimum essential coverage in regula-
tions issued under section 5000A.
The final regulations conform the rules
to amendments to section 5000A that
delete the word “veteran’s” in describing
health care programs under chapter 17 or
18 of Title 38. Thus, the special rule for
veterans’ coverage may apply to individu-
als who are not veterans but are eligible for
the Civilian Health and Medical Program
of the Department of Veterans Affairs
(VA) or the VA’s spina bifida program.
Commentators requested that the final
regulations define eligibility for gov-
ernment-sponsored programs as actual
enrollment for individuals suffering from
end stage renal disease who become el-
igible for Medicare as a result of their
diagnosis. Other commentators requested
this treatment for any individual suffering
from an acute illness who becomes eligi-
ble for a government-sponsored program.
The commentators asserted that these se-
riously-ill individuals should be able to
choose to remain enrolled in a qualified
health plan with the benefit of a premium
tax credit to maintain continuity of med-
ical care, which may be disrupted if the
individual loses eligibility for the premium
tax credit and is required to move to a
government-sponsored program in which
the individual’s medical provider does not
participate.
Section 36B(c)(2)(B) establishes a
clear structure under which eligibility for
government-sponsored minimum essen-
tial coverage in a given month precludes
including an individual in a taxpayer’s
coverage family for purposes of comput-
ing the premium assistance amount for
that month. In keeping with the statutory
scheme, the final regulations do not adopt
these comments. However, the IRS and
the Treasury Department expect to publish
additional guidance, see §601.601(d)(2),
clarifying when or if an individual be-
comes “eligible for government-sponsored
minimum essential coverage” when the
eligibility for that coverage is a result of
a particular illness or condition. For ex-
ample, as the preamble to the proposed
regulations notes, the additional guid-
ance would clarify the rules in the case
of eligibility for Medicaid on the basis of
blindness or disability.
C. Eligibility for limited benefits
Commentators requested that the final
regulations address whether eligibility for
benefits with a limited scope under gov-
ernment programs (for example, eligibil-
ity only for family planning services under
Medicaid) constitutes eligibility for mini-
mum essential coverage. The final regu-
lations do not address these comments be-
cause minimum essential coverage is de-
fined in section 5000A(f). It is anticipated
that regulations under section 5000A will
provide that government-sponsored health
benefit programs that offer only very lim-
ited benefits are not minimum essential
coverage.
D. Medicare eligibility
A commentator noted that the dates in
some of the examples in the proposed reg-
ulations concerningeligibility for Medi-
care inaccurately describe when an indi-
vidual’s Medicare coverage begins. The
commentator also asked that the final reg-
ulations create a safe harbor for taxpayers
whose Medicare coverage is delayed be-
cause they enroll during the later months
of their Medicare initial enrollment period.
The final regulations revise the exam-
ples in response to this comment. The
final regulations do not include the sug-
gested Medicare safe harbor because the
commentator’s concerns are addressed by
the general rule that anindividual is eligi-
ble for minimum essential coverage on the
first day of the first full month the individ-
ual may receive benefits. Additionally, as
discussed earlier in this preamble, the final
regulations revise the rule that an individ-
ual who fails to complete the requirements
to obtain coverage is treated as eligible on
the first day of the fourth month after the
event establishing eligibility. Thus, indi-
viduals enrolling during the later months
of their initial Medicare enrollment period
will not be deemed eligible for Medicare
before the expiration of the enrollment pe-
riod.
E. Indian Health Service
Commentators requested that the final
regulations provide thatindividuals eligi-
ble to receive health care from the Indian
Health Service (IHS) are not eligible for
government-sponsored minimum essential
coverage. Section 5000A(f) defines mini-
mum essential coverage. It does not desig-
nate the IHS as providing minimum essen-
tial coverage. Section 5000A(f)(1)(E) au-
thorizes HHS to designate other coverage
as minimum essential coverage. HHS has
advised the IRS and the Treasury Depart-
ment that it does not intend to designate ac-
cess to the IHS as minimum essential cov-
erage. Thus, individuals who are eligible
to receive health care from the IHS will not
be barred by IHS access alone from eligi-
bility for the premium tax credit or from
access to the special cost-sharing reduction
for tribal members under section 1402(d)
of the Affordable Care Act.
ii. Employer-Sponsored Coverage
A. Affordability
The proposed regulations provide that
an eligible employer-sponsored plan is
affordable for an employee and related
individuals if the portion of the annual pre-
mium the employee must pay for self-only
coverage does not exceed the required
contribution percentage (9.5 percent for
taxable years beginning before January 1,
2015) of the taxpayer’s household income.
Commentators suggested that the afford-
ability of coverage for related individuals
June 11, 20129892012–24 I.R.B.

should be based on the portion of the an-
nual premium the employee must pay for
family coverage.
Under section 36B(c)(2)(C), an indi-
vidual who may enroll in an eligible em-
ployer-sponsored plan may nonetheless be
eligible for a premium tax credit if the
employer-sponsored coverage either is un-
affordable or fails to provide minimum
value. Future regulations concerning em-
ployer-sponsored coverage will provide fi-
nal rules on determining affordability for
related individuals and proposed rules on
determining minimum value.
Some commentators asked that the
final rules clarify howemployer contribu-
tions to health savings accounts (HSAs),
and amounts made available under health
reimbursement arrangements (HRAs) are
treated in determining affordability. Em-
ployer contributions to an HSA would not
affect the affordability of employer-spon-
sored coverage because HSA contribu-
tions may not be used to pay for premiums
for health insurance coverage (except in
limited circumstances not applicable in the
context of employer-sponsored coverage).
Amounts available under an HRA that
may be used only to reimburse medical ex-
penses other than the employee’s required
share of the cost of employer-sponsored
coverage also would not affect the afford-
ability of employer-sponsored coverage.
These final regulations do not address
how other HRAs are treated for purposes
of determining the affordability of an
employer-sponsored plan, which may be
addressed further in additional published
guidance, see §601.601(d)(2).
Some commentators also asked for clar-
ification on how wellness incentive pro-
grams affect the premium affordability de-
termination. The final regulations autho-
rize the Commissioner to publish addi-
tional guidance, see §601.601(d)(2), to ad-
dress the effect on affordability of wellness
incentives that increase or decrease an em-
ployee’s share of premiums. Comments
are requested on types of wellness incen-
tives, how these programs affect the af-
fordability of eligible employer-sponsored
coverage for employees and related indi-
viduals, and how incentives are earned and
applied. The administrability of any rule
on wellness incentives must consider the
extent to which employees can be certain
they will qualify for the incentives at the
time they otherwise would be evaluated for
eligibility for advance credit payments.
B. Affordability safe harbor
Under the proposed regulations, an
employer-sponsored plan is not afford-
able for an employee or family member
for a plan year if, when the employee
or family member enrolls in a qualified
health plan, an Exchange determines that
the eligible employer-sponsored plan is
not affordable. Individuals applying for
advance credit payments are required to
provide the Exchange with information on
whether employer-sponsored coverage is
available to them. Because an Exchange
will make an affordability determination
only when an individual represents that
employer-sponsored coverage is avail-
able, the affordability safe harbor will not
be available to a taxpayer who misrep-
resents to an Exchange the availability
of employer-sponsored coverage. The
final regulations provide that the afford-
ability safe harbor does not apply if a
taxpayer, with reckless disregard for the
facts, provides incorrect information to an
Exchange concerning an employee’s por-
tion of the annual premium for employer
coverage. The final regulations clarify
that the affordability safe harbor applies
only until such time as the availability of
employer-sponsored coverage changes.
If new or different employer-sponsored
coverage becomes available after an indi-
vidual enrolls in a qualified health plan,
the individual must notify the Exchange
and get a new affordability determination
to extend the safe harbor. As the preamble
to the proposed regulation notes, regula-
tions under section 4980H are expected
to provide that an employer is not subject
to a penalty merely because an employee
receives a premium tax credit under this
affordability safe harbor if the employer
offers to its full-time employees affordable
coverage that provides minimum value.
Under 45 CFR 155.335, Exchanges
generally will conduct an annual redeter-
mination process that will allow individu-
als who enroll in a qualified health plan to
maintain their eligibility and enrollment
for subsequent years with limited burden.
This process involves notifying the indi-
vidual of the information the Exchange
intends to use to make a new determi-
nation of eligibility for advance credit
payments and soliciting the individual
to report changes. The final regulations
clarify that the affordability safe harbor
does not carry over to later plan years
automatically as part of the redetermina-
tion process. The affordability safe harbor
applies only to a plan year for which a
taxpayer responds to the notification and
affirmatively provides information relat-
ingtotheaffordabilityintheupcoming
year of available employer-sponsored cov-
erage, allowing an Exchange to determine
that employer-sponsored coverage avail-
able to the taxpayer for that plan year is
unaffordable.
C. Eligibility during a waiting period
Under section 2708 of the Public Health
Service Act, employers are permitted to
apply a waiting period of up to 90 days
beginning when the employee is otherwise
eligible for coverage under a group health
plan. See Notice 2012–17, 2012–9 I.R.B.
430. The final regulations clarify that an
employee or related individual is treated
as not eligible for coverage under the em-
ployer’s plan during a waiting period.
D. Minimum value
The proposed regulations provide that
an eligible employer-sponsored plan pro-
vides minimum value only if the plan’s
share of the total allowed costs of ben-
efits provided under the plan is at least
60 percent. Commentators provided var-
ious recommendations for determining
minimum value. Some commentators re-
quested transition relief. Notice 2012–31,
2012–20 I.R.B. 906, solicits additional
comments on potential approaches for de-
termining minimum value. All comments
will be considered in separate guidance on
determining minimum value.
E. Individuals enrolled in coverage
Section 36B(c)(2)(C)(iii) and the pro-
posed regulations provide that an individ-
ual who enrolls in an eligible employer-
sponsored plan is not eligible for the pre-
mium tax credit even if the plan is unaf-
fordable or fails to offer minimum value.
Commentators asked whether an individ-
ual who enrolls in an eligible employer-
sponsored plan and then terminates cover-
age during the plan year is treated as eligi-
ble for minimum essential coverage under
2012–24 I.R.B.990June 11, 2012

the plan for the entire plan year under this
rule, even though the coverage is unafford-
able or does not provide minimum value.
Commentators similarly asked if individ-
uals who enroll in continuation coverage
and then disenroll from it later during the
year are treated as eligible for minimum
essential coverage for the entire year. In
response to these comments, the final reg-
ulations clarify that an individual is treated
as eligible for minimum essential coverage
under an eligible employer-sponsored plan
by reason of enrolling in the plan or in con-
tinuation coverage only for months the in-
dividual is enrolled in the coverage.
Commentators expressed concern that
an employee may be enrolled automat-
ically in employer-sponsored coverage
and would be treated as eligible for min-
imum essential coverage under an em-
ployer-sponsored plan by reason of the
automatic enrollment even though the
plan is not affordable or does not provide
minimum value. The commentators were
specifically concerned about the auto-
matic enrollment provision in section 18A
of the Fair Labor Standards Act (added
by section 1511 of the Affordable Care
Act), which is applicable to employers
with more than 200 full-time employees.
(The Department of Labor, which has ju-
risdiction over the automatic enrollment
provisions under section 18A of the Fair
Labor Standards Act, does not intend to
require employers to comply with the au-
tomatic enrollment provisions until after
it publishes regulations and those regula-
tions become applicable, and has indicated
that the regulations will not take effect by
2014. See Notice 2012–17, Q&A–1.)
Commentators also raised concerns
about the automatic enrollment of an em-
ployee in an employer-sponsored plan for
other reasons, which could include auto-
matic enrollment that a plan might provide
for without regard to the automatic en-
rollment requirements of the Affordable
Care Act, automatic enrollment that might
occur because of administrative error, or
automatic re-enrollment in the plan in a
subsequent year. The commentators rec-
ommended allowing an employee to opt
out of the employer-sponsored coverage
following automatic enrollment.
In response to these comments, the fi-
nal regulations provide that an employee
or related individual is treated as not en-
rolled in an eligible employer-sponsored
plan for a month in a plan year or other
period if the employee or related individ-
ual (1) is automatically enrolled in the plan
for that plan year or other period, and (2)
terminates the coverage before the later of
the first day of the second full calendar
month of the plan year or other period or
the last day of any permissible opt-out pe-
riod provided by the employer-sponsored
plan or in regulations to be issued by the
Department of Labor. Thus, an individ-
ual who is automatically enrolled for a plan
year or other period in coverage that is un-
affordable or that does not provide mini-
mum value and who terminates that cov-
erage by the date specified in the preced-
ing sentence will not be treated as eligible
for minimum essential coverage under the
employer-sponsored plan for the months in
which the individual was automatically en-
rolled in the plan that are within that plan
year or period. Accordingly, the individual
will not be precluded by the automatic en-
rollment from inclusion in the taxpayer’s
coverage family for computing the amount
of the premium tax credit for those months.
iii. Nondependent Eligibility for
Minimum Essential Coverage
Commentators asked whether individ-
uals who may enroll in an eligible em-
ployer-sponsored plan based on their rela-
tionship to an employee but who are not
tax dependents (for example, a 25-year
old child or a domestic partner of the em-
ployee) are treated as eligible for minimum
essential coverage under the plan. In re-
sponse to these comments, the final regu-
lations provide that an individual who may
enroll in minimum essential coverage be-
cause of a relationship to another person
eligible for the coverage, but for whom the
other eligible person does not claim a per-
sonal exemption deduction under section
151, is treated as eligible for minimum es-
sential coverage under the coverage only
for months that the related individual is
enrolled in the coverage. This change re-
flects the fact that the related individual is
a member of a different family with differ-
ent household income for purposes of the
premium tax credit. Furthermore, a person
who may not claim a related individual as
a dependent is not responsible for the sec-
tion 5000A penalty for the related individ-
ual who does not receive coverage. Thus,
the final regulations ensure that coverage
available through another person does not
create an obstacle to a related individual
claiming a premium tax credit.
3.Computing the Premium Tax Credit
a.Definition of coverage month
Section 36B(c)(2)(A)(ii) and the pro-
posed regulations provide that a month is
a coverage month for an individual only
if the individual is enrolled in a qualified
health plan and is not eligible for other
minimum essential coverage on the first
day of the month, and the premiums are
paid by the taxpayer or through advance
credit payments.
Consistent with the proposed regula-
tions, the final regulations provide that an
individual must be enrolled in a qualified
health plan as of the first day of the month
for a month to be a coverage month. How-
ever, instead of testing whether the indi-
vidual is eligible for other minimum es-
sential coverage as of the first day of the
month, the final regulations provide that
an individual may have a coverage month
as long as there is at least one day of
the month when the individual is not eli-
gible for other minimum essential cover-
age. The final regulations also clarify that
a month is not a coverage month for a tax-
payer if the taxpayer’s share of premiums
is not paid in full by the unextended due
date for filing the taxpayer’s income tax re-
turn for the taxable year.
b.Third-party payments
Under the proposed regulations, pre-
miums another person pays for coverage
of the taxpayer or a member of the tax-
payer’s family for a month are treated as
paid by the taxpayer solely for purposes of
the month qualifying as a coverage month.
Commentators asked for confirmation that
an Indian tribe may pay premiums on be-
half of a tribal member. The final regula-
tions add an example illustrating that pre-
miums paid for a taxpayer by an Indian
tribe are treated as paid by the taxpayer un-
der the coverage month rule.
c.Adjusted monthly premium
Under section 36B(b)(3)(C), the ad-
justed monthly premium is the premium an
issuer would charge to cover all members
of a taxpayer’s coverage family, adjusted
June 11, 20129912012–24 I.R.B.

only for age. A commentator noted that
the definition of adjusted monthly pre-
mium in the proposed regulations does
not include the statutory qualification that,
in the case of a State participating in the
wellness discount demonstration project
under section 2705(d) of the Public Health
Service Act, the adjusted monthly pre-
mium is determined without regard to
any premium discount or rebate under the
project. The final regulations revise the
definition of adjusted monthly premium in
accordance with this comment and clarify
that the premium may not be adjusted for
tobacco use, see section 36B(b)(3)(C).
d.Applicable benchmark plan
i. In General
Under section 36B(b)(3)(B), a tax-
payer’s premium tax credit is computed
based on the premium for the applicable
second lowest cost silver plan in the rating
area where the taxpayer resides and of-
fered by the Exchange where the taxpayer
enrolls in a qualified health plan. For
simplicity, the proposed regulations refer
to this plan as the applicable benchmark
plan.
Section 36B(b)(3)(B)(ii) describes the
“applicable” benchmark plan as providing
self-only or family coverage. The pro-
posed regulations define family coverage
as insurance that covers more than one in-
dividual. The proposed regulations fur-
ther provide that a taxpayer’s “applicable”
benchmark plan is the benchmark plan that
“applies” to the members of the taxpayer’s
coverage family. The proposed regulations
define the coverage family, in general, as
the members of the taxpayer’s family (the
individuals for whom the taxpayer prop-
erly claims a personal exemption deduc-
tion under section 151) who are not eligi-
ble for other minimum essential coverage.
The final regulations clarify that the cover-
age family includes only those individuals
in the taxpayer’s family who are not eligi-
ble for other minimum essential coverage
and enroll in a qualified health plan.
For purposes of determining the bench-
mark plan that “applies” to a coverage
family, the proposed regulations provide
that if an Exchange offers categories of
family coverage (such as coverage for two
adults or coverage for one adult plus chil-
dren), the applicable benchmark plan for
family coverage is the coverage category
that applies to the members of the tax-
payer’s coverage family who enroll in a
qualified health plan. The final regula-
tions delete the reference to coverage cat-
egories. The final Exchange rules promul-
gated by HHS removed references to rat-
ing categories, which are a parallel con-
cept to coverage categories. The final reg-
ulations provide that the applicable bench-
mark plan for family coverage is the plan
that applies to the members of the tax-
payer’s coverage family.
Commentators requested clarification
on how the applicable benchmark plan
would be determined for a qualified health
plan that covers children only. The fi-
nal regulations provide an example in
response to this comment.
ii. Families Not Covered by One
Applicable Benchmark Plan
The proposed regulations provide that
the premium for the applicable benchmark
plan is the sum of the premiums for the ap-
plicable benchmark plans that cover com-
ponents of the taxpayer’s coverage family
if a single benchmark plan would not cover
the family, for example because members
live in different rating areas. The final reg-
ulations provide that, if there is at least one
silver level plan offered on an Exchange
that does not cover all members of a tax-
payer’s coverage family under one policy
and premium, for example because of non-
traditional relationships within the family,
the premium for the applicable benchmark
plan is the single premium or the combi-
nation of premiums that is the second low-
est cost silver option for covering the entire
family. The final regulations reserve rules
for determining the applicable benchmark
plan for families with members residing in
different locations.
Commentators stated that the final reg-
ulations should allow domestic partners
and other two-adult groups to use a fam-
ily benchmark plan to compute their pre-
mium tax credit if the Exchange allows
both adults to be covered by the same qual-
ified health plan. The final regulations do
not adopt this suggestion. If the adults con-
stitute two separate households for Federal
tax purposes, section 36B requires a sep-
arate credit computation for each house-
hold that includes only those individuals
for whom each taxpayer claims a personal
exemption deduction under section 151.
iii. Plans Closed to Enrollment
The proposed regulations provide that,
in general, an applicable benchmark plan is
the second lowest cost silver plan offered
through the Exchange at the time a tax-
payer or family member enrolls. However,
a plan does not cease to be a taxpayer’s
applicable benchmark plan for that enroll-
ment period because the plan or a lower
cost plan closes to enrollment during the
taxable year. Thus, a plan may continue
to be an applicable benchmark plan if it
closes to enrollment after a taxpayer en-
rolls in a qualified health plan, but it is
disregarded in determining the applicable
benchmark plan if it is closed to enrollment
at the time the taxpayer enrolls.
A commentator requested that the fi-
nal regulations exclude certain qualified
health plans open to enrollment only to cer-
tain individuals when determining which
plan constitutes a taxpayer’s applicable
benchmark plan. The final regulations
clarify that a plan is taken into account
in determining the taxpayer’s applicable
benchmarkplanonlyifitisopentoen-
rollment to one or more members of a
taxpayer’s coverage family.
iv. Changes Affecting Applicable
Benchmark Plan
Commentators asked whether a tax-
payer’s applicable benchmark plan is
locked in at enrollment and whether the
benchmark plan could change during the
year if a plan is decertified or if members
of the taxpayer’s family leave the plan.
The proposed regulations provide that a
taxpayer’s applicable benchmark plan may
change from month to month if changes
in the taxpayer’s coverage family occur
(for example, if a family member becomes
eligible or ineligible for minimum essen-
tial coverage during the taxable year).
The proposed regulations also provide
that a taxpayer’s applicable benchmark
plan does not cease to be the applicable
benchmark plan solely because the plan,
or a lower cost plan, terminates or closes
to enrollment during the year. The final
regulations adopt the proposed regulations
without change.
2012–24 I.R.B.992June 11, 2012

