IRS Provides 2016 Indexing Adjustments Under Health Insurance Provisions

26 CFR 601.105: Examination of returns and claims for refund, credit, or abatement; determination of correct tax liability.

(Also §§ 36B, 5000A, 1.36B-2T, 1.36B-3, 1.5000A-3.)

Rev. Proc. 2014-62

SECTION 1. PURPOSE

This revenue procedure provides indexing adjustments for certain provisions under sections 36B and 5000A of the Internal Revenue Code. In particular, it updates the Applicable Percentage Table in § 36B(b)(3)(A)(i) to provide the Applicable Percentage Table for 2016. This table is used to calculate an individual's premium tax credit. This revenue procedure also updates the required contribution percentage in § 36B(c)(2)(C)(i)(II) for plan years beginning after calendar year 2015. This percentage is used to determine whether an individual is eligible for affordable employer-sponsored minimum essential coverage under § 36B. This revenue procedure uses the methodology described in Section 4 of Rev. Proc. 2014-37, 2014-33 I.R.B. 363, to index the Applicable Percentage Table and the § 36B required contribution percentage for the 2016 year. Rev. Proc. 2014-37 provides indexing adjustments for these amounts for the 2015 year. Additionally, this revenue procedure cross-references the required contribution percentage under § 5000A(e)(1)(A) for plan years beginning after calendar year 2015, as determined under guidance issued by the Department of Health and Human Services. This percentage is used to determine whether an individual is eligible for an exemption from the individual shared responsibility payment because of a lack of affordable minimum essential coverage.

SECTION 2. ADJUSTED ITEMS

.01 Applicable Percentage Table for 2016. For taxable years beginning in 2016, the Applicable Percentage Table for purposes of § 36B(b)(3)(A)(i) and § 1.36B-3T(g) is:

 Household income percentage of Federal              Initial         Final

.03 Section 5000A Required Contribution Percentage. In the proposed Notice of Benefit and Payment Parameters for 2016, 79 Fed. Reg. ____ (November 21, 2014), for plan years beginning in 2016, the Department of Health and Human Services (HHS) announced that the Section 5000A required contribution percentage for purposes of § 5000A(e)(1)(A) and § 1.5000A-3(e)(2) is 8.13%. IfHHS announces a different percentage when it finalizes its proposed rule, this revenue procedure will be updated to cross-reference the final percentage announced by HHS. See Exchange and Insurance Market Standards for 2015 and beyond, 79 Fed. Reg. 30239, 30302 (May 27, 2014), for further information on the computation methodology and publication approach for the Section 5000A required contribution percentage.

SECTION 3. EFFECTIVE DATE

This revenue procedure is effective for taxable years and plan years beginning after December 31, 2015.

SECTION 4. DRAFTING INFORMATION

The principal author of this revenue procedure is Arvind Ravichandran of the Office of Associate Chief Counsel (Income Tax and Accounting). For further information regarding this revenue procedure, contact Mr. Ravichandran at (202) 317-4718 (not a toll-free call).