Human Resources
Thought Leadership

IRS Proposes Rules for Federal Subsidy of Health Insurance Purchased in State Exchanges

The Internal Revenue Service (IRS) on August 12, 2011 issued proposed regulations relating to the federal premium tax credit for individuals who purchase health insurance through a state insurance exchange beginning in 2014. Funds for the federal subsidy are obtained from employers that are subject to the “shared responsibility” provision of the Patient Protection and Affordable Care Act (Affordable Care Act), which is also known as the “free rider penalty.”

The Aon Hewitt bulletin below provides:

  • An overview of the federal subsidy (a health insurance premium tax credit) available to applicable taxpayers;
  • An overview of the employer “shared responsibility” payment;
  • Eligibility for the premium tax credit; and
  • Calculating the premium tax credit.

IRS Proposes Rules for Federal Subsidy of Health Insurance Purchased in State Exchanges