e.Combining qualified health plan
premiums with premiums for other
coverage
Section 36B(b) and the proposed regu-
lations provide that the premium tax credit
is the lesser of (1) the premiums for the
qualified health planor plans in which a
taxpayer or family member enrolls, or (2)
the difference between the premium for a
benchmark qualified health plan and the
amount of the premium that the taxpayer
would be required to pay if the taxpayer
purchased the benchmark plan (the tax-
payer’s contribution amount). Commen-
tators suggested that the final regulations
allow taxpayers to determine the premium
tax credit by combining the premiums for
one or more qualified health plans with
premiums a taxpayer pays for other min-
imum essential coverage (particularly pre-
miums for coverage under CHIP). Under
the rule suggested by the commentators,
the taxpayer’s contribution amount would
be reduced by the amount of the family’s
other premiums to ensure that a family
could afford the combined premiums for
qualified health plan coverage and CHIP
or other coverage.
Under section 36B(b)(2), the premium
tax credit is computed by taking into ac-
count only the premiums for qualified
health plans. Thus, the credit may not be
increased for premiums for other mini-
mum essential coverage.
f.Pediatric dental coverage
Under section 36B(b)(3)(E), if an in-
dividual enrolls in both a qualified health
plan and a dental plan, the portion of the
premium for the dental plan properly allo-
cable to pediatric dental benefits that are
essential health benefits is treated as pre-
miums payable for a qualified health plan
for purposes of determining the monthly
premium. The proposed regulations re-
quested comments on methods for deter-
mining the amount of the premium prop-
erly allocable to pediatric dental benefits.
Commentators requested that the final
regulations use a methodology that reflects
the true costs of medical and dental care
for children. Other commentators recom-
mended that the Federal government split
the value of the premium tax credit on
a basis proportionate to the premium for
the pediatric service in the dental plan and
the qualified health plan premium. Some
commentators requested a simple formula
for allocating a taxpayer’s dental benefits
premium to pediatric dental care. A com-
mentator requested a safe harbor permit-
ting dental insurance carriers to use a rea-
sonable method based on sound actuarial
practice.
The final regulations provide that the
portion of the premium for a stand-alone
dental plan properly allocable to pediatric
dental benefits is determined under guid-
ance issued by HHS. Under the final HHS
Exchange regulations at 45 CFR 156.210,
a qualified health plan issuer that offers a
standalone dental plan is required to pro-
videinformationontheplan’sratestothe
Exchange each year. It is anticipated that
future HHS guidance will address how this
required reporting on rates will include re-
portingontheportionofthepremiumal-
locable to pediatric dental coverage.
g.Families with individuals not lawfully
present
Section 36B(e)(1)(B) describes a
method for determining the FPL percent-
age for families that include an individual
not lawfully present (the statutory method)
and allows a comparable method that
reaches the same results to be prescribed
by regulations. Commentators suggested
that the final regulations provide a compa-
rable method based on the Medicaid rules
for income and family size determinations.
The commentators’ suggested method
may not reach the same result as the statu-
tory method. Thus, the final regulations do
not adopt this suggestion. The final regu-
lations provide that the Commissioner may
provide a comparablemethod in additional
published guidance, see §601.601(d)(2).
4.Reconciling the Credit and Advance
Credit Payments
a.Months for which an issuer does not
provide coverage
Section 1412(c)(2)(B) of the Afford-
able Care Act provides that an issuer re-
ceiving an advance credit payment must
reduce the premiums charged to the in-
suredfortheperiodcoveredbythead-
vance payment but may terminate cover-
age if the insured fails to pay premiums
for a 3-month period. The final HHS Ex-
change regulations describe the operation
of this grace period in more detail. Under
the retroactive termination rule, if a tax-
payer does not pay premiums in full for
3 months, the issuer must terminate cov-
erage retroactive to the end of the first of
those months and will be required to re-
turn any advance payments received for
any terminated coverage months. These fi-
nal regulations clarify that a taxpayer does
not have an advance credit payment for a
month in which the issuer of the qualified
health plan does not provide coverage and
will not be required to reconcile payments
for those months. The taxpayer will, how-
ever, have to reconcile the payment for the
first month of the grace period. If the tax-
payer has not paid the taxpayer’s share of
the premium for that month by the unex-
tended due date for filing the return, the
first month is not a coverage month, and
the taxpayer is not eligible for the premium
tax credit for that month.
b.Changes in circumstances
Section 36B(f) provides that a taxpayer
must reconcile on the taxpayer’s income
tax return for the taxable year the pre-
mium tax credit allowed under section 36B
with the advance payments paid during the
course of the taxable year and must pay the
amount of any excess advance payments as
additional tax. For taxpayers with house-
hold income below 400 percent of the FPL,
the amount of additional tax liability the
taxpayer must repay is capped.
Commentators requested that the final
regulations include rules to mitigate the ef-
fects of the requirement to repay excess
advance payments. Commentators sug-
gested that the final regulations adopt a
safe harbor for individuals and families
who can demonstrate that they accurately
reported any changes in income or fam-
ily size to the Exchange and that their ad-
vance payments were properly computed
based on the information available at the
time the payments were made. Commen-
tators suggested that taxpayers who ex-
perience changes in circumstances during
the year, including taxpayers whose house-
hold income for thetaxable year exceeds
400 percent of the FPL, should be allowed
to prorate the repayment limitations based
on the portion of the year the taxpayer re-
ceives advance payments. Other commen-
tators asked that taxpayers who would ex-
perience a hardship as a result of repaying
June 11, 20129932012–24 I.R.B.

excess advance payments be exempt from
the repayment requirement or that the IRS
should disregard changes that cause in-
come to slightly exceed 400 percent of the
FPL. Commentators also suggested that
taxpayers be allowed to compute their pre-
mium tax credit using the largest family
size of the household during the year rather
than the family size reported on the tax re-
turn.
The statute sets forth clear rules for rec-
onciling advance credit payments, which
are not consistent with the suggestions
made by the commentators. Accordingly,
the final regulations do not adopt these
comments.
Commentators suggested that the IRS
should offer automatic payment plans for
taxpayers who have an additional tax li-
ability and should not impose interest or
penalties on this additional tax liability re-
paid through the payment plan. Although
these comments are beyond the scope of
these final regulations, the IRS will con-
sider possible avenues of administrative
relief in appropriate cases for taxpayers
who have additional tax liability as a result
of excess advance payments.
c.Changes in filing status
i. Taxpayers Who Marry During the
Taxable Year
The proposed regulations provide that,
like other taxpayers, newly-married tax-
payers compute their premium tax credit
using family size and household income as
reported on their tax return and the appro-
priate applicable benchmark plan for each
coverage month regardless of whether the
taxpayers were married or single during
the month. The proposed regulations re-
quest comments on alternative credit com-
putations for taxpayers who receive ad-
vance payments, marry during the year,
and owe additional tax, even if the Ex-
change accurately projects each spouse’s
separate income.
Some commentators suggested an al-
ternative computation that computes the
credit for the single months separately for
each spouse as if each taxpayer’s annual
income was one-half of the actual house-
hold income for the year. For the married
months, the credit would be computed
using actual household income for the
year. The premium tax credit would be the
sum of the credits computed for the sin-
gle months and the married months. This
computation generally results in a smaller
amount of excess advance payments com-
pared to the amount computed under the
proposed regulations.
The final regulations adopt the alterna-
tive credit computation suggested by the
commentators as an option for taxpayers
who marry during the taxable year. Under
this alternative method, the credit for the
single months is computed separately for
each spouse as if each taxpayer’s annual
income was one-half of the actual house-
hold income for the year, the credit for
the married months is computed using ac-
tual household income for the year, and
the premium tax credit is the sum of the
credits computed for the single months and
the married months. However, to avoid
allowing taxpayers an increased amount
of additional premium tax credit resulting
from marriage, the final regulations cap
any additional premium tax credit allowed
to a taxpayer under this alternative com-
putation method at the amount of addi-
tional credit that results from computing
the credit under the general rule.
Commentators requested that the fi-
nal regulations allow a year-of-marriage
waiver on repaying excess advance pay-
ments. The final regulations do not adopt
these comments as these rules would cre-
ate unwarranted benefits, for example in
cases of taxpayers who marry during the
year and owe additional tax because their
income is significantly higher than what
the Exchange projected.
ii. Taxpayers Whose Marital Status
Changes from Married to Single During
the Taxable Year
The proposed regulations provide that
taxpayers who are married to each other at
the beginning but not at the end of the tax-
able year must allocate the premium for the
applicable benchmark plan, the premium
for the plan in which the taxpayers enroll,
and the advance credit payments for the
period the taxpayers are married. The pro-
posed regulations permit the allocation to
be made in any proportion, but if the tax-
payers cannot agree on a proportion, these
items are allocated 50 percent to each tax-
payer.
Commentators opined that the final
regulations should provide for allocating
these items to each taxpayer in proportion
to each taxpayer’s household income. The
final regulations do not adopt this sugges-
tion as it would require divorced taxpayers
to exchange income information or require
the IRS to associate each taxpayer’s return
with the other. Divorced taxpayers may
allocate the premium for the applicable
benchmark plan, the premium for the plan
in which the taxpayers enroll, and the
advance credit payments in proportion to
household income under the final regula-
tions if they choose.
iii. Married Taxpayers Filing Separately
Section 36B(c)(1)(C) provides that
marriedtaxpayerswhodonotfileajoint
return are not applicable taxpayers and are
not allowed a premium tax credit. Ac-
cordingly, married taxpayers who receive
advance credit payments but do not file a
joint return must repay the advance credit
payments. The advance credit payments
must be allocated equally to each taxpayer
for purposes of determining the amount
of excess advance payments. The final
regulations clarify that this equal alloca-
tion also applies if one spouse is treated
as unmarried under section 7703(b) (and
may, for example, properly claim the pre-
mium tax credit on a return filed as head
of household).
The proposed regulations requested
comments on special rules for taxpayers
who receive advance payments but face
challenges in meeting the joint return re-
quirement, for example because of the
incarceration of a spouse, domestic abuse,
or a pending divorce.
Numerous commentators stated that
the final regulations should provide spe-
cial rules allowing these spouses to file
separate returns and claim the premium
tax credit. Commentators suggested that
abandoned spouses also warrant an excep-
tion. Other commentators noted that other
married taxpayers may face challenges
in filing a joint return and asked for a
hardship exemption from the joint filing
requirement.
Commentators suggested that taxpayers
should be able to certify on the premium
tax credit form that they meet the crite-
ria for an exemption from the joint filing
requirement. One commentator suggested
granting an exception in case of domestic
2012–24 I.R.B.994June 11, 2012

violence for a taxpayer who has or during
the taxable year had an order of protection.
Some commentators, noting that many
of these situations are not resolved in a
single taxable year, requested a three-year
exception to the joint filing requirement.
The final regulations do not provide
special rules allowing married taxpayers to
claim the premium tax credit on separate
returns. However, the IRS and the Trea-
sury Department intend to propose addi-
tional regulations regarding eligibility for
the premium tax credit to address circum-
stances in which domestic abuse, abandon-
ment, or similar circumstances create ob-
stacles to the ability of taxpayers to file
joint returns. Comments are requested on
the documentation that a taxpayer could
provide to establish that he or she cannot
file a joint return because of the domes-
tic abuse, abandonment, or other similar
circumstances, on what treatment should
be accorded the other spouse if he or she
does not file with documentation support-
ing an exception, and the need for anti-
abuse rules.
5.Information Reporting
Commentators requested that the final
regulations require an Exchange, in report-
ing information under section 36B(f)(3), to
strictly define and limit the use and dis-
closure of immigration status information
for any purpose other than ensuring effi-
cient operation of the Exchange and pro-
hibit the transfer of immigration status in-
formation from the Exchange to the IRS.
The final regulations do not include a rule
responding to these comments because the
IRS does not require information on immi-
gration status of any individual in order to
administer the premium tax credit and will
not obtain this information. The Exchange
will verify that an individual is a citizen
or lawfully present and eligible to enroll in
coverage through the Exchange.
The proposed regulations provide that
the IRS will provide rules on the time
and manner of information reporting by
Exchanges in additional published guid-
ance, see §601.601(d)(2). Commentators
requested that the final regulations pro-
vide information on the time and manner
of information reporting by Exchanges. A
commentator suggested that the informa-
tion returns should be provided to taxpay-
ers by December 31. Another commenta-
tor suggested that the annual information
return should report the cost of the applica-
ble benchmark plan on the first day of each
month. The final regulations defer rules on
the time for information reporting by Ex-
changes to additional regulations, which
are expected to provide for monthly report-
ing by Exchanges to the IRS and an annual
report to the IRS and the taxpayer due by
January 31.
6.American Indians/Alaska Natives
Commentators asked that the final reg-
ulations provide special provisions for
American Indians and Alaska Natives, for
example that they be treated as eligible for
employer-sponsored minimum essential
coverage only if they are enrolled in the
coverage, that they should not be required
to pay any premiums for a qualified health
plan, and that they be exempted from
reconciliation. The IRS and HHS have
conducted several tribal consultations on
these and other issues under the proposed
regulations. The final regulations do not
adopt these suggestions, as they are incon-
sistent with the statute.
7.Effective/Applicability Date
These final regulations apply to taxable
years ending after December 31, 2013.
Special Analyses
It has been determined that this Trea-
sury decision is not a significant regula-
tory action as defined in Executive Order
12866, as supplemented by Executive Or-
der 13563. Therefore, a regulatory assess-
ment is not required. Section 553(b) of the
Administrative Procedure Act (5 U.S.C.
chapter 5) does not apply to these regu-
lations, and, becausethe regulations do
not impose a collection of information re-
quirement on small entities, the Regula-
tory Flexibility Act (5 U.S.C. chapter 6)
does not apply. Pursuant to section 7805(f)
of the Code, the notice of proposed rule-
making that preceded these final regula-
tions was submitted to the Chief Counsel
for Advocacy of the Small Business Ad-
ministration for comment on its impact on
small business, and no comments were re-
ceived.
Comments
Written(includingelectronic)
comments must be received by
August 21, 2012. Comments should be
submitted to Internal Revenue Service,
CC:PA:LPD:PR(REG–131491–10),
Room 5203, P.O. Box 7604, Ben Franklin
Station, Washington, DC 20044, or
electronically towww.regulations.gov
(IRS REG–131491–10). Alternatively,
comments may be hand delivered between
the hours of 8:00 a.m. and 4:00 p.m.
MondaytoFridaytoCC:PA:LPD:PR
(REG–131491–10), Courier’s Desk,
Internal Revenue Service, 1111
Constitution Avenue NW, Washington,
D.C. All comments will be available for
public inspection and copying.
Drafting Information
The principal authors of these fi-
nal regulations are Shareen S. Pflanz,
Frank W. Dunham III, Andrew S. Braden,
and Stephen J. Toomey of the Office of
Associate Chief Counsel (Income Tax and
Accounting). However, other personnel
from the IRS and the Treasury Department
participated in their development.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR parts 1 and 602
are amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended by adding an entry in
numerical order to read in part as follows:
Authority: 26 U.S.C. 7805***
Section 1.36B–4 also issued under
26 U.S.C. 36B(g).
*****
Par. 2. Sections 1.36B–0, 1.36B–1,
1.36B–2, 1.36B–3, 1.36B–4, and 1.36B–5
are added to read as follows:
§1.36B–0 Table of contents.
This section lists the captions contained
in §§1.36B–1 through 1.36B–5.
§1.36B–1 Premium tax credit definitions.
(a) In general.
(b) Affordable Care Act.
June 11, 20129952012–24 I.R.B.

(c) Qualified health plan.
(d) Family and family size.
(e) Household income.
(1) In general.
(2) Modified adjusted gross income.
(f) Dependent.
(g) Lawfully present.
(h) Federal poverty line.
(i) Reserved.
(j) Advance credit payment.
(k) Exchange.
(l) Self-only coverage.
(m) Family coverage.
(n) Rating area.
(o) Effective/applicability date.
§1.36B–2 Eligibility for premium tax
credit.
(a) In general.
(b) Applicable taxpayer.
(1) In general.
(2) Married taxpayers must file joint re-
turn.
(3) Dependents.
(4) Individuals not lawfully present or
incarcerated.
(5) Individuals lawfully present.
(6) Special rule for taxpayers with
household income below 100 percent of
the Federal povertyline for the taxable
year.
(7) Computation of premium assistance
amounts for taxpayers with household in-
come below 100 percent of the Federal
poverty line.
(c) Minimum essential coverage.
(1) In general.
(2) Government-sponsored minimum
essential coverage.
(i) In general.
(ii) Obligation to complete administra-
tive requirements to obtain coverage.
(iii) Special rule for coverage for veter-
ans and other individuals under chapter 17
or 18 of Title 38, U.S.C.
(iv) Retroactive effect of eligibility de-
termination.
(v) Determination of Medicaid or Chil-
dren’s Health Insurance Program (CHIP)
ineligibility.
(vi) Examples.
(3) Employer-sponsored minimum es-
sential coverage.
(i) In general.
(ii) Plan year.
(iii) Eligibility for months during a plan
year.
(A) Failure to enroll in plan.
(B) Waiting periods.
(C) Example.
(iv) Continuation coverage.
(v) Affordable coverage.
(A) In general.
(1) Affordability for employee.
(2) Affordability for related individual.
(3)Employeesafeharbor.
(4) Wellness incentives and employer
contributions to health reimbursement ar-
rangements.
(B) Affordability for part-year period.
(C) Required contribution percentage.
(D) Examples.
(vi) Minimum value.
(vii) Enrollment in eligible employer-
sponsored plan.
(A) In general.
(B) Automatic enrollment.
(C) Examples.
(4) Related individual not claimed as a
personal exemption deduction.
§1.36B–3 Computing the premium
assistance credit amount.
(a) In general.
(b) Definitions.
(c) Coverage month.
(1) In general.
(2) Premiums paid for a taxpayer.
(3) Examples.
(d) Premium assistance amount.
(e) Adjusted monthly premium.
(f) Applicable benchmark plan.
(1) In general.
(2) Family coverage.
(3) Silver level plan not covering a tax-
payer’s family.
(4) Family members residing at differ-
ent locations.
(5) Plan closed to enrollment.
(6) Benchmark plan terminates or
closes to enrollment during the year.
(7) Examples.
(g) Applicable percentage.
(1) In general.
(2) Applicable percentage table.
(3) Examples.
(h) Plan covering more than one family.
(1) In general.
(2) Example.
(i) Reserved.
(j) Additional benefits.
(1) In general.
(2) Method of allocation.
(3) Examples.
(k) Pediatric dental coverage.
(1) In general.
(2) Method of allocation.
(3) Example.
(l) Families including individuals not
lawfully present.
(1) In general.
(2) Revised household income compu-
tation.
(i) Statutory method.
(ii) Comparable method.
§1.36B–4 Reconciling the premium tax
credit with advance credit payments.
(a) Reconciliation.
(1) Coordination of premium tax credit
with advance credit payments.
(i) In general.
(ii) Responsibility for advance credit
payments.
(iii) Advance credit payment for a
month in which an issuer does not provide
coverage.
(2) Credit computation.
(3) Limitation on additional tax.
(i) In general.
(ii) Additional tax limitation table.
(4) Examples.
(b) Changes in filing status.
(1) In general.
(2) Taxpayers who marry during the
taxable year.
(i) In general.
(ii) Alternative computation of addi-
tional tax liability.
(A) In general.
(B) Alternative premium assistance
amounts for pre-marriage months.
(C) Premium assistance amounts for
marriage months.
(3) Taxpayers not married to each other
at the end of the taxable year.
(4) Married taxpayers filing separate re-
turns.
(5) Taxpayers filing returns as head of
household and married filing separately.
(6) Examples.
§1.36B–5 Information reporting by
Exchanges.
(a) Information required to be reported.
(b) Time of reporting.
(c) Manner of reporting.
2012–24 I.R.B.996June 11, 2012

§1.36B–1 Premium tax credit definitions.
(a)In general. Section 36B allows a
refundable premium tax credit for taxable
years ending after December 31, 2013.
The definitions in this section apply to this
section and §§1.36B–2 through 1.36B–5.
(b)Affordable Care Act.Theterm
Affordable Care Actrefers to the Patient
Protection and Affordable Care Act, Pub-
lic Law 111–148 (124 Stat. 119 (2010)),
and the Health Care and Education Recon-
ciliation Act of 2010, Public Law 111–152
(124 Stat. 1029 (2010)), as amended by
the Medicare and Medicaid Extenders Act
of 2010, Public Law 111–309 (124 Stat.
3285 (2010)), the Comprehensive 1099
Taxpayer Protection and Repayment of
Exchange Subsidy Overpayments Act of
2011, Public Law 112–9 (125 Stat. 36
(2011)), the Department of Defense and
Full-Year Continuing Appropriations Act,
2011, Public Law 112–10 (125 Stat. 38
(2011)), and the 3% Withholding Repeal
and Job Creation Act, Public Law 112–56
(125 Stat. 711 (2011)).
(c)Qualified health plan.Theterm
qualified health planhas the same mean-
ing as in section 1301(a) of the Affordable
Care Act (42 U.S.C. 18021(a)) but does
not include a catastrophic plan described
in section 1302(e) of the Affordable Care
Act (42 U.S.C. 18022(e)).
(d)Family and family size.Atax-
payer’s family means the individuals for
whom a taxpayer properly claims a de-
duction for a personal exemption under
section 151 for the taxable year. Family
size means the number of individuals in
the family. Family and family size may in-
clude individuals who are not subject to or
are exempt from the penalty under section
5000Aforfailingtomaintainminimum
essential coverage.
(e)Household income—(1)In general.
Household income means the sum of—
(i) A taxpayer’s modified adjusted
gross income; plus
(ii) The aggregate modified adjusted
gross income of all other individuals
who—
(A) Are included in the taxpayer’s fam-
ily under paragraph (d) of this section; and
(B) Are required to file a return of tax
imposed by section 1 for the taxable year
(determined without regard to the excep-
tion under section (1)(g)(7) to the require-
ment to file a return).
(2)Modified adjusted gross income.
Modified adjusted gross income means
adjusted gross income (within the mean-
ing of section 62) increased by—
(i) Amounts excluded from gross in-
come under section 911;
(ii) Tax-exempt interest the taxpayer re-
ceives or accrues during the taxable year;
and
(iii) Social security benefits (within the
meaning of section 86(d)) not included in
gross income under section 86.
(f)Dependent. Dependent has the same
meaning as in section 152.
(g)Lawfully present. Lawfully present
hasthesamemeaningasin45CFR
155.20.
(h)Federal poverty line. The Federal
poverty line means the most recently pub-
lished poverty guidelines (updated period-
ically in theFederal Registerby the Sec-
retary of Health and Human Services un-
der the authority of 42 U.S.C. 9902(2)) as
of the first day of the regular enrollment
period for coverage by a qualified health
plan offered through an Exchange for a cal-
endar year. Thus, the Federal poverty line
for computing the premium tax credit for
a taxable year is the Federal poverty line
in effect on the first day of the initial or
annual open enrollment period preceding
that taxable year. See 45 CFR 155.410.
If a taxpayer’s primary residence changes
during a taxable year from one state to a
state with different Federal poverty guide-
lines or married taxpayers reside in sepa-
rate states with different Federal poverty
guidelines (for example, Alaska or Hawaii
and another state), the Federal poverty line
that applies for purposes of section 36B
and the associated regulations is the higher
Federal poverty guideline (resulting in a
lower percentage of the Federal poverty
line for the taxpayers’ household income
and family size).
(i) [Reserved]
(j)Advance credit payment. Advance
credit payment means an advance payment
of the premium tax credit as provided in
section 1412 of the Affordable Care Act
(42 U.S.C. 18082).
(k)Exchange. Exchange has the same
meaning as in 45 CFR 155.20.
(l)Self-only coverage. Self-only cover-
age means health insurance that covers one
individual.
(m)Family coverage. Family coverage
means health insurance that covers more
than one individual.
(n)Rating area.[Reserved]
(o)Effective/applicability date.This
section and §§1.36B–2 through 1.36B–5
apply for taxable years ending after De-
cember 31, 2013.
§1.36B–2 Eligibility for premium tax
credit.
(a)In general. An applicable taxpayer
(within the meaning of paragraph (b) of
this section) is allowed a premium assis-
tance amount only for any month that one
or more members of the applicable tax-
payer’s family (the applicable taxpayer or
the applicable taxpayer’s spouse or depen-
dent)—
(1) Is enrolled in one or more qualified
health plans through an Exchange; and
(2) Is not eligible for minimum essential
coverage (within the meaning of paragraph
(c) of this section) other than coverage de-
scribed in section 5000A(f)(1)(C) (relating
to coverage in the individual market).
(b)Applicable taxpayer—(1)In gen-
eral. Except as otherwise provided in this
paragraph (b), an applicable taxpayer is
a taxpayer whose household income is at
least 100 percent but not more than 400
percent of the Federal poverty line for the
taxpayer’s family size for the taxable year.
(2)Married taxpayers must file joint re-
turn. A taxpayer who is married (within
the meaning of section 7703) at the close
of the taxable year isan applicable tax-
payer only if the taxpayer and the tax-
payer’s spouse file a joint return for the
taxable year.
(3)Dependents. An individual is not
an applicable taxpayer if another taxpayer
may claim a deduction under section 151
for the individual for a taxable year begin-
ning in the calendar year in which the in-
dividual’s taxable year begins.
(4)Individuals not lawfully present
or incarcerated. An individual who is
not lawfully present in the United States
or is incarcerated (other than incarcer-
ation pending disposition of charges)
is not eligible to enroll in a qualified
health plan through an Exchange. How-
ever, the individual may be an appli-
cable taxpayer if a family member is
eligible to enroll in a qualified health
plan. See sections 1312(f)(1)(B) and
June 11, 20129972012–24 I.R.B.

