IRS amends rules for computing the premium tax credit

The IRS on Tuesday released final regulations (T.D. 10019) that amend the definition of “coverage month” and amend certain other rules in existing income tax regulations regarding the computation of an individual taxpayer’s premium tax credit.

Under the amended definition of coverage month in the final regulations, in computing a premium tax credit, a month may be a coverage month for an individual if the amount of the premium paid, including by advance payments of the premium tax credit, for the month for the individual’s coverage is sufficient to avoid termination of the individual’s coverage for that month.

The final regulations amend existing regulations relating to the amount of enrollment premiums used in computing the taxpayer’s monthly premium tax credit if a portion of the monthly enrollment premium for a coverage month is unpaid. The final regulations also clarify when an individual is considered to be ineligible for coverage under a state’s basic health program.

The final regulations, which apply to years beginning on or after Jan. 1, 2025, affect taxpayers who enroll themselves, or enroll a family member, in individual health insurance coverage through a health insurance exchange and may be allowed a premium tax credit for the coverage.

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