26 U.S.C. § 36B — Refundable credit for coverage under a qualified health plan

(a) In general: If you qualify as an "applicable taxpayer," you get a tax credit against your income tax. The credit equals your "premium assistance credit amount" for the year. (b) Premium assistance credit amount: This is the sum, over every "coverage month" in the year, of your premium assistance amount for that month. (1) In general — the total is just the sum of the monthly amounts described in (2). (2) Premium assistance amount — for each coverage month, the amount is the smaller of two numbers: (A) the actual monthly premiums for one or more qualified health plans bought through a state Exchange that cover you, your spouse, or a dependent (as section 152 defines "dependent"); or (B) the excess, if any, of (i) the adjusted monthly premium for the "applicable second lowest cost silver plan" available to you, over (ii) 1/12 of your applicable percentage multiplied by your household income for the year. Walking through (B): take the second-lowest-cost silver plan's adjusted monthly premium; subtract 1/12 of your applicable percentage times your yearly household income; whatever is left over is the number to compare against your real premium in (A); the credit for that month is whichever of the two numbers is smaller. (3) Other terms and rules relating to premium assistance amounts: (A) Applicable percentage. (i) In general — a table sets your percentage based on where your household income falls as a share of the poverty line. The percentage rises smoothly, on a straight line, between an "initial" number and a "final" number for each income band: up to 133% of poverty, 2.0% to 2.0%; 133% up to 150%, 3.0% to 4.0%; 150% up to 200%, 4.0% to 6.3%; 200% up to 250%, 6.3% to 8.05%; 250% up to 300%, 8.05% to 9.5%; 300% up to 400%, 9.5% to 9.5%. (ii) Indexing — starting with tax years after 2014, these percentages are adjusted each year for the gap between how fast health premiums are growing and how fast income is growing. Starting with years after 2018, there is an additional adjustment for the gap between premium growth and the consumer price index — but only if total premium tax credits and cost-sharing reductions from the prior year topped 0.504% of gross domestic product (a "failsafe" trigger). (iii) Temporary percentages for 2021 through 2025 — for tax years starting after December 31, 2020, and before January 1, 2026, the indexing in (ii) is turned off. A different table applies instead: up to 150% of poverty, 0.0% to 0.0%; 150% up to 200%, 0.0% to 2.0%; 200% up to 250%, 2.0% to 4.0%; 250% up to 300%, 4.0% to 6.0%; 300% up to 400%, 6.0% to 8.5%; 400% and higher, 8.5% to 8.5%. (B) Applicable second lowest cost silver plan — this is the second-cheapest "silver" plan sold in your rating area through the same Exchange as your actual plan. It must offer self-only coverage if you are unmarried (and not a surviving spouse or head of household) with no dependents, or if you otherwise only bought self-only coverage; it must offer family coverage for everyone else. Special rule: if you file a joint return and your spouse gets no credit under subsection (e) — the rule for people not lawfully present — you are treated as needing only self-only coverage, unless you claim a dependent besides your spouse who is not affected by subsection (e). (C) Adjusted monthly premium — this is what the second-lowest-cost silver plan would have charged if it covered everyone on your actual plan, adjusted only for each person's age the way age-rating works under the Public Health Service Act. If your state runs a wellness-discount pilot program under that Act, any discount from that project is ignored when figuring this premium. (D) Additional benefits — if your qualified health plan offers extra benefits beyond the required "essential health benefits," whether the insurer added them voluntarily or your state required them, the part of the premium paying for those extra benefits is left out of both premium calculations in paragraph (2). (E) Special rule for pediatric dental coverage — if you enroll in both a qualified health plan and a separate stand-alone dental plan for a plan year, the part of that dental plan's premium that pays for the pediatric dental benefits normally required in a qualified health plan is treated as if it were a premium for a qualified health plan. (c) Definitions and rules relating to applicable taxpayers, coverage months, and qualified health plan. (1) Applicable taxpayer. (A) In general — you are an "applicable taxpayer" if your household income for the year is at least 100% but no more than 400% of the poverty line for your family size. (B) [This provision was repealed by Congress in 2025.] (C) Married couples must file joint return — if you are married at the end of the year, you count as an applicable taxpayer only if you and your spouse file jointly. (D) Denial of credit to dependents — if another taxpayer can claim you as a dependent, you get no credit under this section. (E) Temporary rule for 2021 through 2025 — for tax years starting after December 31, 2020, and before January 1, 2026, the 400%-of-poverty ceiling in (A) does not apply, so higher earners can also qualify. (2) Coverage month. (A) In general — a month is a "coverage month" if, on its first day, you, your spouse, or a dependent is covered by a qualified health plan bought through a state Exchange, and the premium for that month has been paid, whether by you or through advance credit payments. (B) Exception for minimum essential coverage — a month is not a coverage month if, that month, the individual is eligible for "minimum essential coverage" from some other source (other than merely being eligible to buy an individual-market plan). "Minimum essential coverage" has the meaning given in section 5000A(f). (C) Special rule for employer-sponsored minimum essential coverage — an employee is not treated as eligible for job-based minimum essential coverage, for purposes of (B), if: (i) coverage must be affordable — the employee's required contribution would exceed 9.5% of household income; or (ii) coverage must provide minimum value — the plan pays for less than 60% of covered costs. (iii) Exception — those two carve-outs do not apply if the employee, or a family member covered through that