1312(f)(3) of the Affordable Care Act
(42 U.S.C. 18032(f)(1)(B) and (f)(3)) and
§1.36B–3(b)(2).
(5)Individuals lawfully present.Ifa
taxpayer’s household income is less than
100 percent of the Federal poverty line for
the taxpayer’s family size and the taxpayer
or a member of the taxpayer’s family is an
alien lawfully present in the United States,
the taxpayer is treated as an applicable tax-
payer if—
(i) The lawfully present taxpayer or
family member is not eligible for the Med-
icaid program; and
(ii) The taxpayer would be an applica-
ble taxpayer if the taxpayer’s household in-
come for the taxable year was between 100
and 400 percent of the Federal poverty line
for the taxpayer’s family size.
(6)Special rule for taxpayers with
household income below 100 percent of
the Federal poverty line for the taxable
year. A taxpayer (other than a taxpayer de-
scribed in paragraph (b)(5) of this section)
whose household income for a taxable
year is less than 100 percent of the Federal
poverty line for the taxpayer’s family size
is treated as an applicable taxpayer if—
(i) The taxpayer or a family member
enrolls in a qualified health plan through
an Exchange;
(ii) An Exchange estimates at the time
of enrollment that the taxpayer’s house-
hold income will be between 100 and 400
percent of the Federal poverty line for the
taxable year;
(iii) Advance credit payments are au-
thorized and paid for one or more months
during the taxable year; and
(iv) The taxpayer would be an applica-
ble taxpayer if the taxpayer’s household in-
come for the taxable year was between 100
and 400 percent of the Federal poverty line
for the taxpayer’s family size.
(7)Computation of premium assistance
amounts for taxpayers with household in-
come below 100 percent of the Federal
poverty line. If a taxpayer is treated as an
applicable taxpayer under paragraph (b)(5)
or (b)(6) of this section, the taxpayer’s ac-
tual household income for the taxable year
is used to compute the premium assistance
amounts under §1.36B–3(d).
(c)Minimum essential coverage—(1)
In general. Minimum essential cover-
age is defined in section 5000A(f) and
regulations issued under that section.
As described in section 5000A(f), gov-
ernment-sponsored programs, eligible
employer-sponsored plans, grandfathered
health plans, and certain other health
benefits coverage are minimum essential
coverage.
(2)Government-sponsored minimum
essential coverage—(i)In general.Anin-
dividual is eligible for government-spon-
sored minimum essential coverage if the
individual meets the criteria for coverage
under a government-sponsored program
described in section 5000A(f)(1)(A) as
of the first day of the first full month
the individual may receive benefits under
the program, subject to the limitation in
paragraph (c)(2)(ii) of this section. The
Commissioner may define eligibility for
specific government-sponsored programs
further in additional published guidance,
see §601.601(d)(2) of this chapter.
(ii)Obligation to complete administra-
tive requirements to obtain coverage.An
individual who meets the criteria for eligi-
bility for government-sponsored minimum
essential coverage must complete the re-
quirements necessary to receive benefits.
An individual who fails by the last day
of the third full calendar month following
the event that establishes eligibility under
paragraph (c)(2)(i) of this section to com-
plete the requirements to obtain govern-
ment-sponsored minimum essential cov-
erage (other than a veteran’s health care
program) is treated as eligible for govern-
ment-sponsored minimum essential cover-
age as of the first day of the fourth calendar
month following the event that establishes
eligibility.
(iii)Special rule for coverage for vet-
erans and other individuals under chapter
17 or 18 of Title 38, U.S.C. An individual
is eligible for minimum essential coverage
under a health care program under chapter
17 or 18 of Title 38, U.S.C. only if the indi-
vidual is enrolled in a health care program
under chapter 17 or 18 of Title 38, U.S.C.
identified as minimum essential coverage
in regulations issued under section 5000A.
(iv)Retroactive effect of eligibility de-
termination. If an individual receiving ad-
vance credit payments is determined to be
eligible for government-sponsored mini-
mum essential coverage that is effective
retroactively (such asMedicaid), the indi-
vidual is treated as eligible for minimum
essential coverage under that program no
earlier than the first day of the first calen-
dar month beginning after the approval.
(v)Determination of Medicaid or Chil-
dren’s Health Insurance Program (CHIP)
ineligibility. An individual is treated as not
eligible for Medicaid, CHIP, or a similar
program for a period of coverage under a
qualified health plan if, when the individ-
ual enrolls in the qualified health plan, an
Exchange determines or considers (within
the meaning of 45 CFR 155.302(b)) the in-
dividual to be not eligible for Medicaid or
CHIP.
(vi)Examples. The following examples
illustrate the provisions of this paragraph
(c)(2):
Example 1.Delay in coverage effectiveness.On
April 10, 2015, Taxpayer D applies for coverage
under a government-sponsored health care program.
D’s application is approved on July 12, 2015, but her
coverage is not effective until September 1, 2015.
Under paragraph (c)(2)(i) of this section, D is eli-
gible for government-sponsored minimum essential
coverage on September 1, 2015.
Example 2.Time of eligibility. Taxpayer E turns
65 on June 3, 2015, and becomes eligible for Medi-
care. Under section 5000A(f)(1)(A)(i), Medicare is
minimum essential coverage. However, E must en-
roll in Medicare to receive benefits. E enrolls in
Medicare in September, which is the last month of E’s
initial enrollment period. Thus, E may receive Medi-
care benefits on December 1, 2015. Because E com-
pleted the requirements necessary to receive Medi-
care benefits by the last day of the third full calendar
month after the event that establishes E’s eligibility
(E turning 65), under paragraph (c)(2)(i) and (c)(2)(ii)
of this section E is eligible for government-sponsored
minimum essential coverage on December 1, 2015,
the first day of the first full month that E may receive
benefits under the program.
Example 3.Time of eligibility, individual fails to
complete necessary requirements. The facts are the
same as inExample 2, except that E fails to enroll in
the Medicare coverage during E’s initial enrollment
period. E is treated as eligible for government-spon-
sored minimum essential coverage under paragraph
(c)(2)(ii) of this section as of October 1, 2015, the
first day of the fourth month following the event that
establishes E’s eligibility (E turning 65).
Example 4.Retroactive effect of eligibility.In
November 2014, Taxpayer F enrolls in a qualified
health plan for 2015 and receives advance credit
payments. F loses her part-time employment and
on April 10, 2015 applies for coverage under the
Medicaid program. F’s application is approved on
May 15, 2015, and her Medicaid coverage is effective
as of April 1, 2015. Under paragraph (c)(2)(iv) of
this section, F is eligible for government-sponsored
minimum essential coverage on June 1, 2015, the
first day of the first calendar month after approval.
Example 5.Determination of Medicaid ineligibil-
ity. In November 2014, Taxpayer G applies through
the Exchange to enroll in health coverage for 2015.
The Exchange determines that G is not eligible for
Medicaid and estimates that G’s household income
will be 140 percent of the Federal poverty line for
G’s family size for purposes of determining advance
credit payments. G enrolls in a qualified health plan
2012–24 I.R.B.998June 11, 2012

and begins receiving advance credit payments. G ex-
periences a reduction in household income during the
year and his household income for 2015 is 130 per-
cent of the Federal poverty line (within the Medic-
aid income threshold). However, under paragraph
(c)(2)(v) of this section, G is treated as not eligible
for Medicaid for 2015.
Example 6.Mid-year Medicaid eligibility rede-
termination.ThefactsarethesameasinExample 5,
except that G returns to the Exchange in July 2015
and the Exchange determines that G is eligible for
Medicaid. Medicaid approves G for coverage and the
Exchange discontinues G’sadvance credit payments
effective August 1. Under paragraphs (c)(2)(iv) and
(c)(2)(v) of this section, G is treated as not eligible for
Medicaid for the months when G is covered by a qual-
ified health plan. G is eligible for government-spon-
sored minimum essential coverage for the months af-
ter G is approved for Medicaid and can receive ben-
efits, August through December 2015.
(3)Employer-sponsored minimum es-
sential coverage—(i)In general.For
purposes of section 36B, an employee
who may enroll in an eligible em-
ployer-sponsored plan (as defined in
section 5000A(f)(2)) and an individual
who may enroll in the plan because of
a relationship to the employee (a related
individual) are eligible for minimum
essential coverage under the plan for
any month only if the plan is affordable
and provides minimum value. Govern-
ment-sponsored programs described in
section 5000A(f)(1)(A) are not eligible
employer-sponsored plans.
(ii)Plan year. For purposes of this
paragraph (c)(3), a plan year is an eli-
gible employer-sponsored plan’s regular
12-month coverage period (or the remain-
der of a 12-month coverage period for a
new employee or an individual who enrolls
during a special enrollment period).
(iii)Eligibility for months during a plan
year—(A)Failure to enroll in plan.An
employee or related individual may be el-
igible for minimum essential coverage un-
der an eligible employer-sponsored plan
for a month during a plan year if the em-
ployee or related individual could have en-
rolled in the plan for that month during an
open or special enrollment period.
(B)Waiting periods.Anemployeeor
related individual is not eligible for min-
imum essential coverage under an eligi-
ble employer-sponsored plan during a re-
quired waiting period before the coverage
becomes effective.
(C)Example. The following example
illustrates the provisions of this paragraph
(c)(3)(iii):
Example. (i) Taxpayer B is an employee of Em-
ployer X. X offers its employees a health insurance
plan that has a plan year (within the meaning of
paragraph (c)(3)(ii) of this section) from October 1
through September 30. Employees may enroll during
an open season from August 1 to September 15. B
does not enroll in X’s plan for the plan year Octo-
ber 1, 2014, to September 30, 2015. In November
2014, B enrolls in a qualified health plan through an
Exchange for calendar year 2015.
(ii) B could have enrolled in X’s plan during
the August 1 to September 15 enrollment period.
Therefore, unless X’s plan is not affordable for B or
does not provide minimum value, B is eligible for
minimum essential coverage under X’s plan for the
months that B is enrolled in the qualified health plan
during X’s plan year (January through September
2015).
(iv)Continuation coverage. An indi-
vidual who may enrollin continuation cov-
erage required under Federal law or a State
law that provides comparable continuation
coverage is eligible for minimum essential
coverage only for months that the individ-
ual is enrolled in the coverage.
(v)Affordable coverage—(A)In
general—(1)Affordability for em-
ployee. Except as provided in paragraph
(c)(3)(v)(A)(3) of this section, an eligible
employer-sponsored plan is affordable
for an employee if the portion of the an-
nual premium the employee must pay,
whether by salary reduction or otherwise
(required contribution), for self-only cov-
erage does not exceed the required contri-
bution percentage (as defined in paragraph
(c)(3)(v)(C) of this section) of the appli-
cable taxpayer’s household income for the
taxable year.
(2)Affordability for related individual.
[Reserved]
(3)Employee safe harbor.Anem-
ployer-sponsored plan is not affordable
for an employee or a related individual
for a plan year if, when the employee
or a related individual enrolls in a qual-
ified health plan for a period coinciding
with the plan year (in whole or in part),
an Exchange determines that the eligible
employer-sponsored plan is not afford-
able for that plan year. This paragraph
(c)(3)(v)(A)(3) does not apply to a de-
termination made as part of the redeter-
mination process described in 45 CFR
155.335 unless the individual receiving an
Exchange redetermination notification af-
firmatively responds and provides current
information on affordability. This para-
graph (c)(3)(v)(A)(3) does not apply for an
individual who, with reckless disregard for
the facts, provides incorrect information
to an Exchange concerning the portion of
the annual premium for coverage for the
employee or related individual under the
plan.
(4)Wellness incentives and employer
contributions to health reimbursement
arrangements. The Commissioner may
provide rules in published guidance, see
§601.601(d)(2) of this chapter, for de-
termining how wellness incentives and
amounts made available under a health
reimbursement arrangement are treated in
determining the affordability of eligible
employer-sponsored coverage under this
paragraph (c)(3)(v).
(B)Affordability for part-year period.
Affordability under paragraph (c)(3)(v)(A)
of this section is determined separately for
each employment period that is less than
a full calendar year or for the portions of
an employer’s plan year that fall in differ-
ent taxable years of an applicable taxpayer
(a part-year period). An eligible employer-
sponsored plan is affordable for a part-year
period if the employee’s annualized re-
quired contribution for self-only coverage
under the plan for the part-year period does
not exceed the required contribution per-
centage of the applicable taxpayer’s house-
hold income for the taxable year. The em-
ployee’s annualized required contribution
is the employee’s required contribution for
the part-year period times a fraction, the
numerator of which is 12 and the denomi-
nator of which is the number of months in
the part-year period during the applicable
taxpayer’s taxable year. Only full calen-
dar months are included in the computa-
tion under this paragraph (c)(3)(v)(B).
(C)Required contribution percentage.
The required contribution percentage is 9.5
percent. The percentage may be adjusted
in published guidance, see §601.601(d)(2)
of this chapter, for taxable years beginning
after December 31, 2014, to reflect rates
of premium growth relative to growth in
income and, for taxable years beginning
after December 31, 2018, to reflect rates of
premiumgrowthrelativetogrowthinthe
consumer price index.
(D)Examples. The following examples
illustrate the provisions of this paragraph
(c)(3)(v). Unless stated otherwise, in each
example the taxpayer is single and has no
dependents, the employer’s plan is an el-
igible employer-sponsored plan and pro-
vides minimum value, the employee is not
June 11, 20129992012–24 I.R.B.

eligible for other minimum essential cov-
erage, and the taxpayer, related individual,
and employer-sponsored plan have a cal-
endar taxable year:
Example 1.Basic determination of affordabil-
ity. In 2014 Taxpayer C has household income of
$47,000. C is an employee of Employer X, which
offers its employees a health insurance plan that re-
quires C to contribute $3,450 for self-only coverage
for 2014 (7.3 percent of C’s household income). Be-
cause C’s required contribution for self-only cover-
age does not exceed 9.5 percent of household income,
under paragraph (c)(3)(v)(A)(1)ofthissection,X’s
plan is affordable for C, and C is eligible for mini-
mum essential coverage for all months in 2014.
Example 2.Basic determination of affordability
for a related individual.[Reserved]
Example 3.Determination of unaffordability at
enrollment. (i) Taxpayer D is an employee of Em-
ployer X. In November 2013 the Exchange for D’s
rating area projects that D’s 2014 household income
will be $37,000. It also verifies that D’s required
contribution for self-only coverage under X’s health
insurance plan will be $3,700 (10 percent of house-
hold income). Consequently, the Exchange deter-
mines that X’s plan is unaffordable. D enrolls in a
qualified health plan and not in X’s plan. In Decem-
ber 2014, X pays D a $2,500 bonus. Thus, D’s actual
2014 household income is $39,500 and D’s required
contribution for coverage under X’s plan is 9.4 per-
cent of D’s household income.
(ii) Based on D’s actual 2014 household income,
D’s required contribution does not exceed 9.5 percent
of household income and X’s health plan is affordable
for D. However, when D enrolled in a qualified health
plan for 2014, the Exchange determined that X’s plan
was not affordable for D for 2014. Consequently,
under paragraph (c)(3)(v)(A)(3)ofthissection,X’s
plan is not affordable for D and D is not eligible for
minimum essential coverage under X’s plan for 2014.
Example 4.Determination of unaffordability for
plan year. ThefactsarethesameasinExample
3, except that X’s employee health insurance plan
year is September 1 to August 31. The Exchange
for D’s rating area determines in August 2014 that
X’s plan is unaffordable for D based on D’s projected
household income for 2014. D enrolls in a qualified
health plan as of September 1, 2014. Under paragraph
(c)(3)(v)(A)(3) of this section, X’s plan is not afford-
able for D and D is not eligible for minimum essen-
tial coverage under X’s plan for the coverage months
September to December 2014 and January through
August 2015.
Example 5. No affordability information affirma-
tively provided for annual redetermination.(i)The
facts are the same as inExample 3, except the Ex-
change redetermines D’s eligibility for advance credit
payments for 2015. D does not affirmatively provide
the Exchange with current information regarding af-
fordability and the Exchange determines that D’s cov-
erage is not affordable for 2015 and approves advance
credit payments based on information from the previ-
ous enrollment period. In 2015, D’s required contri-
bution for coverage under X’s plan is 9.4 percent of
D’s household income.
(ii) Because D does not respond to the Exchange
notification and the Exchange makes an affordability
determination based on information from an ear-
lier year, the employee safe harbor in paragraph
(c)(3)(v)(A)(3) of this section does not apply. D’s
required contribution for 2015 does not exceed 9.5
percent of D’s household income. Thus, X’s plan
is affordable for D for 2015 and D is eligible for
minimum essential coverage for all months in 2015.
Example 6.Determination of unaffordability for
part of plan year (part-year period). (i) Taxpayer
E is an employee of Employer X beginning in May
2015. X’s employee health insurance plan year is
September 1 to August 31. E’s required contribu-
tion for self-only coverage for May through August
is $150 per month ($1,800 for the full plan year). The
Exchange for E’s rating area projects E’s household
income for purposes of eligibility for advance credit
payments as $18,000. E’s actual household income
for the 2015 taxable year is $20,000.
(ii) Under paragraph (c)(3)(v)(B) of this section,
whether coverage under X’splan is affordable for E is
determined for the remainder of X’s plan year (May
through August). E’s required contribution for a full
plan year ($1,800) exceeds 9.5 percent of E’s house-
hold income (1,800/18,000 = 10 percent). Therefore,
the Exchange determines that X’s coverage is unaf-
fordable for May through August. Although E’s ac-
tual household income for 2015 is $20,000 (and E’s
required contribution of $1,800 does not exceed 9.5
percent of E’s household income), under paragraph
(c)(3)(v)(A)(3) of this section, X’s plan is unafford-
able for E for the part of the plan year May through
August 2015. Consequently, E is not eligible for min-
imum essential coverage under X’s plan for the period
May through August 2015.
Example 7.Affordability determined for part of
a taxable year (part-year period). (i) Taxpayer F is
an employee of Employer X. X’s employee health in-
surance plan year is September 1 to August 31. F’s
required contribution for self-only coverage for the
period September 2014 through August 2015 is $150
per month or $1,800 for the plan year. F does not en-
roll in X’s plan during X’s open season but enrolls in a
qualified health plan for September through Decem-
ber 2014. F does not request advance credit payments
and does not ask the Exchange for his rating area to
determine whether X’s coverage is affordable for F.
F’s household income in 2014 is $18,000.
(ii) Because F is a calendar year taxpayer and Em-
ployer X’s plan is not a calendar year plan, F must
determine the affordability of X’s coverage for the
part-year period in 2014 (September-December) un-
der paragraph (c)(3)(v)(B) of this section. F deter-
mines the affordability of X’s plan for the Septem-
ber through December 2014 period by comparing the
annual premiums ($1,800) to F’s 2014 household in-
come. F’s required contribution of $1,800 is 10 per-
cent of F’s 2014 household income. Because F’s re-
quired contribution exceeds 9.5 percent of F’s 2014
household income, X’s plan is not affordable for F
for the part-year period September through Decem-
ber 2014 and F is not eligible for minimum essential
coverage under X’s plan for that period.
(iii) F enrolls in Exchange coverage for 2015 and
does not ask the Exchange toapprove advance credit
payments or determine whether X’s coverage is af-
fordable. F’s 2015 household income is $20,000.
(iv) F must determine if X’s plan is affordable
for the part-year period January 2015 through Au-
gust 2015. F’s annual required contribution ($1,800)
is 9 percent of F’s 2015 household income. Because
F’s required contribution does not exceed 9.5 percent
of F’s 2015 household income, X’s plan is affordable
for F for the part-year period January through August
2015 and F is eligible for minimum essential cover-
age for that period.
Example 8.Coverage unaffordable at year end.
TaxpayerGisemployedbyEmployerX.InNovem-
ber 2014, the Exchange for G’s rating area determines
that G is eligible for affordable employer-sponsored
coverage for 2015. G nonetheless enrolls in a quali-
fied health plan for 2015 but does not receive advance
credit payments. G’s 2015 household income is less
than expected and G’s required contribution for em-
ployer-sponsored coverage for 2015 exceeds 9.5 per-
cent of G’s actual 2015 household income. Under
paragraph (c)(3)(v)(A)(1)ofthissection,Gisnoteli-
gible for minimum essential coverage under X’s plan
for 2015.
(vi)Minimum value. An eligible em-
ployer-sponsored plan provides minimum
value only if the plan’s share of the total
allowed costs of benefits provided to the
employee under the plan (as determined
under guidance issued by the Secretary of
Health and Human Services under section
1302(d)(2) of the Affordable Care Act
(42 U.S.C. 18022(d)(2))) is at least 60
percent.
(vii)Enrollment in eligible employer-
sponsored plan—(A)In general. Except
as provided in paragraph (c)(3)(vii)(B) of
this section, the requirements of afford-
ability and minimum value do not apply
for months that an individual is enrolled in
an eligible employer-sponsored plan.
(B)Automatic enrollment.Anem-
ployee or related individual is treated as
not enrolled in an eligible employer-spon-
sored plan for a month in a plan year or
other period for which the employee or re-
lated individual is automatically enrolled
if the employee or related individual ter-
minates the coverage before the later of
the first day of the second full calendar
month of that plan year or other period or
the last day of any permissible opt-out pe-
riod provided by the employer-sponsored
plan or in regulations to be issued by the
Department of Labor, for that plan year or
other period.
(C)Examples. The following examples
illustrate the provisions of this paragraph
(c)(3)(vii):
Example 1. Taxpayer H is employed by Employer
X in 2014. H’s required contribution for self-only
employer coverage exceeds 9.5 percent of H’s 2014
household income. H enrolls in X’s calendar year
plan for 2014. Under paragraph (c)(3)(vii)(A) of this
section, H is eligible for minimum essential cover-
age for 2014 because H is enrolled in an eligible em-
ployer-sponsored plan for 2014.
2012–24 I.R.B.1000June 11, 2012

