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News

IRS Amends 'Coverage Month' Definition and Rules on Computing the Premium Tax Credit

By:
Karen Sibayan
Published Date:
Dec 17, 2024

The IRS released final regulations on Dec. 17 amending the definition of “coverage month.” The agency also amended certain other rules in existing income tax regulations relating to the computation of an individual taxpayer’s premium tax credit. 

According to the IRS, generally, the "coverage month" amendment provides that, in computing a premium tax credit, a month might be a coverage month for an individual if the amount of the premium paid, such as the month for the individual’s coverage is enough to avoid termination of the individual’s coverage for that month. 

The final regulations also amend the existing rules relating to the amount of enrollment premiums utilized in computing the taxpayer’s monthly premium tax credit if a portion of the monthly enrollment premium for a coverage month is unpaid. 

Finally, the final regulations clarify when an individual is not eligible for coverage under a State’s Basic Health Program. The final regulations impact taxpayers who enroll themselves or enroll a family member in individual health insurance coverage via a health insurance exchange, and they might be allowed a premium tax credit for the coverage.

These final regulations will apply to taxable years starting on or after Jan. 1, 2025