D.C. Mun. Regs. tit. 26, r. 26-D201

Current through Register Vol. 71, No. 49, December 6, 2024

Rule 26-D201 - AFFORDABILITY EXEMPTIONS

201.1

An individual is an exempt individual for a month that includes a day with respect to which the individual lacks affordable coverage. For purposes of this section, an individual lacks affordable coverage in a month if the individual's required contribution (determined on an annual basis) for minimum essential coverage for the month exceeds the required contribution percentage of the individual's household income.

201.2

An individual's required contribution percentage shall be determined as follows:

(a) The required contribution percentage for tax year 2019 is eight and three tenths percent (8.3%).

(b) For tax years after 2019, the required contribution percentage shall beequal to the amount under 26 USC § 5000A(a)(1).

(c) The Authority shall annually publish on its website the required contribution percentage before September 30 of the applicable tax year.

201.3

Affordability exemption determinations for individuals or related individuals who are eligible for coverage through a plan offered by an employer shall be determined as follows:

(a) An individual's eligibility for coverage through an employer-sponsored plan shall be determined as follows:

(1) Except as provided in paragraph (a)(2), an employee or related individual shall be treated as eligible for coverage under an employer-sponsored plan for a month during a plan year if the employee could have enrolled in the plan for any day in that month during an open or special enrollment period, regardless of whether the employee or related individual is eligible for any other type of minimum essential coverage. An employer-sponsored plan shall only be considered eligible if it meets the minimum value standard described in 42 CFR§ 156.145.

(2) An employee eligible for coverage both under an eligible employer-sponsored plan offered by their own employer's plan and as a related individual on another eligible employer-sponsored plan (for example, an eligible employer-sponsored plan offered by the employer of the employee's spouse) for any month, shall be treated only as eligible under their own employer's plan and not as an eligible related individual for that month.

(3) A former employee or an individual related to a former employee, who may enroll in continuation coverage required under federal law or a District or state law that provides comparable continuation coverage, or in retiree coverage under an eligible employer-sponsored plan, shall be treated as eligible for coverage under an eligible employer-sponsored plan only if the individual enrolls in the coverage.

(b) The required contribution for individuals eligible for employer-sponsored coverage shall be as follows:

(1) Annual Enrollment

(A) For employees eligible for enrollment in an employer-sponsored plan, the required contribution shall be the portion of the annual premium that the employee would pay, whether through salary reduction or otherwise, for the lowest cost self-only coverage.

(B) For related individuals who are eligible for coverage under an eligible employer-sponsored plan because of a relationship to an employee, and for whom a personal exemption deduction under § 151 of the Internal Revenue Code is claimed, or considered under this paragraph to have been claimed, on the employee's Federal income tax return, the required contribution shall be the portion of the annual premium that the employee would pay, whether through salary reduction or otherwise, for the lowest cost family coverage that would cover the employee and all related individuals who are included in the employee's nonexempt family but not an exempt individual under 9 DCMR § 3903.

(i) An employee shall be considered to have claimed a personal exemption deduction for himself or herself for a taxable year if the employee files an income tax return for the year and does not qualify as a dependent of another taxpayer under § 152 of the Internal Revenue Code for the year; or

(ii) A employee shall be considered to have claimed a personal exemption deduction for an individual other than the employee if the employee is allowed a personal exemption deduction for the employee (taking into account § 151(d)(5)(B) of the Internal Revenue Code) and lists the individual's name and Tax Identification Number on Form 1040, U.S. Individual Income Tax Return, or Form 1040NR, U.S. Nonresident Alien Income Tax Return, the taxpayer files for the year.

(2) Partial Year Enrollment

(A) The affordability of an employer-sponsored plan shall be determined separately for each employment period that is less than a full calendar year or for the portions of a year that fall in different taxable years of the individual.

(B) Coverage under an eligible employer-sponsored plan shall be considered affordable for a part-year period if the annualized required contribution for self-only coverage (in the case of the employee) or family coverage (in the case of a related individual) under the plan for the part-year period does not exceed the required contribution percentage of the individual's household income for the taxable year.

(C) The annualized required contribution shall be the required contribution determined under paragraph (b) for the part-year period times a fraction, the numerator of which is twelve (12) and the denominator of which is the number of months in the part- year period during the individual's taxable year. Only full calendar months are included in the computation under this paragraph.

(3) Employer Contributions to Health Reimbursement Arrangements

(A) Amounts newly made available for the current plan year under a health reimbursement arrangement that an employee may use to pay premiums, or cost-sharing or benefits not covered by the primary plan in addition to premiums, shall be counted toward the employee's required contribution if the health reimbursement arrangement would be integrated, as that term is used in Internal Revenue Service Notice 2013-54 (2013-40 IRB 287), with an eligible employer-sponsored plan for an employee enrolled in the plan.

(B) The eligible employer-sponsored plan and the health reimbursement arrangement must be offered by the same employer.

(C) Employer contributions to a health reimbursement arrangement shall count toward an employee's required contribution only to the extent the amount of the annual contribution is required under the terms of the plan or otherwise determinable within a reasonable time before the employee must decide whether to enroll in the eligible employer-sponsored plan.

(4) Employer Contributions to Cafeteria Plans Amounts made available for the current plan year under a cafeteria plan, within the meaning of Internal Revenue Code §125, are counted as reducing an employee's or a related individual's required contribution if:

(A) The employee may not opt to receive the amount as a taxable benefit;

(B) The employee may use the amount to pay for minimum essential coverage; and

(C) The employee may use the amount exclusively to pay for medical care, within the meaning of Internal Revenue Code §213.

(5) Wellness Program Incentives

(A) Nondiscriminatory wellness program incentives, within the meaning of 26 CFR § 54.9802-1(f), offered by an eligible employer-sponsored plan that affect premiums shall be treated as earned in determining an employee's required contribution for purposes of affordability of an eligible employer-sponsored plan to the extent the incentives relate exclusively to tobacco use.

(B) Wellness program incentives that do not relate to tobacco use or that include a component unrelated to tobacco use shall be treated as not earned for this purpose. For the purposes of this section, the term wellness program incentive has the same meaning as the term reward in 26 CFR § 54.9802-1(f)(1)(i).

201.4

Affordability exemption eligibility for individuals or related individuals who are not eligible for coverage through a plan offered by an employer shall be determined as follows.

(a) The required contribution shall be the annual premium for the applicable qualified health plan, reduced by the maximum amount of any credit allowable under Internal Revenue Code §36B for the taxable year, determined as if the individual was covered for the entire taxable year by a qualified health plan offered through the Exchange established pursuant to D.C. Official Code § 31-3171.04(a)(1).

(b) For each individual who applies for an exemption for a period of less than twelve (12) months, eligibility shall be determined separately for each period. Coverage under a plan shall be considered affordable for a part-year period if the annualized required contribution for coverage under the plan for the part-year period does not exceed the required contribution percentage of the individual's household income for the taxable year.

(c) The annualized required contribution shall be the required contribution determined under paragraph (a) for the part-year period times a fraction, the numerator of which is twelve (12) and the denominator of which is the number of months in the part-year period during the individual's taxable year. Only full calendar months are included in the computation under this paragraph.

D.C. Mun. Regs. tit. 26, r. 26-D201

Final Rulemaking published at 67 DCR 1236 (2/7/2020)