Example 2. The facts are the same as inExample
1, except that H terminates plan coverage on June 30,
2014. Under paragraph (c)(3)(vii)(A) of this section,
H is eligible for minimum essential coverage under
X’s plan for January through June 2014 but is not
eligible for minimum essential coverage under X’s
plan for July through December 2014.
Example 3. ThefactsarethesameasinExam-
ple 1, except that Employer X automatically enrolls
H in the plan for calendar year 2015. H terminates
the coverage on January 20, 2015. Under paragraph
(c)(3)(vii)(B) of this section, H is not eligible for min-
imum essential coverage under X’s plan for January
2015.
(4)Related individual not claimed as
a personal exemption deduction.Anin-
dividual who may enroll in minimum es-
sential coverage because of a relationship
to another person eligible for the cover-
age, but for whom the other eligible person
does not claim a personal exemption de-
duction under section 151, is treated as el-
igible for minimum essential coverage un-
der the coverage only for months that the
related individual is enrolled in the cover-
age.
§1.36B–3 Computing the premium as-
sistance credit amount.
(a)In general. A taxpayer’s premium
assistance credit amount for a taxable
year is the sum of the premium assistance
amounts determined under paragraph (d)
of this section for all coverage months for
individuals in the taxpayer’s family.
(b)Definitions. For purposes of this
section—
(1) The cost of a qualified health plan is
the premium the plan charges; and
(2) The termcoverage familyrefers to
members of the taxpayer’s family who en-
roll in a qualified health plan and are not
eligible for minimum essential coverage
(other than coverage in the individual mar-
ket).
(c)Coverage month—(1)In general.A
month is a coverage month for an individ-
ual if—
(i) As of the first day of the month, the
individual is enrolled in a qualified health
plan through an Exchange;
(ii) The taxpayer pays the taxpayer’s
share of the premium for the individual’s
coverage under the plan for the month by
the unextended due date for filing the tax-
payer’s income tax return for that taxable
year, or the full premium for the month is
paid by advance credit payments; and
(iii) The individual is not eligible for
the full calendar month for minimum
essential coverage (within the meaning
of §1.36B–2(c)) other than coverage de-
scribed in section 5000A(f)(1)(C) (relating
to coverage in the individual market).
(2)Premiums paid for a taxpayer.Pre-
miums another person pays for coverage of
the taxpayer, taxpayer’s spouse, or depen-
dent are treated as paid by the taxpayer.
(3)Examples. The following examples
illustrate the provisions of this paragraph
(c):
Example 1. (i) Taxpayer M is single with no de-
pendents. In December 2013, M enrolls in a quali-
fied health plan for 2014 and the Exchange approves
advance credit payments. M pays M’s share of the
premiums. On May 15, 2014, M enlists in the U.S.
Army and is eligible immediately for government-
sponsored minimum essential coverage.
(ii) Under paragraph (c)(1) of this section, Jan-
uary through May 2014 are coverage months for
M. June through December 2014 are not coverage
months because M is eligible for minimum essential
coverage for those months. Thus, under paragraph
(a) of this section, M’s premium assistance credit
amount for 2014 is the sum of the premium assistance
amounts for the months January through May.
Example 2. (i) Taxpayer N has one dependent,
S. S is eligible for government-sponsored minimum
essential coverage. N is not eligible for minimum es-
sential coverage. N enrolls in a qualified health plan
for 2014 and the Exchange approves advance credit
payments. On August 1, 2014, S loses eligibility for
minimum essential coverage. N terminates enroll-
ment in the qualified health plan that covers only N
and enrolls in a qualified health plan that covers N
and S for August through December 2014. N pays all
premiums not covered by advance credit payments.
(ii) Under paragraph (c)(1) of this section, Jan-
uary through December of 2014 are coverage months
for N and August through December are coverage
months for N and S. N’s premium assistance credit
amount for 2014 is the sum of the premium assistance
amounts for these coverage months.
Example 3. (i) O and P are the divorced parents
of T. Under the divorce agreement between O and P,
T resides with P and P claims T as a dependent. How-
ever, O must pay premiums for health insurance for
T. P enrolls T in a qualified health plan for 2014. O
pays the portion of T’s qualified health plan premi-
ums not covered by advance credit payments.
(ii) Because P claims T as a dependent, P (and not
O) may claim a premium tax credit for coverage for
T. See §1.36B–2(a). Under paragraph (c)(2) of this
section, the premiums that O pays for coverage for
T are treated as paid by P. Thus, the months when T
is covered by a qualified health plan and not eligible
for other minimum essential coverage are coverage
months under paragraph (c)(1) of this section in com-
puting P’s premium tax credit under paragraph (a) of
this section.
Example 4. Q, an American Indian, enrolls in a
qualified health plan for 2014. Q’s tribe pays the por-
tion of Q’s qualified health plan premiums not cov-
ered by advance credit payments. Under paragraph
(c)(2) of this section, the premiums that Q’s tribe pays
for Q are treated as paid by Q. Thus, the months when
Q is covered by a qualified health plan and not eligi-
ble for other minimum essential coverage are cover-
age months under paragraph (c)(1) of this section in
computing Q’s premium taxcredit under paragraph
(a)ofthissection.
(d)Premium assistance amount.The
premium assistance amount for a coverage
month is the lesser of—
(1) The premiums for the month for one
or more qualified health plans in which
a taxpayer or a member of the taxpayer’s
family enrolls; or
(2) The excess of the adjusted monthly
premium for the applicable benchmark
plan over 1/12 of the product of a tax-
payer’s household income and the appli-
cable percentage for the taxable year.
(e)Adjusted monthly premium.The
adjusted monthly premium is the premium
an issuer would charge for the applicable
benchmark plan to cover all members of
the taxpayer’s coverage family, adjusted
only for the age of each member of the
coverage family as allowed under section
2701 of the Public Health Service Act
(42 U.S.C. 300gg). The adjusted monthly
premium is determined without regard to
any premium discount or rebate under the
wellness discount demonstration project
under section 2705(d) of the Public Health
Service Act (42 U.S.C. 300gg–4(d)) and
may not include any adjustments for
tobacco use.
(f)Applicable benchmark plan—(1)
In general. Except as otherwise pro-
vided in this paragraph (f), the applica-
ble benchmark plan for each coverage
month is the second lowest cost silver plan
(as described in section 1302(d)(1)(B)
of the Affordable Care Act (42 U.S.C.
18022(d)(1)(B))) offered through the Ex-
change for the rating area where the tax-
payer resides for—
(i) Self-only coverage for a taxpayer—
(A) Who computes tax under section
1(c) (unmarried individuals other than sur-
viving spouses and heads of household)
and is not allowed a deduction under sec-
tion 151 for a dependent for the taxable
year;
(B) Who purchases only self-only cov-
erage for one individual; or
(C) Whose coverage family includes
only one individual; and
(ii) Family coverage for all other tax-
payers.
(2)Family coverage. The applicable
benchmark plan for family coverage is the
second lowest cost silver plan that applies
to the members of the taxpayer’s coverage
June 11, 201210012012–24 I.R.B.

family (such as a plan covering two adults
if the members of a taxpayer’s coverage
family are two adults).
(3)Silver level plan not covering a tax-
payer’s family. If one or more silver level
plans for family coverage offered through
an Exchange do not cover all members of
a taxpayer’s coverage family under one
policy (for example, because of the rela-
tionships within the family), the premium
for the applicable benchmark plan deter-
mined under paragraphs (f)(1) and (f)(2)
of this section may be the premium for a
single policy or for more than one policy,
whichever is the second lowest cost silver
option.
(4)Family members residing at differ-
ent locations.[Reserved]
(5)Plan closed to enrollment. A qual-
ified health plan that is not open to en-
rollment by a taxpayer or family member
at the time the taxpayer or family mem-
ber enrolls in a qualified health plan is
disregarded in determining the applicable
benchmark plan.
(6)Benchmark plan terminates or
closes to enrollment during the year.A
qualified health plan that is the applicable
benchmark plan under this paragraph (f)
for a taxpayer does not cease to be the
applicable benchmark plan solely because
the plan or a lower cost plan terminates
or closes to enrollment during the taxable
year.
(7)Examples. The following examples
illustrate the rules of this paragraph (f).
Unless otherwise stated, in each example
the plans are open to enrollment to a tax-
payerorfamilymemberatthetimeofen-
rollment and are offered through the Ex-
change for the rating area where the tax-
payer resides:
Example 1.Single taxpayer enrolls. Taxpayer M
is single, has no dependents and enrolls in a qualified
health plan. Under paragraph (f)(1)(i) of this section,
M’s applicable benchmark plan is the second lowest
cost silver plan providing self-only coverage for M.
Example 2.Family enrolls. The facts are the same
as inExample 1, except that M, her spouse N, and
their dependent enroll in a qualified health plan. Un-
der paragraphs (f)(1)(ii) and (f)(2) of this section, M’s
and N’s applicable benchmark plan is the second low-
est cost silver plan covering M, N, and their depen-
dent.
Example 3.Single taxpayer enrolls with nonde-
pendent. Taxpayer O is single and resides with his
daughter, K, but may not claim K as a dependent. O
purchases family coverage for himself and K. Under
paragraphs (f)(1)(i)(A) and (f)(1)(i)(C) of this sec-
tion, O’s applicable benchmark plan is the second
lowest cost silver plan providing self-only coverage
for O. However, K may qualify for a premium tax
credit if K is otherwise eligible. See paragraph (h) of
this section.
Example 4.Single taxpayer enrolls with depen-
dent and nondependent. The facts are the same as in
Example 3, except that O also resides with his teenage
son, L, and claims L as a dependent. O purchases
family coverage for himself, K, and L. Under para-
graphs (f)(1)(ii) and (f)(2) of this section, O’s appli-
cable benchmark plan is the second lowest cost silver
plan covering O and L.
Example 5.Children only enroll. The facts are
thesameasinExample 4, except that O enrolls
only K and L in the coverage. Under paragraph
(f)(1)(i)(C) of this section, O’s applicable benchmark
plan is the second lowest cost silver plan providing
self-only coverage for L.
Example 6.Applicable benchmark plan unrelated
to coverage purchased. Taxpayers P and Q, who are
married, reside with Q’s two teenage daughters, M
and N, whom they claim as dependents. P and Q pur-
chase self-only coveragefor P and family coverage
for Q, M, and N. Under paragraphs (f)(1)(ii) and (f)(2)
of this section, P’s and Q’s applicable benchmark plan
is the second lowest cost silver plan covering P, Q, M,
and N.
Example 7.Change in coverage family. Taxpayer
R is single and has no dependents when she enrolls
in a qualified health plan for 2014. On August 1,
2014, R has a child, O, whom she claims as a de-
pendent for 2014. R enrolls in a qualified health plan
covering R and O effective August 1. Under para-
graph (f)(1)(i) of this section, R’s applicable bench-
mark plan for January through July is the second low-
est cost silver plan providing self-only coverage for
R. Under paragraphs (f)(1)(ii) and (f)(2) of this sec-
tion, R’s applicable benchmark plan for the months
August through December is the second lowest cost
silver plan covering R and O.
Example 8.Minimum essential coverage for
some coverage months. Taxpayer S claims his daugh-
ter, P, as a dependent. S and P enroll in a qualified
health plan for 2014. S, but not P, is eligible for
government-sponsored minimum essential cover-
age for September to December 2014. Thus, under
paragraph (c)(1)(iii) of this section, January through
December are coverage months for P and January
through August are coverage months for S. Because,
under paragraphs (d) and (f)(1) of this section, the
premium assistance amount for a coverage month is
computed based on the applicable benchmark plan
for that coverage month, S’s applicable benchmark
plan for January through August is the second lowest
cost silver plan under paragraphs (f)(1)(ii) and (f)(2)
of this section covering S and P. Under paragraph
(f)(1)(i)(C) of this section, S’s applicable benchmark
plan for September through December is the second
lowest cost silver plan providing self-only coverage
for P.
Example 9.Family member eligible for minimum
essential coverage for the taxable year. The facts are
the same as in
Example 8, except that S is not eli-
gible for government-sponsored minimum essential
coverage for any months and P is eligible for gov-
ernment-sponsored minimum essential coverage for
the entire year. Under paragraph (f)(1)(i)(C) of this
section, S’s applicable benchmark plan is the second
lowest cost silver plan providing self-only coverage
for S.
Example 10.Qualified health plans not covering
certain families. (i) Taxpayers V and W are married
and live with W’s mother, K, whom they claim as
a dependent. The Exchange for their rating area of-
fers self-only and family coverage at the silver level
through Issuers A, B, and C, who each offer only one
silver level plan. Issuers A and B respectively charge
V and W a monthly premium of $900 and $700 for
family coverage, but do not allow individuals to en-
roll a parent in family coverage. Issuers A and B re-
spectively charge $600 and $400 for self-only cover-
age for K. Issuer C offers a qualified health plan that
provides family coverage for V, W, and K under one
policy for a $1,200 monthly premium. Thus, the Ex-
change offers the following silver level options for
covering V’s and W’s coverage family:
Issuer A: $1,500 for premiums for two policies ($900 for V and W, $600 for K)
Issuer B: $1,100 for premiums for two policies ($700 for V and W, $400 for K)
Issuer C: $1,200 for premiums for one policy ($1,200 for V, W, and K)
(ii) Because some silver level qualified health
plans for family coverage offered on the Exchange do
not cover all members of their coverage family under
one policy, under paragraph (f)(3) of this section,
the premium for V’s and W’s applicable benchmark
plan may be the premium for a single policy or for
more than one policy. The coverage offered by Issuer
C is the second lowest cost silver level option for
covering V’s and W’s family. The premium for their
applicable benchmark plan is the premium for the
Issuer C coverage.
Example 11. (i) The facts are the same as inEx-
ample 10, except that Issuer B covers V, W, and K
under one policy for a premium of $1,100, and Issuer
C does not allow individuals to enroll parents in fam-
ily coverage. Issuer C charges a monthly premium of
$700 for family coverage for V and W and a monthly
premium of $500 for self-only coverage for K. Thus,
the Exchange offers the following silver level options
for covering V’s and W’s coverage family:
2012–24 I.R.B.1002June 11, 2012

Issuer A: $1,500 for premiums for two policies ($900 for V and W, $600 for K)
Issuer B: $1,100 for premiums for one policy ($1,100 for V, W, and K)
Issuer C: $1,200 for premiums for two policies ($700 for V and W, $500 for K)
(ii) The cover
age offered by Issuer C is the sec-
ond lowest cost silver level option for covering V’s
and W’s family. The premium for their applicable
benchmark pla
n is the premiums for the two policies
available through Issuer C.
Example 12.Family members residing in differ-
ent location
s.[Reserved]
Example 13.Qualified health plan closed to en-
rollment. Taxpayer Y has two dependents, R and S.
Y, R, and S enr
oll in a qualified health plan. The Ex-
change for the rating area where the family resides
offers silver level plans J, K, L, and M, which are the
first, seco
nd, third, and fourth lowest cost silver plans
covering Y’s family. When Y’s family enrolls, Plan
J is closed to enrollment. Under paragraph (f)(5) of
this sectio
n, Plan J is disregarded in determining Y’s
applicable benchmark plan, and Plan L is Y’s appli-
cable benchmark plan.
Example 14.
Benchmark plan closes to new en-
rollees during the year. (i) Taxpayers X, Y, and Z
each have coverage families consisting of two adults.
In the rati
ng area where X, Y, and Z reside, Plan 2
is the second lowest cost silver plan and Plan 3 is the
third lowest cost silver plan covering the two adults in
each cover
age family offered through the Exchange.
The X and Y families each enroll in a qualified health
plan that is not the applicable benchmark plan (Plan
4) in Nove
mber during the annual open enrollment
period. Plan 2 closes to new enrollees the following
June. Thus, on
July 1, Plan 3 is the second lowest
cost silver plan available to new enrollees through the
Exchange. The Z family enrolls in a qualified health
plan in July.
(ii) Under paragraphs (f)(1), (f)(2), and (f)(6) of
this section, the applicable benchmark plan is Plan
2forXandYfo
r all coverage months during the
year. The applicable benchmark plan for Z is Plan
3, because Plan 2 is not open to enrollment through
the Exchange
when the Z family enrolls.
Example 15.Benchmark plan terminates for all
enrollees during the year. The facts are the same
as inExampl
e14, except that Plan 2 terminates for
all enrollees on June 30. Under paragraphs (f)(1),
(f)(2), and (f)(6) of this section, Plan 2 is the appli-
cable bench
mark plan for X and Y for all coverage
months during the year, and Plan 3 is the applicable
benchmark plan for Z.
(g)Applicable percentage—(1)In gen-
eral. The applicable percentage multiplied
by a taxpayer’s household income deter-
mines the taxpayer’s required share of
premiums for the benchmark plan. This
required share is subtracted from the ad-
justed monthly premium for the applicable
benchmark plan when computing the pre-
mium assistance amount. The applicable
percentage is
computed by first deter-
mining the per
centage that the taxpayer’s
household inc
ome bears to the Federal
poverty line
for the taxpayer’s family size.
The resultin
g Federal poverty line per-
centage is th
en compared to the income
categories d
escribed in the table in para-
graph (g)(2
) of this section (or successor
tables). An
applicable percentage within
an income ca
tegory increases on a sliding
scale in a li
near manner and is rounded to
the neares
t one-hundredth of one percent.
The applic
able percentages in the table
may be adju
sted in published guidance,
see §601.6
01(d)(2) of this chapter, for tax-
able years
beginning after December 31,
2014, to r
eflect rates of premium growth
relative
to growth in income and, for tax-
able year
s beginning after December 31,
2018, to r
eflect rates of premium growth
relative
to growth in the consumer price
index.
(2)Appli
cable percentage table.
Household income percentage of Federal poverty lineInitial percentageFinal percentage
Less than 133%2.0%2.0%
At least 133% but less than 150%
3.0%4.0%
At least 150% but less than 200%
4.0%6.3%
At least 200% but less than 250%
6.3%
8.05%
At least 250% but less than 300%8.05%9.5%
At least 300% but less than 400%
9.5%9.5%
(3)Examples. The following examples
illustrate the rules of this paragraph (g):
Example 1. A’s household income is 275 per-
cent
of the Federal poverty line for A’s family size
for that taxable year. In the table in paragraph (g)(2)
of this section, the initial percentage for a taxpayer
wit
h household income of 250 to 300 percent of the
Federal poverty line is 8.05 and the final percentage
is 9.5. A’s Federal poverty line percentage of 275
percent is halfway between 250 percent and 300 per-
cent. Thus, rounded to the nearest one-hundredth of
one p
ercent, A’s applicable percentage is 8.78, which
is halfway between the initial percentage of 8.05 and
the final percentage of 9.5.
Exa
mple 2. (i) B’s household income is 210 per-
cent of the Federal poverty line for B’s family size. In
the table in paragraph (g)(2) of this section, the initial
per
centage for a taxpayer with household income of
200 to 250 percent of the Federal poverty line is 6.3
and the final percentage is 8.05. B’s applicable per-
centage is 6.65, computed as follows.
(ii)
Determine the excess of B’s Federal poverty
line percentage (210) over the initial household in-
come percentage in B’s range (200), which is 10. De-
ter
mine the difference between the initial household
income percentage in the taxpayer’s range (200) and
the ending household income percentage in the tax-
pay
er’s range (250), which is 50. Divide the first
amount by the second amount:
210 - 200= 10
250 - 200= 50
10/50
= .20.
(iii) Compute the difference between the initial
premium percentage (6.3) and the second premium
percentage (8.05) in the taxpayer’s range; 8.05 - 6.3
= 1.75.
(iv) Multiply the amount in the first calculation
(.20) by the amount in the second calculation (1.75)
and add the product (.35) to the initial premium per-
centage in B’s range (6.3), resulting in B’s applicable
percentage of 6.65:
June 11, 201210032012–24 I.R.B.

