Under Internal Revenue Code (Code) Section 36B, individuals are eligible for an exchange subsidy (or premium tax credit) if their employer has not offered them affordable coverage that provides minimum value. The IRS recently released two pieces of guidance with respect to eligibility determinations under Code Section 36B – Final Regulations under Code Section 36B and Notice 2022-41. Under the new guidance, subsidized exchange coverage for family members will be based on the cost of employer-sponsored family coverage. Plans that operate on a plan year other than the calendar year may be amended to permit mid-year election changes corresponding to the new exchange subsidy eligibility rules.
As recently announced, President Biden has authorized forgiveness of up to $10,000 for federal student loan borrowers and $20,000 to individuals who received Pell Grants.
Employers are also able to provide student loan repayment benefits to their employees on a tax-free basis by expanding the type of permitted expenses under a Code § 127 “educational assistance program” to include student loan repayments made by the employer on behalf of an employee. If an employer has or adopts an educational assistance program, the employer may make student loan payments on behalf of an employee in an amount up to $5,250 annually, and such payments would be excluded from the employee’s taxable income.