relationship, is actually enrolled in the employer's plan (including a grandfathered plan). (iv) Indexing — starting with plan years after 2014, the Secretary adjusts the 9.5% figure the same way the applicable percentages in (b)(3)(A)(ii) are adjusted. (3) Definitions and other rules. (A) Qualified health plan — (i) generally has the meaning given in the Affordable Care Act, but excludes bare-bones "catastrophic" plans; (ii) pre-enrollment verification required — a plan does not qualify unless its Exchange lets applicants verify their household income and eligibility, starting no later than August 1, before the next plan year begins; (iii) exception for certain special enrollment periods — a plan does not qualify if enrollment happened during a special enrollment period the Exchange opened based only on expected household income compared to the poverty line, rather than tied to some qualifying life event or circumstance. (B) Grandfathered health plan — has the meaning given in the Affordable Care Act. (4) Special rules for qualified small employer health reimbursement arrangements (QSEHRAs). (A) In general — a month is not a coverage month if, that month, the employee is provided a QSEHRA that counts as "affordable coverage." (B) Denial of double benefit — if an employee has a QSEHRA for a month (regardless of whether (A) applies), any credit otherwise allowed for that month is reduced, but not below zero, by the amount described in (C)(i)(II). (C) Affordable coverage — a QSEHRA counts as affordable for a month if this excess does not exceed 1/12 of 9.5% of household income: take what the employee would pay for self-only coverage under the second-lowest-cost silver plan in the relevant market; subtract 1/12 of the employee's yearly permitted HRA benefit. (D) Qualified small employer health reimbursement arrangement — has the meaning given in section 9831(d)(2). (E) Coverage for less than entire year — if the QSEHRA ran for only part of the year, use the actual number of months it ran instead of 12 in the formula in (C). (F) Indexing — starting with plan years after 2014, the 9.5% figure here is adjusted the same way as under (b)(3)(A)(ii). (d) Terms relating to income and families. (1) Family size — equals the number of people, including yourself, for whom you are allowed a dependent deduction under section 151. (2) Household income — (A) equals your modified adjusted gross income plus the modified adjusted gross income of every other person counted in your family size who was required to file their own tax return. (B) Modified adjusted gross income means adjusted gross income increased by: (i) foreign earned income excluded under section 911; (ii) tax-exempt interest received or accrued during the year; and (iii) the portion of Social Security benefits not otherwise included in gross income. (3) Poverty line — (A) has the meaning given in section 2110(c)(5) of the Social Security Act; (B) for any plan year, use the most recently published poverty line as of the first day of that year's regular enrollment period. (e) Rules for individuals not lawfully present. (1) If someone you claim as a dependent — including you or your spouse — is not lawfully present in the United States: (A) the total premiums counted under (b)(2)(A) are reduced by the share attributable to that person; and (B) your income-to-poverty-line percentage is figured using one of two methods: (i) recompute your family size without that person, then scale your household income by a fraction — the poverty line for your smaller family size, divided by the poverty line for your full family size; or (ii) a comparable method that reaches the same result. (2) Lawfully present means the person is, and is reasonably expected to remain for the entire enrollment period, a U.S. citizen or national, or a lawfully present alien. (3) The Secretary of Health and Human Services, working with the Treasury Secretary, must write rules for making these family-size and household-income calculations, designed to place the least possible burden on people enrolling through an Exchange and on taxpayers claiming this credit. (f) Reconciliation of credit and advance credit. (1) Your credit for the year is reduced, but not below zero, by any advance payments of this credit already sent to your insurer during the year. (2) If those advance payments exceeded the credit you actually qualify for (figured without regard to (1)), your tax for the year is increased by that excess. (3) Each Exchange — or anyone carrying out an Exchange's responsibilities — must report to the Secretary and to you: (A) your coverage level and how long it was in effect; (B) the total premium, without regard to this credit or cost-sharing reductions; (C) the total advance payments or reductions made; (D) the name, address, and taxpayer ID of the primary insured person and of each other insured person; (E) any information, including changes in circumstances, needed to determine your eligibility for and the amount of this credit; and (F) information needed to determine whether you received excess advance payments. (g) Special rule for individuals who receive unemployment compensation during 2021. (1) If you received, or were approved to receive, unemployment compensation for any week beginning in 2021, then for that tax year: (A) you are treated as an applicable taxpayer, and (B) any household income above 133% of the poverty line is left out of the credit calculation. (2) "Unemployment compensation" has the meaning given in section 85(b). (3) You are not treated as having received or been approved for unemployment compensation unless you self-attest and provide documentation the Secretary requires. (4) Clarification of rules that still apply — (A) the joint-filing requirement in (c)(1)(C) still applies even though (g)(1)(A) treats you as an applicable taxpayer; (B) the income rule in (g)(1)(B) does not apply when figuring the QSEHRA affordability tests in (c)(2)(C)(i)(II) or (c)(4)(C)(ii). (h) Regulations: The Secretary must write regulations needed to carry out this section, including rules for (1) coordinating this credit with the ACA's advance-payment program, and (2) applying the reconciliation rules in subsection (f) when a taxpayer's filing status for the year differs from the status used to figure their advance payments.