.20 X 1.75= .35
6.3 + .35= 6.65.
(h)Plan covering more than one fam-
ily—(1)In general. If a qualified health
plan covers more than one family under
a single policy, each applicable taxpayer
covered by the plan may claim a premium
tax credit, if otherwise allowable. Each
taxpayer computes the credit using that
taxpayer’s applicable percentage, house-
hold income, and the benchmark plan that
applies to the taxpayer under paragraph (f)
of this section. In determining whether the
amount computed under paragraph (d)(1)
of this section (the premiums for the qual-
ified health plan in which the taxpayer en-
rolls) is less than the amount computed un-
der paragraph (d)(2) of this section (the
benchmark plan premium minus the prod-
uct of household income and the applica-
ble percentage), the premiums paid are al-
located to each taxpayer in proportion to
the premiums for each taxpayer’s applica-
ble benchmark plan.
(2)Example. The following example
illustrates the rules of this paragraph (h):
Example. (i) Taxpayers A and B enroll in a single
pol
icy under a qualified health plan. B is A’s 25-year
old child who is not A’s dependent. B has no depen-
dents. The plan covers A, B, and A’s two additional
ch
ildren who are A’s dependents. The premium for
the plan in which A and B enroll is $15,000. The pre-
mium for the second lowest cost silver family plan
co
vering only A and A’s dependents is $12,000 and
the premium for the second lowest cost silver plan
providing self-only coverage to B is $6,000. A and
B
are applicable taxpayers and otherwise eligible to
claim the premium tax credit.
(ii) Under paragraph (h)(1) of this section, both A
a
nd B may claim premium tax credits. A computes
her credit using her household income, a family size
of three, and a benchmark plan premium of $12,000.
B
computes his credit using his household income, a
family size of one, and a benchmark plan premium of
$6,000.
(
iii) In determining whether the amount in para-
graph (d)(1) of this section (the premiums for the
qualified health plan A and B purchase) is less
than the amount in paragraph (d)(2) of this section
(the benchmark plan premium minus the product
of household income and the applicable percent-
age), the $15,000 premiums paid are allocated to
A and B in proportion to the premiums for their
applicable benchmark plans. Thus, the portion of
the premium allocated to A is $10,000 ($15,000 x
$12,000/$18,000) and the portion allocated to B is
$5,000 ($15,000 x $6,000/$18,000).
(i) [Reserved]
(j)Additional benefits—(1)In general.
If a qualified health plan offers benefits in
addition to the essential health benefits a
qualified health plan must provide under
section 1302 of the Affordable Care Act
(42 U.S.C. 18022), or a State requires a
qualified health plan to cover benefits in
addition to these essential health benefits,
the portion of the premium for the plan
properly allocable tothe additional bene-
fits is excluded from the monthly premi-
ums under paragraph (d)(1) or (d)(2) of
this section.
(2)Method of allocation. The por-
tion of the premium properly allocable
to additional benefits is determined un-
der guidance issued by the Secretary of
Health and Human Services. See section
36B(b)(3)(D).
(3)Examples. The following examples
illustrate the rules of this paragraph (j):
Example 1. (i) Taxpayer B enrolls in a qualified
heal
th plan that provides benefits in addition to the
essential health benefits the plan must provide (addi-
tional benefits). The monthly premium for the plan in
whic
h B enrolls is $385 (Amount 1), of which $35 is
allocable to the additional benefits. The premium for
B’s applicable benchmark plan is $440, of which $40
is a
llocable to the additional benefits. The excess of
the premium for B’s applicable benchmark plan over
B’s $60 contribution amount (which is the product of
B’s
household income and the applicable percentage)
is $380 per month (Amount 2).
(ii) Under this paragraph (j), the premium for the
qua
lified health plan in which B enrolls and the ap-
plicable benchmark premium each is reduced by the
portion of the premium that is allocable to the addi-
ti
onal benefits provided under that plan. Therefore,
Amount 1 is reduced to $350 ($385 - $35), the pre-
mium for B’s applicable benchmark plan is reduced to
$4
00 ($440 - $40), and Amount 2 is reduced to $340
($400 less $60). B’s premium assistance amount for
a coverage month is $340, the lesser of Amount 1 and
A
mount 2.
Example 2. (i)ThefactsarethesameasinEx-
ample 1, except that B’s applicable benchmark plan
p
rovides no benefits in addition to the essential health
benefits required to be provided by the plan. Thus,
under paragraph (j) of this section, only the amount
o
f the monthly premium for the plan in which B en-
rolls is reduced by the portion of the premium that
is allocable to the additional benefits provided un-
der that plan, and Amount 1 is $350 ($385 - $35).
The premium for B’s applicable benchmark plan is
not reduced under this paragraph (j), and Amount 2
is $380 ($440 - $60). B’s premium assistance amount
for a coverage month is $350, the lesser of these two
amounts.
(k)Pediatric dental coverage—(1)In
general. For purposes of determining the
amount of the monthly premium a tax-
payer pays for coverage under paragraph
(d)(1) of this section, if an individual en-
rolls in both a qualified health plan and a
plan described in section 1311(d)(2)(B)(ii)
of the Affordable Care Act (42 U.S.C.
13031(d)(2)(B)(ii)) (a stand-alone dental
plan), the portion of the premium for the
stand-alone dental plan that is properly
allocable to pediatric dental benefits that
are essential benefits required to be pro-
vided by a qualified health plan is treated
as a premium payable for the individual’s
qualified health plan.
(2)Method of allocation. The portion
of the premium for a stand-alone dental
plan properly allocableto pediatric dental
benefits is determined under guidance is-
sued by the Secretary of Health and Hu-
man Services.
(3)Example. The following example
illustrates the rules of this paragraph (k):
Example. (i) Taxpayer C and C’s dependent, R,
enro
ll in a qualified health plan. The premium for the
plan in which C and R enroll is $7,200 ($600/month)
(Amount 1). The plan does not provide dental cover-
age.
C also enrolls in a stand-alone dental plan cov-
ering C and R. The portion of the premium for the
dental plan allocable to pediatric dental benefits that
are
essential health benefitsis $240 ($20 per month).
The excess of the premium for C’s applicable bench-
mark plan over C’s contribution amount (the product
of C
’s household income and the applicable percent-
age) is $7,260 ($605/month) (Amount 2).
(ii) Under this paragraph (k), the amount C pays
fo
r premiums (Amount 1) for purposes of computing
the premium assistance amount is increased by the
portion of the premium for the stand-alone dental plan
al
locable to pediatric dental benefits that are essential
health benefits. Thus, the amount of the premiums
for the plan in which C enrolls is treated as $620 for
pu
rposes of computing the amount of the premium
tax credit. C’s premium assistance amount for each
coverage month is $605 (Amount 2), the lesser of
A
mount 1 (increased by the premiums allocable to
pediatric dental benefits) and Amount 2.
(l)Families including individuals not
lawfully present—(1)In general. If one or
more individuals for whom a taxpayer is
allowed a deduction under section 151 are
not lawfully present (within the meaning
of §1.36B–1(g)), the percentage a tax-
payer’s household income bears to the
Federal poverty line for the taxpayer’s
family size for purposes of determining
the applicable percentage under paragraph
(g) of this section is determined by ex-
cluding individuals who are not lawfully
present from family size and by determin-
ing household income in accordance with
paragraph (l)(2) of this section.
2012–24 I.R.B.1004June 11, 2012

(2)Revised household income com-
putation—(i)Statutory method. For pur-
poses of paragraph (l)(1) of this section,
household income is equal to the product
of the taxpayer’s household income (de-
termined without regard to this paragraph
(l)(2)) and a fraction—
(A) The numerator of which is the Fed-
eral poverty line for the taxpayer’s family
size determined by excluding individuals
who are not lawfully present; and
(B) The denominator of which is the
Federal poverty line for the taxpayer’s
family size determined by including indi-
viduals who are not lawfully present.
(ii)Comparable method.TheCom-
missioner may describe a comparable
method in additional published guidance,
see §601.601(d)(2) of this chapter.
§1.36B–4 Reconciling the premium tax
credit with advance credit payments.
(a)Reconciliation—(1)Coordination
of premium tax credit with advance credit
payments—(i)In general. A taxpayer
must reconcile the amount of credit al-
lowed under section 36B with advance
credit payments on the taxpayer’s income
tax return for a taxable year. A taxpayer
whose premium tax credit for the taxable
year exceeds the taxpayer’s advance credit
payments may receive the excess as an
income tax refund. A taxpayer whose ad-
vance credit payments for the taxable year
exceed the taxpayer’s premium tax credit
owes the excess as an additional income
tax liability.
(ii)Responsibility for advance credit
payments. A taxpayer must reconcile all
advance credit payments for coverage of
any member of the taxpayer’s family. If
advance credit payments are made for cov-
erage of an individual for whom no tax-
payer claims a personal exemption deduc-
tion, the taxpayer who attests to the Ex-
change to the intention to claim a personal
exemption deduction for the individual as
part of the determination that the taxpayer
is eligible for advance credit payments for
coverage of the individual must reconcile
the advance credit payments.
(iii)Advance credit payment for a
month in which an issuer does not provide
coverage. For purposes of reconciliation,
a taxpayer does not have an advance credit
payment for a month if the issuer of the
qualified health plan in which the taxpayer
or a family member is enrolled does not
provide coverage for that month.
(2)Credit computation.Thepremium
assistance credit amount is computed on
the taxpayer’s return using the taxpayer’s
household income and family size for the
taxable year. Thus, the taxpayer’s contri-
bution amount (household income for the
taxable year times the applicable percent-
age) is determined using the taxpayer’s
household income and family size at the
end of the taxable year. The applicable
benchmark plan for each coverage month
is determined under §1.36B–3(f).
(3)Limitation on additional tax—(i)In
general. The additional tax imposed under
paragraph (a)(1) of this section on a tax-
payer whose household income is less than
400 percent of the Federal poverty line is
limited to the amounts provided in the ta-
ble in paragraph (a)(3)(ii) of this section
(or successor tables). For taxable years be-
ginning after December 31, 2014, the lim-
itation amounts may be adjusted in pub-
lished guidance, see §601.601(d)(2) of this
chapter, to reflect changes in the consumer
price index.
(ii)Additional tax limitation table.
Household income percentage
of Federal poverty line
Limitation amount for
taxpayers whose tax is
determined under section 1(c)
Limitation amount for
all other taxpayers
Less than 200%
$ 300$ 600
At least 200% but less than 300%
$ 750$1,500
At least 300% but less than 400%
$1,250$2,500
(4
)Examples. The following examples
i
llustrate the rules of this paragraph (a).
I
n each example the taxpayer enrolls in a
h
igher cost qualified health plan than the
a
pplicable benchmark plan:
Example 1.Household income increases.(i)Tax-
payer A is single and has no dependents. The Ex-
c
hange for A’s rating area projects A’s 2014 house-
hold income to be $27,925 (250 percent of the Federal
poverty line for a family of one, applicable percent-
age 8.05). A enrolls in a qualified health plan. The
annual premium for the applicable benchmark plan
is $5,200. A’s advance credit payments are $2,952,
computed as follows: benchmark plan premium of
$5,200 less contribution amount of $2,248 (projected
household income of $27,925 x .0805) = $2,952.
(ii) A’s household income for 2014 is $33,622,
which is 301 percent of the Federal poverty line for
a family of one (applicable percentage 9.5). Conse-
quently, A’s premium tax credit for 2014 is $2,006
(benchmark plan premium of $5,200 less contribu-
tion amount of $3,194 (household income of $33,622
x.
095)). Because A’s advance credit payments for
2014 are $2,952 and A’s 2014 credit is $2,006, A has
excess advance payments of $946. Under paragraph
(
a)(1) of this section, A’s tax liability for 2014 is
increased by $946. Because A’s household income
is between 300 percent and 400 percent of the Fed-
e
ral poverty line, if A’s excess advance payments
exceeded $1,250, under the limitation of paragraph
(a)(3) of this section, A’s additional tax liability
would be limited to that amount.
Example 2.Household income increases, repay-
ment limitation applies. The facts are the same as
inExample 1, except that A’s household income for
2014 is $43,560 (390 percent of the Federal poverty
line for a family of one, applicable percentage 9.5).
Consequently, A’s premium tax credit for 2014 is
$1,062 ($5,200 benchmarkplanpremiumlesscon-
tribution amount of $4,138 (household income of
$43,560 x .095)). A’s advance credit payments for
2014 are $2,952; therefore, A has excess advance
payments of $1,890. Because A’s household income
is between 300 percent and 400 percent of the Fed-
eral poverty line, A’s additional tax liability for the
ta
xable year is $1,250 under the repayment limitation
of paragraph (a)(3) of this section.
Example 3.Household income decreases.The
f
acts are the same as inExample 1, except that A’s
actual household income for 2014 is $22,340 (200
percent of the Federal poverty line for a family
o
f one, applicable percentage 6.3). Consequently,
A’s premium tax credit for 2014 is $3,793 ($5,200
benchmark plan premium less contribution amount
o
f $1,407 (household income of $22,340 x .063)).
Because A’s advance credit payments for 2014 are
$2,952, A is allowed an additional credit of $841
($3,793 less $2,952).
Example 4.Family size decreases. (i) Taxpay-
ers B and C are married and have two children, K
and L (ages 17 and 20), whom they claim as their de-
pendents in 2013. The Exchange for their rating area
projects their 2014 household income to be $63,388
(275 percent of the Federal poverty line for a family
of four, applicable percentage 8.78). B and C enroll
in a qualified health plan for 2014 that covers the four
family members. The annual premium for the appli-
cable benchmark plan is $14,100. B’s and C’s ad-
June 11, 201210052012–24 I.R.B.

vance credit payments for 2014 are $8,535, computed
as follows: benchmark plan premium of $14,100 less
contribution amount of $5,565 (projected household
income of $63,388 x .0878) = $8,535.
(ii) In 2014, B and C do not claim L as their de-
pendent. Consequently, B’s and C’s family size for
2014 is three, their household income of $63,388 is
332 percent of the Federal poverty line for a family of
three (applicable percentage 9.5), and the annual pre-
mium for their applicable benchmark plan is $12,000.
Their premium tax credit for 2014 is $5,978 ($12,000
benchmark plan premium less $6,022 contribution
amount (household income of $63,388 x .095)). Be-
cause B’s and C’s advance credit payments for 2014
are $8,535 and their 2014 credit is $5,978, B and C
have excess advance payments of $2,557. B’s and
C’s additional tax liability for 2014 under paragraph
(a)(1) of this section, however, is limited to $2,500
under paragraph (a)(3) of this section.
Example 5.Repayment limitation does not ap-
ply. (i) Taxpayer D is single and has no dependents.
The Exchange for D’s rating area approves advance
credit payments for D based on 2014 household in-
come of $39,095 (350 percent of the Federal poverty
line for a family of one, applicable percentage 9.5).
D enrolls in a qualified health plan. The annual pre-
mium for the applicable benchmark plan is $5,200.
D’s advance credit payments are $1,486, computed
as follows: benchmark plan premium of $5,200 less
contribution amount of $3,714 (projected household
income of $39,095 x .095) = $1,486.
(ii) D’s actual household income for 2014 is
$44,903, which is 402 percent of the Federal poverty
line for a family of one. D is not an applicable
taxpayer and may not claim a premium tax credit.
Additionally, the repayment limitation of paragraph
(a)(3) of this section does not apply. Consequently,
D has excess advance payments of $1,486 (the total
amount of the advance credit payments in 2014). Un-
der paragraph (a)(1) of this section, D’s tax liability
for 2014 is increased by $1,486.
Example 6.Coverage for less than a full taxable
year. (i) Taxpayer F is single and has no dependents.
In November 2013, the Exchange for F’s rating area
projects F’s 2014 household income to be $27,925
(250 percent of the Federal poverty line for a fam-
ily of one, applicable percentage 8.05). F enrolls in
a qualified health plan. The annual premium for the
applicable benchmark plan is $5,200. F’s monthly ad-
vance credit payment is $246, computed as follows:
benchmark plan premium of $5,200 less contribution
amount of $2,248 (projected household income of
$27,925 x .0805) = $2,952; $2,952/12 = $246.
(ii) F begins a new job in August 2014 and is
eligible for employer-sponsored minimum essential
coverage for the period September through Decem-
ber 2014. F discontinues her Exchange coverage ef-
fective November 1, 2014. F’s household income for
2014 is $28,707 (257 percent of the Federal poverty
line for a family size of one, applicable percentage
8.25).
(iii) Under §1.36B–3(a), F’s premium assistance
credit amount is the sum of the premium assis-
tance amounts for the coverage months. Under
§1.36B–3(c)(1)(iii), a month in which an individual
is eligible for minimum essential coverage other than
coverage in the individual market is not a coverage
month. Because F is eligible for employer-sponsored
minimum essential coverage as of September 1, only
the months January through August of 2014 are
coverage months.
(iv) If F had 12 coverage months in 2014, F’s
premium tax credit would be $2,832 (benchmark
plan premium of $5,200 less contribution amount
of $2,368 (household income of $28,707 x .0825)).
Because F has only eight coverage months in 2014,
F’s credit is $1,888 ($2,832/12 x 8). Because F does
not discontinue her Exchange coverage until Novem-
ber 1, 2014, F’s advance credit payments for 2014
are $2,460 ($246 x 10). Consequently, F has excess
advance payments of $572 ($2,460 less $1,888) and
F’s tax liability for 2014 is increased by $572 under
paragraph (a)(1) of this section.
Example 7.Changes in coverage months and
applicable benchmark plan. (i) Taxpayer E claims
one dependent, F. E is eligible for government-spon-
sored minimum essential coverage. E enrolls F in
a qualified health plan for 2014. The Exchange for
E’s rating area projects E’s 2014 household income
to be $30,260 (200 percent of the Federal poverty
line for a family of two, applicable percentage 6.3).
The annual premium for E’s applicable benchmark
plan is $5,200. E’s monthly advance credit payment
is $275, computed as follows: benchmark plan pre-
mium of $5,200 less contribution amount of $1,906
(projected household income of $30,260 x .063) =
$3,294; $3,294/12 = $275.
(ii) On August 1, 2014, E loses her eligibility for
government-sponsored minimum essential coverage.
E enrolls in the qualified health plan that covers F
for August through December 2014. The annual pre-
mium for the applicable benchmark plan is $10,000.
The Exchange computes E’s monthly advance credit
payments for the period September through Decem-
ber to be $675 as follows: benchmark plan premium
of $10,000 less contribution amount of $1,906 (pro-
jected household income of $30,260 x .063) = $8,094;
$8,094/12 = $675. E’s household income for 2014 is
$28,747 (190 percent of the Federal poverty line, ap-
plicable percentage 5.84).
(iii) Under §1.36B–3(c)(1), January through
July of 2014 are coverage months for F and August
through December are coverage months for E and
F. Under paragraph (a)(2) of this section, E must
compute her premium tax credit using the premium
for the applicable benchmark plan for each coverage
month. E’s premium assistance credit amount for
2014 is the sum of the premium assistance amounts
for all coverage months. E reconciles her premium
tax credit with advance credit payments as follows:
Advance credit payments (Jan. to July)
$1,925($275 x 7)
Advance credit payments (Aug. to Dec.)
3
,375
($675 x 5)
Total advance credit payments
5,300
Benchmark plan premium (Jan. to July)3,033
(($5,200/12) x 7)
Benchmark plan premium (Aug. to Dec.)4
,167
(($10,000/12) x 5)
Total benchmark plan premium7,200
Contribution amount (taxable year household income X
applicable percentage)
1,679
($28,747 x .0584)
Credit (total benchmark plan premium less contribution
amou
nt)
5,521
(iv)
E’s advance credit payments for 2014 are
$5,300. E’s premium tax credit is $5,521. Thus, E
is allowed an additional credit of $221.
Exam
ple 8.Part-year coverage and changes in
coverage months and applicable benchmark plan.(i)
The f
acts are the same as inExample 7, except that
F is eligible for government-sponsored minimum es-
sential coverage for January and February 2014, and
Eenr
olls F in a qualified health plan beginning in
March 2014. Thus, March through July are cover-
age m
onths for F and August through December are
coverage months for E and F.
(ii) E reconciles her premium tax credit with ad-
vanc
e credit payments as follows:
2012–24 I.R.B.1006June 11, 2012

