IRS Releases 2021 ACA Premium Tax Credit Percentages
The IRS has updated items related to the premium tax credit under IRC §36B that was enacted as part of the Affordable Care Act to take into account indexing required under the law.[1] The updated items are:
The applicable percentage table under IRC §36B(b)(3)(A)(i) and
The employee’s required contribution under IRC §36B(c)(2)(C)(i)(II) used to determine if an employer’s offer of coverage is affordable.
Under IRC §36B, if an individual is not offered an affordable health plan providing minimum value by his/her employer, a credit is available up to the difference between the cost of the second lowest cost Silver Plan available to the employee and the applicable percentage for the year of the individual’s household income.
A plan is deemed not affordable if the employee’s required contribution to the employer’s plan exceeds the required contribution percentage.
Both the applicable percentage and the employer’s required contribution percentage are adjusted each year based on indexing calculations.
The applicable percentage table for 2021 will be:
| In the case of household income (expressed as a percent of poverty line) within the following income tier: | The initial premium percentage is | The final premium percentage is | ||
|---|---|---|---|---|
| Up to 133% | 2.07% | 2.07% | ||
| 133% up to 150% | 3.10% | 4.14% | ||
| 150% up to 200% | 4.14% | 6.52% | ||
| 200% up to 250% | 6.52% | 8.33% | ||
| 250% up to 300% | 8.33% | 9.83% | ||
| 300% up to 400% | 9.83% | 9.83% |
For 2021, the required contribution percentage for purposes of IRC §36B(c)(2)(C)(i)(II) and Reg. §1.36B-2(c)(3)(v)(C) is 9.83%.
[1] Revenue Procedure 2020-36, July 21, 2020, https://www.irs.gov/pub/irs-drop/rp-20-36.pdf (retrieved July 21, 2020)