Advance credit payments (March to July)
$1,375($275 x 5)
Advance credit payments (Aug. to Dec.)
3
,375
($675 x 5)
Total advance credit payments
4,750
Benchmark plan premium (March to July)2,167
(($5,200/12) x 5)
Benchmark plan premium (Aug. to Dec.)4
,167
(($10,000/12) x 5)
Total benchmark plan premium6,334
Contribution amount for 10 coverage months (taxable year
household income X applicable percentage X 10/12)
1,399
($28,747 x .0584 x 10/12)
Credit (total benchmark plan premium less contribution
amount)
4,935
(iii) E’s ad
vance credit payments for 2014 are
$4,750. E’s premium tax credit is $4,935. Thus, E
is allowed an additional credit of $185.
Example 9.A
dvance credit payments for months
an issuer does not provide coverage. (i) Taxpayer
F enrolls in a qualified health plan for 2014 and the
Exchange ap
proves advance credit payments. F pays
the portion of the premium not covered by advance
credit payments for January through April of 2014
but fails t
o make payments in May, June, and July.
As a result, the issuer of the qualified health plan
initiates the 3-month grace period under section
1412(c)(
2)(B)(iv)(II) of the Affordable Care Act and
45 CFR 156.270(d). During the grace period the
issuer continues to receive advance credit payments
on behalf
of F. On July 1 the issuer rescinds F’s
coverage retroactive to the end of the first month of
the grace period, May 31.
(ii) Unde
r paragraph (a)(1)(iii) of this section, F
does not take into account advance credit payments
for June or July of 2014 when reconciling the pre-
mium tax
credit with advance credit payments under
paragraph (a)(1) of this section.
(b)Changes in filing status—(1)In gen-
eral. Except as provided in paragraph
(b)(2) or (b)(3) of this section, a taxpayer
whose marital status changes during the
taxable year computes the premium tax
credit by using the applicable benchmark
plan or plans for the taxpayer’s marital
status as of the first day of each cover-
age month. The taxpayer’s contribution
amount (household income for the taxable
year times the applicable percentage) is de-
termined using the taxpayer’s household
income and family size at the end of the
taxable year.
(2)Taxpayers who marry during the
taxable year—(i)In general.Taxpayers
who marry during and file a joint return
for the taxable year may compute the addi-
tional tax imposed under paragraph (a)(1)
of this section under paragraph (b)(2)(ii)
of this section. Only taxpayers who are
unmarried at the beginning of the taxable
year and are married (within the meaning
of section 7703) at the end of the taxable
year, at lea
st one of whom receives ad-
vance credi
t payments, may use this alter-
native comp
utation.
(ii)Altern
ative computation of addi-
tional tax l
iability—(A)In general.The
additional
tax liability determined under
this parag
raph (b)(2)(ii) is equal to the
excess of t
he taxpayers’ advance credit
payments f
or the taxable year over the
amount of t
he alternative marriage-year
credit. T
he alternative marriage-year
credit is
the sum of both taxpayers’ alter-
native pr
emium assistance amounts for the
pre-marr
iage months and the premium as-
sistance
amounts for the marriage months.
This par
agraph (b)(2)(ii) may not be used
to incre
ase the additional premium tax
credit c
omputed under paragraph (a)(1)(i)
of this s
ection.
(B)Alte
rnative premium assistance
amounts
for pre-marriage months.Tax-
payers
compute the alternative premium
assist
ance amounts for each taxpayer for
each fu
ll or partial month the taxpayers are
unmarr
ied as described in paragraph (a)(2)
of this
section, except that each taxpayer
treats
the amount of household income as
one-h
alf of the actual household income
for th
e taxable year and treats family size
as the
number of individuals in the tax-
payer
’s family prior to the marriage. The
taxpa
yers may include a dependent of the
taxp
ayers for the taxable year in either
taxp
ayer’s family size for the pre-marriage
mont
hs.
(C)P
remium assistance amounts for
marr
iage months. Taxpayers compute the
prem
ium assistance amounts for each full
mont
h the taxpayers are married as de-
scr
ibed in paragraph (a)(2) of this section.
(3)T
axpayers not married to each other
at t
he end of the taxable year. Taxpayers
who
are married (within the meaning of
sec
tion 7703) to each other during a tax-
able year bu
t are not married to each other
on the last d
ay of the taxable year, and who
are enrolle
d in the same qualified health
plan at any t
ime during the taxable year,
must alloc
ate the premium for the applica-
ble benchm
ark plan, the premium for the
plan in whi
ch the taxpayers enroll, and the
advance cr
edit payments for the period the
taxpayer
s are married during the taxable
year. The
taxpayers may allocate these
items to e
ach former spouse in any propor-
tion but m
ust allocate all items in the same
proporti
on. If the taxpayers cannot agree
on an all
ocation, 50 percent of the pre-
mium for
the applicable benchmark plan,
the prem
iums for the plan in which the tax-
payers e
nroll, and the advance credit pay-
ments fo
r the married period are allocated
to each
taxpayer. If a plan covers only one
of thes
e taxpayers for any period during a
taxabl
e year, the amounts for that period
are all
ocated entirely to that taxpayer.
(4)Mar
ried taxpayers filing separate
return
s. The premium tax credit is allowed
to marr
ied (within the meaning of section
7703)
taxpayers only if they file joint re-
turns
. See §1.36B–2(b)(2). A married
taxpa
yer who receives advance credit pay-
ments
and files an income tax return as
marri
ed filing separately has received ex-
cess
advance payments. Taxpayers who
rece
ive advance credit payments as mar-
ried
taxpayers and do not file a joint return
must
allocate the advance credit payments
equa
lly to each taxpayer. The repayment
lim
itation described in paragraph (a)(3) of
thi
s section applies to each taxpayer based
on t
he household income and family size
rep
orted on that taxpayer’s return.
(5)
Taxpayers filing returns as head of
hou
sehold and married filing separately.
If t
axpayers enroll in one qualified health
pla
n and receive advance credit payments
ba
sed on a filing status of married filing a
June 11, 201210072012–24 I.R.B.

joint tax return, and one taxpayer properly
files a tax return as head of household and
the other taxpayer files a tax return as mar-
ried filing separately for that taxable year,
advance credit payments are allocated to
each taxpayer equally for any period the
taxpayers are enrolled in the same quali-
fied health plan.
(6)Examples. The following examples
illustrate the provisions of this paragraph
(b). In each example the taxpayer enrolls
in a higher cost qualified health plan than
the applicable benchmark plan:
Example 1.Taxpayers marry during the taxable
year, general rule for computing additional tax.(i)
P is a single taxpayer with no dependents. In 2013
the Exchange for the rating area where P resides
determines that P’s 2014 household income will be
$40,000 (358 percent of the Federal poverty line,
applicable percentage 9.5). P enrolls in a quali-
fied health plan. The premium for the applicable
benchmark plan is $5,200. P’s monthly advance
credit payment is $117, computed as follows: $5,200
benchmark plan premium minus contribution amount
of $3,800 ($40,000 x .095) equals $1,400 (total ad-
vance credit payment); $1,400/12 = $117.
(ii) Q is a single taxpayer with two dependents.
In 2013 the Exchange for the rating area where Q
resides determines that Q’s 2014 household income
will be $35,000 (183 percent of the Federal poverty
line, applicable percentage 5.52). Q enrolls in a
qualified health plan. The premium for the ap-
plicable benchmark plan is $10,000. Q’s monthly
advance credit payment is $672, computed as fol-
lows: $10,000 benchmark plan premium minus
contribution amount of $1,932 ($35,000 x .0552)
equals $8,068 (total advance credit); $8,068/12 =
$672.
(iii) P and Q marry on July 17, 2014 and enroll
in a single policy for a qualified health plan cover-
ing four family members, effective August 1, 2014.
The premium for the applicable benchmark plan is
$14,000. Based on household income of $75,000
and a family size of four (325 percent of the Fed-
eral poverty line, applicable percentage 9.5), the Ex-
change approves advance credit payments of $573
per month, computed as follows: $14,000 benchmark
plan premium minus contribution amount of $7,125
($75,000 x .095) equals $6,875 (total advance credit);
$6,875/12 = $573.
(iv) P and Q file a joint return for 2014 and re-
port $75,000 in household income and a family size
of four. P and Q compute their credit at reconcilia-
tion under paragraph (b)(1) of this section. They use
the premiums for the applicable benchmark plans that
apply for the months married and the months not mar-
ried, and their contribution amount is based on their
Federal poverty line percentage at the end of the tax-
able year. P and Q reconciletheir premium tax credit
with advance credit payments as follows:
Advance payments for P (Jan. to July)
$819
Advance payments for Q (Jan. to July)4,704
Advance payments for P and Q (Aug. to Dec.)
2
,865
Total advance payments8,388
Benchmark plan premium for P (Jan. to July)3,033
BenchmarkplanpremiumforQ(Jan.toJuly)
5,833
BenchmarkplanpremiumforPandQ(Aug.toDec.)
5
,833
Total benchmark plan premium14,699
Contribution amount (taxable year household income X
applicable percentage)
7,125
Credit (total benchmark plan premium less contribution
amount)
7,574
Additional tax814
(v) P’s and Q’s tax liability for 2014 is
increased by $814 under paragraph (a)(1)
of this section.
Example 2. Taxpayers marry during the taxable
year, alternative computation of additional tax.(i)
ThefactsarethesameasinExample 1, except that
P and Q compute their additional tax liability under
paragraph (b)(2)(ii) of this section. P’s and Q’s
additional tax is the excess of their advance credit
payments for the taxable year ($8,388) over their
alternative marriage-year credit, which is the sum
of the alternative premium assistance amounts for
the pre-marriage months and the premium assistance
amounts for the marriage months.
(ii) P and Q compute the alternative marriage-
year credit as follows:
2012–24 I.R.B.1008June 11, 2012

Alternative premium assistance amounts for pre-marriage months
BenchmarkplanpremiumforP(Jan.toJuly)
$3,033 (($5,200/12) x 7)
Contribution amount (1/2 taxable year household income X applicable
percentage) X 7/12)
$2,078 ($37,500 x .095 x 7/12)
Alternative premium assistance amount for P’s pre-marriage months
$955 ($3,033 - $2,078)
Benchmark pl
an premium for Q (Jan. to July)
$5,833 (($10,000/12) x 7)
Contribution amount (1/2 taxable year household income X applicable
percentage X
7/12)
$1,339 ($37,
500 x .0612 x 7/12)
Alternative premium assistance amount for Q’s pre-marriage months
$4,494 ($5,833 - $1,339)
Premium assistance amount for marriage months
Benchmark plan premium for P and Q (Aug. to Dec.)
$5,833 (($14,000/12 x 5)
Contribution amount (taxable year household income X applicable percentage
X5/12)
$2,969 ($75,000 x .095 x 5/12)
Premium assistance amount for marriage months
$2,864 ($5,833 - $2,969)
Alternative marriage-year credit (sum of premium assistance amounts for pre-marriage months and marriage months): $955 + $4,494 + $2,864 = $8,313.
(iii) P and Q reconcile their premium tax credit
with advance credit payments by determining the ex-
cess of
their advance credit payments ($8,388) over
their alternative marriage-year credit ($8,313). P and
Q must increase their tax liability by $75 under para-
graph (
a)(1)ofthissection.
Example 3. Taxpayers marry during the taxable
year, alternative computation of additional tax, al-
ternat
ive marriage-year tax credit exceeds advance
credit payments. The facts are the same as inExam-
ple 2, except that the amount of P’s and Q’s advance
credi
t payments is $8,301. Thus, their alternative
marriage-year credit ($8,313) exceeds the amount of
their advance credit payments ($8,301). Under para-
graph
(b)(2)(ii)(A) of this section, the amount of ad-
ditional tax liability and additional tax credit that P
and Q report on their tax return is $0.
Example 4.Taxpayers marry during the taxable
year, alternative computation of additional tax.(i)
Taxpay
er R is single and has no dependents. In 2013,
the Exchange for the rating area where R resides
determines that R’s 2014 household income will be
$40,00
0 (358 percent of the Federal poverty line,
applicable percentage 9.5). R enrolls in a quali-
fied health plan. The premium for the applicable
benchm
ark plan is $5,200. R’s monthly advance
credit payment is $117, computed as follows: $5,200
benchmark plan premium minus contribution amount
of $3,
800 ($40,000 x .095) = $1,400 (total advance
credit); $1,400/12 = $117.
(ii) Taxpayer S is single with no dependents. In
2013,
the Exchange for the rating area where S re-
sides determines that S’s 2014 household income will
be $20,000 (179 percent of the Federal poverty line,
appl
icable percentage 5.33). S enrolls in a qualified
health plan. The premium for the applicable bench-
mark plan is $5,200. S’s monthly advance credit pay-
ment is
$345, computed as follows: $5,200 bench-
mark plan premium minus contribution amount of
$1,066 ($20,000 x .0533) = $4,134 (total advance
credit
); $4,134/12 = $345.
(iii) R and S marry in September 2014 and enroll
in a single policy for a qualified health plan cover-
ing the
m both, beginning October 1, 2014. The pre-
mium for the applicable benchmark plan is $10,000.
Based on household income of $60,000 and a family
size o
f two (397 percent of the Federal poverty line,
applicable percentage 9.5), R’s and S’s monthly ad-
vance credit payment is $358, computed as follows:
$10,0
00 benchmark plan premium minus contribu-
tion amount of $5,700 ($60,000 x .095) = $4,300;
$4,300/12 = $358. R’s and S’s advance credit pay-
ment
s for 2014 are $5,232, computed as follows:
Advance payments for R (Jan. to Sept.)
$1,053($117 x 9)
Advance payments for S (Jan. to Sept.)
3,105
($34
5x9)
Adva
nce payments for R and S (Oct. to Dec.)
1
,07
4
($358 x 3)
Total advance payments
5,23
2
(iv
) R and S file a joint return for 2014 and report
$62,000 in household income and a family size of
two (410 percent of the FPL for a family of 2). Thus,
und
er §1.36B–2(b)(2), R and S are not applicable
taxpayers for 2014 and may not claim a premium
tax credit for 2014. However, they compute their
ad
ditional tax liability under paragraph (b)(2)(ii) of
thi
s section. R’s and S’s additional tax is the excess
of their advance credit payments for the taxable
year ($5,232) over their alternative marriage-year
cre
dit, which is the sum of the alternative premium
assistance amounts for the pre-marriage months and
the premium assistance amounts for the marriage
mo
nths. In this case, R and S have no premium
ass
istance amounts for the married months because
their household income is over 400 percent of the
Federal poverty line for a family of 2.
(v)
R and S compute their alternative marriage-
year credit as follows:
June 11, 201210092012–24 I.R.B.

Premium assistance amount for pre-marriage months
Benchmark plan premium for R (Jan. to Sept.)
$3,900 (($5,200/12) x 9)
Contribution amount ((1/2 taxable year household income X
applicable percentage) x 9/12)
$2,053 ($31,000 x .0883 x 9/12)
Premium assistance amount for R’s pre-marriage months
$1,847 ($3,900 - $2,053)
Benchmark pl
an premium for S (Jan. to Sept.)
$3,900 (($5,200/12) x 9)
Contribution amount ((1/2 taxable year household income X
applicable p
ercentage) x 9/12)
$2,053 ($31,
000x.0883x9/12)
Premium assistance amountfor S’s pre-marriage months
$1,847 ($3,900 - $2,053)
Premium assistance amount for marriage months
$0
Alternative marriage-year credit (sum of premium assistance amounts forpre-marriage months and marriage months): $1,847 + 1,847 + 0 = $3,694.
(vi) R and S reconcile their premium tax credit
with advance credit payments by determining the ex-
cess of their advance credit payments ($5,232) over
their alternative marriage-year credit ($3,694). R and
S must increase their tax liability by $1,538 under
paragraph (a)(1) of this section.
Example 5.(i)Taxpayers marry during the
taxable year, no additional tax liability. The facts
are the same as inExample 4, except that S has
no income and is enrolled in Medicaid for January
through September 2014 and R’s and S’s household
income for 2014 is $37,000 (245 percent of the Fed-
eral poverty line, applicable percentage 7.88). Their
advance credit payments for 2014 are $2,707 ($1,053
for R for January to September and $1,654 for R
and S for October to December). Their premium tax
credit for 2014 is $3,484 (total benchmark premium
of $6,400 less contribution amount of $2,916).
(ii) Because R’s and S’s premium tax credit of
$3,484 exceeds their advance credit payments of
$2,707, R and S are allowed an additional credit of
$777. Although R and S marry in 2014, paragraph
(b)(2) of this section (the alternative computation of
additional tax for taxpayers who marry during the
taxable year) does not apply because they do not owe
additional tax for 2014.
Example 6.Taxpayers divorce during the taxable
year, 50 percent allocation. (i) Taxpayers V and W
are married and have two dependents. In 2013, the
Exchange for the rating area where the family resides
determines that their 2014 household income will be
$76,000 (330 percent of the Federal poverty line for a
family of 4, applicable percentage 9.5). V and W en-
roll in a qualified health plan for 2014. The premium
for the applicable benchmark plan is $14,100. The
Exchange approves advance credit payments of $573
per month, computed as follows: $14,100 benchmark
plan premium minus V and W’s contribution amount
of $7,220 ($76,000 x .095) equals $6,880 (total ad-
vance credit); $6,880/12 = $573.
(ii) V and W divorce on June 17, 2014, and
obtain separate qualified health plans beginning
July 1, 2014. V enrolls based on household income
of $60,000 and a family size of three (314 percent
of the Federal poverty line, applicable percentage
9.5). The premium for the applicable benchmark
plan is $10,000. The Exchange approves advance
credit payments of $358 per month, computed as
follows: $10,000 benchmark plan premium minus
V’s contribution amount of $5,700 ($60,000 x .095)
equals $4,300 (total advance credit); $4,300/12 =
$358.
(iii) W enrolls based on household income of
$16,420 and a family size of one (147 percent of the
Federal poverty line, applicable percentage 3.82).
The premium for the applicable benchmark plan
is $5,200. The Exchange approves advance credit
payments of $381 per month, computed as follows:
$5,200 benchmark plan premium minus W’s con-
tribution amount of $627 ($16,420 x .0382) equals
$4,573 (total advance credit); $4,573/12 = $381. V
andWdonotagreeonanallocationofthepremium
for the applicable benchmark plan, the premiums for
the plan in which they enroll, and the advance credit
payments for the period they were married in the
taxable year.
(iv) V and W each compute their credit at recon-
ciliation under paragraph (b)(1) of this section, using
the premiums for the applicable benchmark plans that
apply to them for the months married and the months
not married, and the contribution amount based on
their Federal poverty line percentages at the end of
the taxable year. Under paragraph (b)(3) of this sec-
tion, because V and W do not agree on an allocation,
V and W must equally allocate the benchmark plan
premium ($7,050) and the advance credit payments
($3,438) for the six-month period January through
June 2014 when they are married and enrolled in the
same qualified health plan. Thus, V and W each
are allocated $3,525 of the benchmark plan premium
($7,050/2) and $1,719 of the advance credit payments
($3,438/2) for January through June.
(v) V reports on his 2014 tax return $60,000 in
household income and family size of three. W re-
ports on her 2014 tax return $16,420 in household in-
come and family size of one. V and W reconcile their
premium tax credit with advance credit payments as
follows:
2012–24 I.R.B.1010June 11, 2012

VW
Allocated advance payments (Jan. to June)
$ 1,719$ 1,719
Actual advance payments (July to Dec.)2
,1482,286
Total advance payments3,867
4,005
Allocated benchmark plan premium (Jan. to June)
3,5253,525
Actual benchmark plan premium (July to Dec.)
5
,000
2,600
Total benchmark plan premium
8,5256,125
Contribution amount (taxable year household income X
applicable percentage)
5,700
627
Credit (tota
l benchmark plan premium less contribution
amount)
2,8255,498
Additional credit1,493
Additional tax1,042
(vi) Under paragraph (a)(1) of this section, on
their tax returns V’s tax liability is increased by
$1,042 and W is allowed $1,493 as additional credit.
Example 7.Taxpayers divorce during the taxable
year, allocation in proportion to household income.
(i)ThefactsarethesameasinExample 6, except
that V and W decide to allocate the benchmark plan
premium ($7,050) and the advance credit payments
($3,438) for January through June 2014 in propor-
tion to their household incomes (79 percent and 21
percent). Thus, V is allocated $5,570 of the bench-
mark plan premiums ($7,050 x .79) and $2,716 of
the advance credit payments ($3,438 x .79), and W
is allocated $1,481 of thebenchmark plan premiums
($7,050 x .21) and $722 of the advance credit pay-
ments ($3,438 x .21). V and W reconcile their pre-
mium tax credit with advance credit payments as fol-
lows:
VW
Allocated advance payments (Jan. to June)
$2,716$ 722
Actual advance payments (July to Dec.)2
,1482,286
Total advance payments4,8643,008
Allocated benchmark plan premium (Jan. to June)
5,570
1,481
Actual benchmark plan premium (July to Dec.)
5
,000
2,600
Total benchmark plan premium
10,570
4,081
Contribution amount (taxable year household income X
applicable percentage)
5,700
627
Credit (total benchmark plan premium less contribution
amount)
4,870
3,454
Additional credit6446
(ii) Under paragraph (a)(1) of this section, on their
tax returns V is allowed an additional credit of $6 and
W is allowed an additional credit of $446.
Example 8.Married taxpayers filing separate tax
returns. (i) Taxpayers X and Yare married and have
two dependents. In 2013, the Exchange for the rat-
ing area where the family resides determines that their
2014 household income will be $76,000 (330 percent
of the Federal poverty line for a family of 4, appli-
cable percentage 9.5). W and Y enroll in a qualified
health plan for 2014. The premium for the applica-
ble benchmark plan is $14,100. X’s and Y’s monthly
advance credit payment is $573, computed as fol-
lows: $14,100 benchmark plan premium minus X’s
and Y’s contribution amount of $7,220 ($76,000 x
.095) equals $6,880 (total advance credit); $6,880/12
= $573.
(ii) X and Y file income tax returns for 2014 using
a married filing separately filing status. X reports
household income of $60,000 and a family size of
three (314 percent of the Federal poverty line). Y
reports household income of $16,420 and a family
size of one (147 percent of the Federal poverty line).
(iii) Because X and Y are married but do not file a
joint return for 2014, X and Y are not applicable tax-
payers and are not allowed a premium tax credit for
2014. See §1.36B–2(b)(2). Under paragraph (b)(4)
of this section, half of the advance credit payments
($6,880/2 = $3,440) is allocated to X and half is al-
located to Y for purposes of determining their ex-
cess advance payments. The repayment limitation
described in paragraph (a)(3) of this section applies
to X and Y based on the household income and fam-
ily size reported on each return. Consequently, X’s
tax liability for 2014 is increased by $2,500 and Y’s
tax liability for 2014 is increased by $600.
Example 9. (i) The facts are the same as inExam-
ple 8, except that X and Y live apart for over 6 months
of the year and X properly files an income tax return
as head of household. Under section 7703(b), X is
treated as unmarried and therefore is not required to
file a joint return. If X otherwise qualifies as an appli-
cable taxpayer, X may claim the premium tax credit
based on the household income and family size X re-
ports on the return. Y is not an applicable taxpayer
and is not eligible to claim the premium tax credit.
(ii) X must reconcile the amount of credit with
advance credit payments under paragraph (a) of this
section. The premium for the applicable benchmark
plan covering X and his two dependents is $9,800.
X’s premium tax credit is computed as follows:
$9,800 benchmark plan premium minus X’s contri-
bution amount of $5,700 ($60,000 x .095) equals
$4,100.
(iii) Under paragraph (b)(5) of this section, half
of the advance payments ($6,880/2 = $3,440) is allo-
cated to X and half is allocated to Y. Thus, X is en-
titled to $660 additional premium tax credit ($4,100
- $3,440). Y has $3,440 excess advance payments,
June 11, 201210112012–24 I.R.B.

which is limited to $600 under paragraph (a)(3) of
this section.
§1.36B–5 Information reporting by
Exchanges.
(a)Information required to be reported.
An Exchange must report to the Internal
Revenue Service and each taxpayer the
following information for the qualified
health plan or plans in which the taxpayer
or a member of the taxpayer’s family en-
rolls through the Exchange—
(1) The premium for the applicable
benchmark plans used to compute advance
credit payments and the period coverage
was in effect;
(2) The total premium for the cover-
age in which the taxpayer or family mem-
ber enrolls without reduction for advance
credit payments;
(3) The aggregate amount of any ad-
vance credit payments;
(4) The name, address and Social Secu-
rity number (SSN) of the primary insured
and the name and SSN or adoption tax-
payer identification number of each other
individual covered under the policy;
(5) All information provided to the Ex-
change at enrollment or during the tax-
able year, including any change in circum-
stances, necessary to determine eligibility
forandtheamountofthepremiumtax
credit;
(6) Any other information required in
published guidance, see §601.601(d)(2)
of this chapter, necessary to determine
whether a taxpayer has received excess
advance payments.
(b)Time of reporting.[Reserved]
(c)Manner of reporting.TheCom-
missioner may provide rules in published
guidance, see §601.601(d)(2) of this chap-
ter, for the manner of reporting under this
section.
Par. 3. Section 1.6011–8 is added to
read as follows:
§1.6011–8 Requirement of income tax
return for taxpayers who claim the
premium tax credit under section 36B.
(a)Requirement of return. A taxpayer
who receives advance payments of the pre-
mium tax credit under section 36B must
file an income tax return for that taxable
year on or before the fifteenth day of the
fourth month following the close of the
taxable year.
(b)Effective/applicability date.This
section applies for taxable years ending af-
ter December 31, 2013.
Par. 4. In §1.6012–1, paragraph
(a)(2)(viii) is added to read as follows:
§1.6012–1 Individuals required to make
returns of income.
(a) * * *
(2) * * *
(viii) For rules relating to returns re-
quired of taxpayers who receive advance
payments of the premium tax credit under
section 36B, see §1.6011–8(a).
*****
PART 602 — OMB CONTROL
NUMBERS UNDER THE PAPERWORK
REDUCTION ACT
Par. 5. The authority citation for part
602 continues to read as follows:
Authority: 26 U.S.C. 7805.
Par. 6. In §602.101, paragraph (b) is
amended by adding an entry in numerical
order to the table to read as follows:
§602.101 OMB Control numbers.
*****
(b) * * *
CFR part or section where
identified and described
Current OMB
Control No.
*****
1.36B–5
...........................................................
1545–2232
*****
Steven T. Miller,
Deputy Commissioner for
Services and Enforcement.
Approved May 16, 2012.
Emily S. McMahon,
Acting Assistant Secretary
oftheTreasury(TaxPolicy).
(Filed by the Office of the Federal Register on May 18, 2012,
11:15 a.m., and published in the issue of the Federal Register
for May 23, 2012, 77 F.R. 30377)
Section 108.—Income from
Discharge of Indebtedness
26 CFR 108(a)–1: Income from discharge of indebt-
edness.
(Also: Sections 61(a)(12); 704; 752; 1.752–3).
Income from discharge of indebted-
ness.This ruling amplifies Revenue Rul-
ing 92–53, 1992–2 C.B. 48, by describing
how discharged partnership excess nonre-
course debt is taken into account in mea-
suring the insolvency of the partners under
section 108(d)(3) of the Code. The rul-
ing provides that to the extent discharged
excess nonrecourse debt generates cancel-
lation of indebtedness (COD) income that
is allocated under section 704(b) (and the
regulations thereunder), each partner treats
its portion of the discharged excess nonre-
course debt related to such COD income
as a liability in measuring insolvency un-
der section 108(d)(3). Rev. Rul. 92–53
amplified.
Rev. Rul. 2012–14
ISSUE
How do partners treat the partnership’s
discharged excess nonrecourse debt in
measuring insolvency under § 108(d)(3)
of the Internal Revenue Code?
FACTS
X, an investor other than a partner-
ship, and Holdco, a corporation, are equal
partners in PRS, a partnership for federal
tax purposes. In Year 1, PRS borrows
2012–24 I.R.B.1012June 11, 2012

$1,000,000 from Bank and signs a note
payable to Bank for $1,000,000 that bears
interest at a fixed market rate payable
annually. The note is secured by real es-
tate valued in excess of $1,000,000 that
PRS acquires from Seller, in part with the
proceeds of the note. The note is a non-
recourse liability within the meaning of
§ 1.752–1(a)(2) of the Income Tax Reg-
ulations. Neither PRS nor its partners (X
and Holdco) are personally liable on the
note.
In Year 2, when the value of the real es-
tate is $800,000 and the outstanding princi-
pal on the note is $1,000,000, Bank agrees
to modify the terms of the note by reducing
the note’s principal amount to $825,000.
At the time that the Bank reduces the note’s
principal amount, PRS has no partnership
minimum gain with respect to the note un-
der § 1.704–2(d)(1). The modified note
bears adequate stated interest within the
meaning of § 1274(c)(2). The PRS part-
nership agreement provides for income to
be allocated equally to X and Holdco un-
der § 704(b) and the regulations thereun-
der. X and Holdco share PRS nonrecourse
liabilities equally under § 1.752–3. At
the time of the modification of the note,
X and Holdco have no assets or liabili-
ties other than their partnership interests in
PRS. PRS’s sole asset is the real estate sub-
ject to the note, and PRS’s sole liability is
the note. The specific exclusion provided
by § 108(a)(1)(A) (bankruptcy exception)
does not apply in this case.
LAW
Section 61(a)(12) provides that gross
income includes income from the dis-
charge of indebtedness (COD). Section
1.61–12(a) provides that the discharge of
indebtedness, in whole or in part, may
result in the realization of income.
Section 108(a)(1)(B) generally ex-
cludes discharged indebtedness from a
taxpayer’s gross income if the discharge
occurs when the taxpayer is insolvent.
Section 108(a)(3) limits the amount of in-
come excluded by reason of § 108(a)(1)(B)
to the amount by which the taxpayer is
insolvent.
Section 108(d)(3) defines “insolvent”
as the excess of liabilities over the fair mar-
ket value of assets. That section further
provides that whether a taxpayer is insol-
vent, and the amount by which the tax-
payer is insolvent, is determined on the ba-
sis of the taxpayer’s assets and liabilities
immediately before the discharge.
Section 108(d)(1) provides that indebt-
edness of the taxpayer means any indebt-
edness for which the taxpayer is liable, or
subject to which the taxpayer holds prop-
erty. Section 108(d)(6) provides that in the
case of cancelled partnership debt, the in-
solvency exception of § 108(a)(1)(B) ap-
plies at the partner level.
Rev. Rul. 92–53, 1992–2 C.B. 48, pro-
vides that the amount by which a nonre-
course debt exceeds the fair market value
of the property securing the debt (excess
nonrecourse debt) is treated as a liability
in determining insolvency for purposes of
§ 108 to the extent that the excess nonre-
course debt is discharged.
ANALYSIS
In order to properly apply Rev. Rul.
92–53 in a partnership context, the partner-
ship’s discharged excess nonrecourse debt
should be associatedwith the partner who
in the absence of the insolvency or other
§ 108 exclusion would be required to pay
the tax liability arising from the discharge
of that debt. Therefore, a partnership’s dis-
charged excess nonrecourse debt is treated
as a liability of the partners for purposes
of measuring the partners’ insolvency un-
der § 108(d)(3) based upon how the COD
income with respect to that portion of the
debt is allocated among the partners un-
der § 704(b) and the regulations thereun-
der. See Rev. Rul. 99–43, 1999–2 C.B.
506, and Rev. Rul. 92–97, 1992–2 C.B.
124, regarding the application of § 704(b)
to allocations of COD income.
In this case, Bank cancels $175,000 of
PRS’s $200,000 excess nonrecourse debt,
generating $175,000 of COD income.
PRS’s $175,000 COD income is allocated
equally between X and Holdco under
§ 704(b) and the regulations thereunder.
For purposes of measuring the insolvency
of the partners, PRS’s discharged excess
nonrecourse debt is treated as a liability of
its partners based upon the COD income
allocation. Thus, X treats $87,500 of
PRS’s debt as a liability of X, and Holdco
treats $87,500 of PRS’s debt as a liability
of Holdco. X and Holdco treat their shares
of the cancelled PRS excess nonrecourse
debt as their own liabilities in determining
whether, and to what extent, each is insol-
vent within the meaning of § 108(d)(3).
X and Holdco have no assets or liabil-
ities other than their partnership interests
in PRS. In this case, the value of X’s and
Holdco’s partnership interests in PRS is
zero.
Immediately before Bank discharges
the indebtedness, X’s liability exceeds
the value of X’s partnership interest by
$87,500, and similarly Holdco’s liability
exceeds the value of Holdco’s partnership
interest by $87,500. Therefore, X and
Holdco are each insolvent to the extent
of $87,500 under § 108(d)(3). Accord-
ingly, X and Holdco each exclude their
$87,500 amount of COD income under
§ 108(a)(1)(B).
HOLDING
For purposes of measuring a partner’s
insolvency under § 108(d)(3), each partner
treats as a liability an amount of the part-
nership’s discharged excess nonrecourse
debt that is based upon the allocation
of COD income to such partner under
§ 704(b) and the regulations thereunder.
EFFECT ON OTHER REVENUE
RULINGS
Rev. Rul. 92–53 is amplified.
DRAFTING INFORMATION
The principal authors of this ruling are
Kevin I. Babitz and Anne W. Bryson of
the Office of Associate Chief Counsel
(Passthroughs & Special Industries).
For further information regarding this
revenue ruling, contact Kevin I. Babitz,
Anne W. Bryson, or Charlotte Chyr at
(202) 622–3060 (not a toll-free call).
June 11, 201210132012–24 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
Extension of Interim Guidance
on Modification of Section
833 Treatment of Certain
Health Organizations
Notice 2012–37
PURPOSE
This notice extends the interim guid-
ance provided in Notice 2011–51, 2011–27
I.R.B. 36, and Notice 2010–79, 2010–49
I.R.B. 809, as clarified and modified by
Notice 2011–4, 2011–2 I.R.B. 282, and
Rev. Proc. 2011–14, 2011–4 I.R.B. 330,
on the interpretation and application of
§ 833(c)(5) of the Internal Revenue Code
(Code).
BACKGROUND
Section 9016 of the Patient Protection
and Affordable Care Act, Pub. L. No.
111–148, 124 Stat. 119 (2010) (Afford-
able Care Act), added § 833(c)(5) to the
Code, effective for taxable years begin-
ning after December 31, 2009. Section
833(c)(5) provides that § 833 does not ap-
ply to an otherwise-eligible organization
unless the organization’s medical loss ra-
tio (MLR) during the taxable year is not
less than 85 percent. For purposes of sec-
tion 833(c)(5), an organization’s MLR is
equal to the “percentage of total premium
revenue expended on reimbursement for
clinical services provided to enrollees un-
der its policies during such taxable year (as
reported under section 2718 of the Public
Health Service Act).”
In December 2010, the Depart-
ment of Health and Human Services
(HHS) issued interim final regulations
implementing § 2718 of the Public
Health Service Act (PHSA), 75 Fed.
Reg. 74864 (December 1, 2010). The
Department of Treasury (Treasury)
and the Internal Revenue Service (the
Service) subsequently issued Notice
2010–79 providing interim guidance and
transitional relief on (1) the computation
of a taxpayer’s MLR for purposes of
§ 833(c)(5), (2) the consequences of
nonapplication of § 833 if § 833(c)(5) is
not satisfied, and (3) changes in accounting
method by reason of application or
nonapplication of § 833. The interim
guidance applied to the first taxable year
beginning after December 31, 2009.
In Notice 2011–51, Treasury and the
Service extended the interim guidance and
transitional relief to the first taxable year
beginning after December 31, 2010.
In December 2011, HHS issued final
regulations, codified at 45 C.F.R. pt. 158,
implementing the reporting requirements
under § 2718 of the PHSA, 76 Fed. Reg.
76574 (December 7, 2011). The final reg-
ulations became effective January 3, 2012,
and the first reporting under § 2718 of the
PHSA is due in June 2012.
EXTENSION OF INTERIM GUIDANCE
Section 833(c)(5) looks to information
reported under § 2718 of the PHSA for pur-
poses of determining whether a taxpayer’s
MLR is at least 85 percent. Now that HHS
has issued final regulations under § 2718,
Treasury and the Service expect to pro-
pose regulations under § 833(c)(5). How-
ever, Treasury and the Service believe that
the development of those proposed regula-
tions should reflect the experience of both
HHS and the affected taxpayers with the
implementation of the HHS § 2718 reg-
ulations, the first reporting under which
occurs this year. Moreover, once Trea-
sury and the Service have published pro-
posed regulations, affected taxpayers will
need time to determine the potential ef-
fect of the proposed regulations, to pro-
vide comments thereon, and to consider
whether any program adjustments may be
necessary in advance of the effective date
of final regulations. Accordingly, the in-
terim guidance and transitional relief pro-
vided in Notices 2010–79 and 2011–51 are
extended through the first taxable year be-
ginning after December 31, 2012.
REQUEST FOR COMMENTS
Treasury and the Service invite com-
ments on all aspects of §833(c)(5), includ-
ing how the proposed regulations they an-
ticipate issuing under that provision might
take account of the specific reporting re-
quired under § 2718 of the PHSA and
coordinate the MLR computations under
§ 2718 of the PHSA and § 833(c)(5).
Comments should be submitted in writ-
ing on or before September 10, 2012.
Comments should include a reference to
Notice 2012–37. Send submissions to
CC:PA:LPD:PR (Notice 2012–37), Room
5203, Internal Revenue Service, P.O. Box
7604, Ben Franklin Station, Washing-
ton, DC 20224. Submissions may be
hand-delivered Monday through Friday
between the hours of 8 a.m. and 4 p.m.
to CC:PA:LPD:PR (Notice 2012–37),
Courier’s Desk, Internal Revenue Ser-
vice, 1111 Constitution Avenue, NW,
Washington, DC 20004, or sent electron-
ically, via the following e-mail address:
Notice.comments@irscounsel.treas.gov.
Please include “Notice 2012–37” in
the subject line of any electronic
communications. Allcomments submitted
will be available for public inspection and
copying.
EFFECT ON OTHER DOCUMENTS
Notice 2011–51 is modified and super-
seded.
CONTACT INFORMATION
The principal author of this notice
is Graham R. Green of the Office of
Associate Chief Counsel (Financial
Institutions & Products). For further
information regarding this notice, contact
Graham R. Green at (202) 622–3970 (not
a toll-free call).
Implementation of Rev. Rul.
2006–57—Issues for Public
Comment
Notice 2012–38
PURPOSE
This notice requests public comments
on issues associated with Revenue Ruling
2006–57, 2006–2 C.B. 911, which became
effective on January 1, 2012. Rev. Rul.
2006–57 provides guidance on the use
of smartcards, debit or credit cards, or
other electronic media to provide quali-
fied transportation fringes under sections
132(a)(5) and (f) of the Internal Revenue
Code (the Code). The Treasury Depart-
ment and the Internal Revenue Service
have become aware of changes in tech-
nology that may give rise to the need for
2012–24 I.R.B.1014June 11, 2012

additional guidance on the use of elec-
tronic media to provide transit benefits.
BACKGROUND
Section 132(a)(5) of the Code provides
that any fringe benefit that is a qualified
transportation fringe is excluded from
gross income. Section 132(f)(1) provides
that the term “qualified transportation
fringe” means, when provided by an em-
ployer to an employee, (1) transportation
in a commuter highway vehicle between
home and work, (2) any transit pass, (3)
qualified parking, or (4) any qualified bi-
cycle commuting reimbursement.
Section 132(f)(5)(A) provides that a
transit pass is any pass, token, farecard,
voucher or similar item entitling a person
to transportation (or transportation at a
reduced price) if such transportation is on
mass transit facilities or is provided by
any person in the business of transport-
ingpersonsforcompensationorhireina
commuter highway vehicle.
Section 132(f)(3) of the Code generally
allows employers to use cash reimburse-
ment arrangements to provide employees
with qualified transportation fringe ben-
efits. This section, however, prohibits
use of such arrangements to provide tran-
sit benefits “if a voucher or similar item
which may be exchanged only for a tran-
sit pass” is “readily available.” Section
1.132–9, Q/A–16(b) of the Regulations
specifies that a voucher or similar item is
not readily available if the entity provid-
ing it imposes restrictions that effectively
prevent the employer from obtaining
vouchers appropriate for distribution to
employees. Examples of such restrictions
include:
1. Excessive fare media charges: The
term “fare media charges” refers to
extra fees that the voucher-provider
requires employers to incur to furnish
employees with vouchers. Such fees
are excessive if the average annual
fare media charges that the employer
incurs to provide its employees with
transit benefits via vouchers are more
than one percent of the average annual
value of the vouchers for a transit sys-
tem.
2. Advance purchase requirements: A
voucher-provider imposes an exces-
sive advance purchase requirement
if it “does not offer vouchers at
regular intervals or fails to provide
the voucher within a reasonable pe-
riod after receiving payment for the
voucher.” The regulations clarify that
a requirement that employers pur-
chase vouchers only once per year
is an excessive advance purchase re-
quirement, but a requirement that
an employer purchase vouchers on a
monthly basis is not.
3. Purchase quantity requirements: A
voucher is not readily available if
the voucher-provider requires the
employer to purchase vouchers in
quantities that are not reasonably ap-
propriate considering the number of
employees who use mass transit.
4. Limitations on denominations of
available vouchers: A voucher
is not readily available if the
voucher-provider requires the em-
ployer to purchase vouchers in de-
nominations that are not appropriate
for distribution to the employer’s em-
ployees.
Section 1.132–9, Q/A–16 of the Regu-
lations provides that a qualified transporta-
tion fringe includes cash reimbursement
for transit passes made under abona fide
reimbursement arrangement that meets
substantiation requirements specified in
the regulations. In discussing the applica-
tion of Section 132(f) of the Code to reim-
bursements, Section 1.132–9, Q/A–16(a)
of the Regulations provides that a payment
made before the date an expense has been
incurred or paid is not a reimbursement;
nor does abona fidereimbursement ar-
rangement include an arrangement that
is dependent solely upon an employee
certifying in advance that the employee
will incur expenses at some future date.
Employers must implement reasonable
procedures to ensure that employees have
incurred expenses for transit passes in
an amount equal to the reimbursement.
What constitutes a reasonable procedure
depends on the facts and circumstances of
a particular arrangement. The Regulations
further require employees to provide any
such substantiation within a “reasonable
period of time.”
Rev. Rul. 2006–57 provides guidance
on the use of smartcards, debit or credit
cards, or other electronic media to provide
employees with transportation fringes.
The ruling was originally scheduled to
become effective January 1, 2008. How-
ever, Treasury and the IRS delayed the
effective date of the ruling several times
in order to give transit systems additional
time to modify their technology to comply
with the requirements set forth in Revenue
Ruling 2006–57, mostrecently in Notice
2010–94, 2010–52 I.R.B. 927, which de-
layed the effective date until January 1,
2012. There have been no subsequent
notices delaying the effective date of the
revenue ruling. The revenue ruling is
therefore now effective.
The revenue ruling includes four situ-
ations that illustrate the tax treatment of
arrangements under which employers use
electronic media to provide employees
with transportation benefits.
Employers in the first situation distrib-
ute “smartcards” to their employees. Em-
ployees use the fare media value that is
stored on these cards to pay for transporta-
tion on the local transit system. The fare
media value stored on the cards is useable
only to pay for transportation on the local
transit system. The revenue ruling there-
fore concludes that the smartcards qualify
as transit system vouchers under section
1.132–9(b) of the Regulations. The value
of the fare media stored on the smartcards,
up to the applicable monthly limit, is ex-
cludable from an employee’s gross income
as a qualified transportation benefit. Un-
der section 1.132–9(b) Q/A–18, employ-
ees are not required to substantiate their
use of the smartcards.
In the second situation, employers fur-
nish employees with debit cards. These
debit cards are restricted for use only at
merchant terminals at points of sale at
which only fare media for the local transit
system is sold. Employers make monthly
payments to the debit card provider, which
the debit card provider then allocates to
each employee’s card. The revenue ruling
concludes that these terminal-restricted
debit cards qualify as transit system vouch-
ers under section 1.132–9(b) because,
similar to the smartcards in the first situ-
ation, they can be used only to purchase
fare media on the local transit system.
Amounts stored on these debit cards are
excludable from employee’s gross in-
comes to the extent that they do not exceed
the applicable monthly limit and employ-
ees are not required to substantiate their
use of the debit cards.
June 11, 201210152012–24 I.R.B.

The revenue ruling’s third situation
depicts an arrangement under which em-
ployers provide employees with debit
cards that employees can use to pur-
chase transit benefits under circumstances
in which vouchers or similar items ex-
changeable only for transit passes are not
readily available. These debit cards are
restricted for use only at merchants that
have been assigned a merchant category
code (MCC-restricted) indicating that the
merchants sell fare media for the local
transit system. The merchants may or may
not sell other merchandise. The revenue
ruling concludes that these debit cards
do not qualify as transit system vouchers
under section 1.132–9(b) because there is
nothing in the debit card technology that
prevents the use of the cards to purchase
items other than fare media for the local
transit system. However, because tran-
sit passes are not readily available to the
employers in these circumstances, the em-
ployers are permitted to distribute transit
benefits viabona fidecash reimbursement
arrangements. The revenue ruling con-
cludes that the facts of this third situation
result in abona fidecash reimbursement
arrangement because employees are re-
quired to pay for fare media with after-tax
amounts during their first month of par-
ticipation in the transportation benefit
program, the employees must substantiate
the amount of their monthly expenses to
the employers, and the employers pro-
vide funds that the debit card provider
allocates to each debit card in an amount
that does not exceed the lesser of the ap-
plicable monthly limit or the amount of
the employee’s substantiated fare media
expenses for the prior month.
The facts in the fourth situation are the
same as those in the third situation, except
that the employer provides employees
with the MCC-restricted debit cards be-
fore they begin work. Before using the
MCC-restricted debit cards, employees
must certify that the card will be used only
to purchase transit passes. Further, written
on each card is a statement that the card is
to be used only for transit passes and, by
using the card, the employees certify that
the card is being used only to purchase
transit passes. The revenue ruling con-
cludes that the arrangement in the fourth
situation does not meet the requirements of
abona fidecash reimbursement arrange-
ment because it provides for advances
rather than reimbursements and because
itreliessolelyonemployee certifications
provided before expenses are incurred.
Those certifications, standing alone, do
not provide the substantiation of expenses
incurred necessary for there to be abona
fidereimbursement arrangement.
At the time Rev. Rul. 2006–57 was
issued, the Treasury Department and the
Internal Revenue Service (IRS) lacked
sufficient factual context to develop guid-
ance regarding whether terminal-restricted
debit cards were “readily available”. The
revenue ruling indicates that the IRS in-
tends “to issue guidance clarifying under
what situations the cards are considered to
be readily available and thus preclude cash
reimbursement for transit benefits.” In the
interim, employers may usebona fidecash
reimbursement arrangements when the
only available voucher or similar item is a
terminal-restricted debit card.
REQUESTS FOR COMMENT
Treasury and the IRS have become
aware that changes in fare media and in
transit benefit administration may have
created the need for guidance in addition
to the guidance issued concerning the
specific situations described in Rev. Rul.
2006–57. Developments in technology,
an increase in the number of transit sys-
tems and third parties providing electronic
media for transit use, and the trend away
fromuseofpaperfaremediaprovideaba-
sis for concluding that the four situations
described in Rev. Rul. 2006–57 may not
cover the full range of available electronic
media for providing fare media.
Treasury and the IRS request com-
ments on how electronic media may meet
the statutory requirements under section
132(f) for providing transit benefits, either
as vouchers or transit passes or through
bona fidecash reimbursement arrange-
ments in a manner other than those de-
scribed in situations one through four in
Rev. Rul. 2006–57. Also, Treasury and
the IRS request comments on the avail-
ability of terminal-restricted cards and
any other electronic media qualifying as
vouchers or transit passes for purposes
of determining whether such items are
readily available and, therefore, cash re-
imbursement arrangements for providing
transit benefits should be prohibited. Fi-
nally, Treasury and the IRS request com-
ments on challenges employers encounter
in transitioning from paper transit passes
or vouchers to electronic media that qual-
ify as vouchers or transit passes, or from
cash reimbursement arrangements to elec-
tronic media qualifying as transit passes
or vouchers.
1. Electronic Media other than those
described in Revenue Ruling 2006–57
Revenue Ruling 2006–57 distinguishes
the tax-treatment of terminal-restricted
debit cards and MCC-restricted debit cards
under the facts described in the situations.
Specifically, the revenue ruling concludes
that under the facts described in those sit-
uations. a terminal-restricted debit card
qualifies as a transit pass under section
132(f) of the Code, while MCC-restricted
debit cards do not qualify as transit passes
because the holders may be able use the
MCC-restricted debit cards to purchase
items other than fare media. Treasury and
the IRS have become aware of technolog-
ical advances that may enable providers
of MCC-restricted debit cards to limit the
use of these cards to such an extent that it
is almost, if not entirely, impossible to use
the cards to purchase any items other than
fare media. In light of these technological
advances, Treasury and the IRS request
comments on circumstances in which the
use of MCC-restricted debit cards is suf-
ficiently circumscribed so that the cards
qualify as transit passes or vouchers pro-
viding transit benefits.
2. Definition of “readily available”
As discussed in the Background sec-
tion, employers may usebona fidecash
reimbursement arrangements to provide
employees with qualified transportation
fringe benefits only if vouchers or sim-
ilar items are not readily available. The
regulations state that a voucher or similar
item is not readily available if the entity
providing the item imposes restrictions
that effectively prevent employers from
obtaining vouchers appropriate for dis-
tribution to employees. Revenue Ruling
2006–57 did not provide guidance on
what constitutes “readily available” in the
context of terminal-restricted debit cards,
but the revenue ruling indicated that this
issue will be addressed in future guidance.
The IRS requests comments on whether
terminal-restricted debit cards are widely
2012–24 I.R.B.1016June 11, 2012

used, the availability of terminal-restricted
debit cards in areas where paper vouchers
are no longer accepted by the local transit
system, the ease with which employers
can acquire terminal-restricted debit cards
to distribute transit benefits, and any is-
sues that employers and/or employees are
encountering in connection with the use of
such cards.
3. Transitions from paper transit
system vouchers to electronic vouchers
or tobona fidecash reimbursement
systems.
Treasury and the IRS have become
aware of issues arising in locations in
which transit systems no longer accept pa-
per transit passes. Some benefit providers
in these locations that previously pro-
vided transit benefits via paper vouchers
now plan to provide benefits via elec-
tronic media that qualify as transit passes
or vouchers, or viabona fidecash reim-
bursement arrangements because no other
transit passes or vouchers are readily avail-
able for use on the transit systems. The
IRS requests administrators of, and par-
ticipants in, such arrangements to provide
comments concerning any issues that have
arisen related to the transition from paper
vouchers to other methodologies for pro-
viding transportationfringe benefits. For
example, employers transitioning from
paper transit passes to cash reimbursement
arrangements may have questions regard-
ing how to comply with the requirement in
section 1.132–9, Q/A–16 that employees
incur expenses prior to the date employers
make payments as they move from an
in-kind arrangement, which does not have
such a requirement regarding the timing
of expenses, to a cash reimbursement ar-
rangement.
4. Application ofbona fide
reimbursement arrangement
requirements in context of electronic
media.
Treasury and the IRS also requests
comments concerning the circumstances
under which the provision of transit ben-
efits via electronic media constitutes a
bona fidereimbursement arrangement.
For example, the IRS has become aware
of arrangements under which employers
load funds onto electronic media at the
beginning of each month after receiving
an employee certification of expected
transit expenses and then utilize one or
both of the following: (1) true-up mecha-
nisms under which employers periodically
review statements detailing employees’
transactions and require employees to
repay the costs of any “unauthorized”
transactions, or (2) sweep-away mecha-
nisms under which employers delete any
unused amounts from employees’ elec-
tronic media at the end of each month.
The IRS requests comments concern-
ing whether arrangements under which
employers credit employees’ electronic
media with amounts before the employ-
ees actually incur transit expenses may
qualify asbona fidecash reimbursement
arrangements through use of one or both
of these safeguards and if the employee
provides reasonable substantiation of the
expenses incurred within the meaning of
Section 1.132–9, Q/A–16(c). The IRS
also requests comments concerning any
other similar safeguards that should en-
able such up-front crediting of employees’
electronic mediato qualify asbona fide
cash reimbursement arrangements.
REQUEST FOR COMMENTS
The IRS requests comments on the is-
sues described above. Comments should
besubmittedinwritingonorbeforeAu-
gust 27, 2012. All Comments will be
available for public inspection and copy-
ing. Comments may be submitted in one
of three ways:
1. By mail to CC:PA:LPD:PR (Notice
2012–38), Room 5203, Internal Revenue
Service, P.O. Box 7604, Ben Franklin Sta-
tion, Washington, DC 20044.
2.Electronicallyto
Notice.Comments@irscounsel.treas.gov.
Please include “Notice 2012–38”
in the subject line of any electronic
communications.
3. By hand-delivery Monday through
Friday between the hours of 8 a.m.
and 4 p.m. to CC:PA:LPD:PR (Notice
2012–38), Courier’s Desk, Internal Rev-
enue Service, 1111 Constitution Ave., NW,
Washington, DC 20224.
DRAFTING INFORMATION
The principal author of this announce-
ment is Syd Gernstein of the Employment
Tax 2, Tax Exempt and Government
Entities Division. For further information
regarding this announcement, contact
Syd Gernstein or Jean Casey at (202)
622–6040 (not a toll-free call).
June 11, 201210172012–24 I.R.B.

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case, the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of cases
in litigation, or the outcome of a Service
study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
2012–24 I.R.B.iJune 11, 2012

Numerical Finding List
1
Bulletins 2012–1 through 2012–24
Announcements:
2012-1, 2012-1 I.R.B.249
2012-2, 2012-2 I.R.B.285
2012-3, 2012-4 I.R.B.335
2012-4, 2012-4 I.R.B.335
2012-5, 2012-5 I.R.B.348
2012-6, 2012-6 I.R.B.366
2012-7, 2012-6 I.R.B.367
2012-8, 2012-7 I.R.B.373
2012-9, 2012-7 I.R.B.377
2012-11, 2012-13 I.R.B.611
2012-12, 2012-12 I.R.B.562
2012-13, 2012-16 I.R.B.805
2012-14, 2012-14 I.R.B.721
2012-15, 2012-15 I.R.B.794
2012-16, 2012-18 I.R.B.876
2012-17, 2012-18 I.R.B.876
2012-18, 2012-16 I.R.B.845
2012-19, 2012-20 I.R.B.934
2012-20, 2012-18 I.R.B.876
2012-21, 2012-19 I.R.B.898
2012-22, 2012-19 I.R.B.899
2012-23, 2012-22 I.R.B.967
2012-24, 2012-23 I.R.B.982
Notices:
2012-1, 2012-2 I.R.B.260
2012-3, 2012-3 I.R.B.289
2012-4, 2012-3 I.R.B.290
2012-5, 2012-3 I.R.B.291
2012-6, 2012-3 I.R.B.293
2012-7, 2012-4 I.R.B.308
2012-8, 2012-4 I.R.B.309
2012-9, 2012-4 I.R.B.315
2012-10, 2012-5 I.R.B.343
2012-11, 2012-5 I.R.B.346
2012-12, 2012-6 I.R.B.365
2012-13, 2012-9 I.R.B.421
2012-14, 2012-8 I.R.B.411
2012-15, 2012-9 I.R.B.424
2012-16, 2012-9 I.R.B.427
2012-17, 2012-9 I.R.B.430
2012-18, 2012-10 I.R.B.438
2012-19, 2012-10 I.R.B.440
2012-20, 2012-13 I.R.B.574
2012-21, 2012-10 I.R.B.450
2012-22, 2012-13 I.R.B.576
2012-23, 2012-11 I.R.B.483
2012-24, 2012-13 I.R.B.578
2012-25, 2012-15 I.R.B.789
2012-26, 2012-17 I.R.B.847
2012-27, 2012-17 I.R.B.849
Notices— Continued:
2012-28, 2012-17 I.R.B.850
2012-29, 2012-18 I.R.B.872
2012-30, 2012-18 I.R.B.874
2012-31, 2012-20 I.R.B.906
2012-32, 2012-20 I.R.B.910
2012-33, 2012-20 I.R.B.912
2012-34, 2012-21 I.R.B.937
2012-35, 2012-21 I.R.B.937
2012-36, 2012-22 I.R.B.962
2012-37, 2012-24 I.R.B.1014
2012-38, 2012-24 I.R.B.1014
Proposed Regulations:
REG-168745-03, 2012-14 I.R.B.718
REG-137589-07, 2012-21 I.R.B.942
REG-139991-08, 2012-21 I.R.B.945
REG-109369-10, 2012-9 I.R.B.434
REG-110980-10, 2012-13 I.R.B.581
REG-113770-10, 2012-13 I.R.B.587
REG-113903-10, 2012-11 I.R.B.486
REG-120282-10, 2012-11 I.R.B.487
REG-130302-10, 2012-8 I.R.B.412
REG-135491-10, 2012-16 I.R.B.803
REG-149625-10, 2012-2 I.R.B.279
REG-102988-11, 2012-4 I.R.B.326
REG-107548-11, 2012-23 I.R.B.977
REG-115809-11, 2012-13 I.R.B.598
REG-119632-11, 2012-23 I.R.B.978
REG-124627-11, 2012-8 I.R.B.417
REG-124791-11, 2012-15 I.R.B.791
REG-130777-11, 2012-5 I.R.B.347
REG-132736-11, 2012-15 I.R.B.793
REG-135071-11, 2012-12 I.R.B.561
REG-136008-11, 2012-19 I.R.B.881
REG-141268-11, 2012-19 I.R.B.896
REG-144267-11, 2012-21 I.R.B.949
REG-145474-11, 2012-11 I.R.B.495
REG-117645-12, 2012-22 I.R.B.965
Revenue Procedures:
2012-1, 2012-1 I.R.B.1
2012-2, 2012-1 I.R.B.92
2012-3, 2012-1 I.R.B.113
2012-4, 2012-1 I.R.B.125
2012-5, 2012-1 I.R.B.169
2012-6, 2012-1 I.R.B.197
2012-7, 2012-1 I.R.B.232
2012-8, 2012-1 I.R.B.235
2012-9, 2012-2 I.R.B.261
2012-10, 2012-2 I.R.B.273
2012-11, 2012-7 I.R.B.368
2012-12, 2012-2 I.R.B.275
2012-13, 2012-3 I.R.B.295
2012-14, 2012-3 I.R.B.296
2012-15, 2012-7 I.R.B.369
Revenue Procedures— Continued:
2012-16, 2012-10 I.R.B.452
2012-17, 2012-10 I.R.B.453
2012-18, 2012-10 I.R.B.455
2012-19, 2012-14 I.R.B.689
2012-20, 2012-14 I.R.B.700
2012-21, 2012-11 I.R.B.484
2012-22, 2012-17 I.R.B.853
2012-23, 2012-14 I.R.B.712
2012-24, 2012-20 I.R.B.913
2012-25, 2012-20 I.R.B.914
2012-26, 2012-20 I.R.B.933
2012-27, 2012-21 I.R.B.940
Revenue Rulings:
2012-1, 2012-2 I.R.B.255
2012-2, 2012-3 I.R.B.286
2012-3, 2012-8 I.R.B.383
2012-4, 2012-8 I.R.B.386
2012-5, 2012-5 I.R.B.337
2012-6, 2012-6 I.R.B.349
2012-7, 2012-6 I.R.B.362
2012-8, 2012-13 I.R.B.563
2012-9, 2012-11 I.R.B.475
2012-10, 2012-14 I.R.B.614
2012-11, 2012-14 I.R.B.686
2012-12, 2012-15 I.R.B.748
2012-13, 2012-19 I.R.B.878
2012-14, 2012-24 I.R.B.1012
2012-15, 2012-23 I.R.B.975
Treasury Decisions:
9559, 2012-2 I.R.B.252
9560, 2012-4 I.R.B.299
9561, 2012-5 I.R.B.341
9562, 2012-5 I.R.B.339
9563, 2012-6 I.R.B.354
9564, 2012-14 I.R.B.614
9565, 2012-8 I.R.B.378
9566, 2012-8 I.R.B.389
9567, 2012-8 I.R.B.395
9568, 2012-12 I.R.B.499
9569, 2012-11 I.R.B.465
9570, 2012-11 I.R.B.477
9571, 2012-11 I.R.B.468
9572, 2012-11 I.R.B.471
9573, 2012-12 I.R.B.498
9574, 2012-12 I.R.B.559
9575, 2012-15 I.R.B.749
9576, 2012-15 I.R.B.723
9577, 2012-15 I.R.B.730
9579, 2012-16 I.R.B.796
9580, 2012-16 I.R.B.801
9581, 2012-16 I.R.B.798
9582, 2012-18 I.R.B.868
9583, 2012-18 I.R.B.866
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2011–27 through 2011–52 is in Internal Revenue Bulletin
2011–52, dated December 27, 2011.
June 11, 2012ii2012–24 I.R.B.

Treasury Decisions— Continued:
9584, 2012-20 I.R.B.900
9585, 2012-21 I.R.B.935
9586, 2011-22 I.R.B.960
9587, 2012-22 I.R.B.953
9588, 2012-23 I.R.B.969
9589, 2012-23 I.R.B.971
9590, 2012-24 I.R.B.986
2012–24 I.R.B.iiiJune 11, 2012

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2012–1 through 2012–24
Announcements:
2002-44
Supplemented by
Notice 2012-13, 2012-9 I.R.B.421
2010-19
Obsoleted by
Ann. 2012-12, 2012-12 I.R.B.562
2011-63
Corrected by
Ann. 2012-9, 2012-7 I.R.B.377
Notices:
2006-52
As clarified and amplified by Notice 2008-40, is
modified by
Notice 2012-26, 2012-17 I.R.B.847
2006-87
Superseded by
Notice 2012-19, 2012-10 I.R.B.440
2006-99
Superseded in part by
Notice 2012-20, 2012-13 I.R.B.574
2007-25
Superseded by
Notice 2012-19, 2012-10 I.R.B.440
2007-47
Obsoleted by
REG-137589-07, 2012-21 I.R.B.942
2007-77
Superseded by
Notice 2012-19, 2012-10 I.R.B.440
2007-95
Obsoleted in part by
T.D. 9576, 2012-15 I.R.B.723
2008-98
Modified by
Notice 2012-29, 2012-18 I.R.B.872
2008-107
Superseded by
Notice 2012-19, 2012-10 I.R.B.440
2009-86
Modified by
Notice 2012-29, 2012-18 I.R.B.872
2010-27
Superseded by
Notice 2012-19, 2012-10 I.R.B.440
Notices— Continued:
2010-88
As modified by Ann. 2011-40, is superseded by
Notice 2012-1, 2012-2 I.R.B.260
2010-92
Obsoleted by
T.D. 9577, 2012-15 I.R.B.730
2011-8
Superseded by
Notice 2012-19, 2012-10 I.R.B.440
2011-28
Superseded by
Notice 2012-9, 2012-4 I.R.B.315
2011-51
Modified and superseded by
Notice 2012-37, 2012-24 I.R.B.1014
Proposed Regulations:
REG-208274-86
Withdrawn by
Ann. 2012-11, 2012-13 I.R.B.611
REG-151687-10
Withdrawn by
Ann. 2012-23, 2012-22 I.R.B.967
Revenue Procedures:
2000-43
Amplified, modified and superseded by
Rev. Proc. 2012-18, 2012-10 I.R.B.455
2003-61
Superseded by
Notice 2012-8, 2012-4 I.R.B.309
2007-44
Modified by
Ann. 2012-3, 2012-4 I.R.B.335
2010-43
Superseded by
Rev. Proc. 2012-22, 2012-17 I.R.B.853
2011-1
Superseded by
Rev. Proc. 2012-1, 2012-1 I.R.B.1
2011-2
Superseded by
Rev. Proc. 2012-2, 2012-1 I.R.B.92
2011-3
Superseded by
Rev. Proc. 2012-3, 2012-1 I.R.B.113
2011-4
Superseded by
Rev. Proc. 2012-4, 2012-1 I.R.B.125
Revenue Procedures— Continued:
2011-5
Superseded by
Rev. Proc. 2012-5, 2012-1 I.R.B.169
2011-6
Superseded by
Rev. Proc. 2012-6, 2012-1 I.R.B.197
2011-7
Superseded by
Rev. Proc. 2012-7, 2012-1 I.R.B.232
2011-8
Superseded by
Rev. Proc. 2012-8, 2012-1 I.R.B.235
2011-9
Superseded by
Rev. Proc. 2012-9, 2012-2 I.R.B.261
2011-10
Superseded by
Rev. Proc. 2012-10, 2012-2 I.R.B.273
2011-14
Modified and clarified by
Rev. Proc. 2012-19, 2012-14 I.R.B.689
Rev. Proc. 2012-20, 2012-14 I.R.B.700
2011-23
Obsoleted in part by
Rev. Proc. 2012-25, 2012-20 I.R.B.914
2011-37
Obsoleted in part by
Rev. Proc. 2012-16, 2012-10 I.R.B.452
2011-40
Corrected by
Ann. 2012-6, 2012-6 I.R.B.366
2011-49
Modified by
Ann. 2012-3, 2012-4 I.R.B.335
2011-50
Corrected by
Ann. 2012-6, 2012-6 I.R.B.366
2011-51
Corrected by
Ann. 2012-6, 2012-6 I.R.B.366
2011-62
Corrected by
Ann. 2012-17, 2012-18 I.R.B.876
2012-8
Corrected by
Ann. 2012-7, 2012-6 I.R.B.367
Revenue Rulings:
92-19
Supplemented in part by
Rev. Rul. 2012-6, 2012-6 I.R.B.349
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2011–27 through 2011–52 is in Internal Revenue Bulletin 2011–52, dated December 27,
2011.
June 11, 2012iv2012–24 I.R.B.

Revenue Rulings— Continued:
92-53
Amplified by
Rev. Rul. 2012-14, 2012-24 I.R.B.1012
2008-40
Modified by
Notice 2012-6, 2012-3 I.R.B.293
2011-1
Modified by
Notice 2012-6, 2012-3 I.R.B.293
2012-9
Modified by
Rev. Rul. 2012-12, 2012-15 I.R.B.748
Treasury Decision:
9517
Corrected by
Ann. 2012-4, 2012-4 I.R.B.335
Ann. 2012-5, 2012-5 I.R.B.348
2012–24 I.R.B.vJune 11, 2012

June 11, 20122012–24 I.R.B.

2012–24 I.R.B.June 11, 2012

June 11, 20122012–24 I.R.B.

Internal Revenue Service
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ashington,DC20224
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