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Federal Register / Vol. 86, No. 127 / Wednesday, July 7, 2021 / Rules and Regulations
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TABLE 1APPLICABLE PERCENTAGE TABLE FOR CY 2022 aContinued In the case of household income expressed as a percent of poverty line within the following income tier:

The initial premium percentage is
200.0% up to 250.0%
250.0% up to 300.0%
300.0 percent up to 400.0%
400.0% percent and higher

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2.0
4.0
6.0
8.5

The final premium percentage is 4.0
6.0
8.5
8.5

9661 of the American Rescue Plan Act of 2021.

6. Metal Tier Selection Factor MTSF
On the Exchange, if an enrollee chooses a QHP and the value of the APTC to which the enrollee is entitled is greater than the premium of the plan selected, then the APTC is reduced to be equal to the premium. This usually occurs when enrollees eligible for larger APTCs choose bronze-level QHPs, which typically have lower premiums on the Exchange than silver-level QHPs.
Prior to 2018, we believed that the impact of these choices and plan selections on the amount of PTCs that the federal government paid was relatively small. During this time, most enrollees in income ranges up to 200
percent FPL chose silver-level QHPs, and in most cases where enrollees chose bronze-level QHPs, the premium was still more than the PTC. Based on our analysis of the percentage of persons with incomes below 200 percent FPL
choosing bronze-level QHPs and the average reduction in the PTCs paid for those enrollees, we believe that the total PTCs paid for persons with incomes below 200 percent FPL were reduced by about 1 percent in 2017. Therefore, we did not seek to make an adjustment based on the effect of enrollees choosing non-silver-level QHPs in developing the BHP payment methodology applicable to program years prior to 2018.
However, after the discontinuance of the CSR payments in October 2017, several changes occurred that increased the expected impact of enrollees plan selection choices on the amount of PTC
the government paid. These changes led to a larger percentage of individuals choosing bronze-level QHPs, and for those individuals who chose bronzelevel QHPs, these changes also generally led to larger reductions in PTCs paid by the federal government per individual.
The combination of more individuals with incomes below 200 percent of FPL
choosing bronze-level QHPs and the reduction in PTCs had an impact on PTCs paid by the federal government for enrollees with incomes below 200
percent FPL.
Therefore, in the 2020 and 2021
payment methodology, we included an adjustment the MTSF in the BHP
payment methodology to account for the
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effects of these choices. Section 1331d3 of the Patient Protection and Affordable Care Act requires that the BHP payments to states be based on what would have been provided if such eligible individuals were allowed to enroll in QHPs, and we believed that it was appropriate to consider how individuals would have chosen different plansincluding across different metal tiersas part of the BHP payment methodology.
In the 2022 proposed Payment Notice, we proposed to include the MTSF in the payment methodology and calculate its value using the same approach as finalized in the 2020 final Payment Notice 84 FR 59543. As discussed above, since publication of the 2022
proposed Payment Notice, Congress passed the ARP, which, as discussed in section I.C. of this final notice, modifies the applicable percentages of household income used to calculate the amount of APTC taxpayers are eligible to have paid on their behalf for coverage purchased through an Exchange during taxable years 2021 and 2022. Also as discussed above, we believe that these changes are likely to significantly affect enrollees plan choices starting in 2022. Most notably, individuals with incomes up to 150 percent of FPL will be able to purchase a silver-level plan with a $0
premium, and individuals with incomes between 150 percent and 200 percent of FPL will be able to purchase a silverlevel plan at a lower premium than previously. Therefore, we believe that significantly more enrollees likely will choose to enroll in silver-level plans and fewer in bronze-level plans and the amount of PTC foregone therefore will be less than it was in previous years. Accordingly, the impact of the MTSF likely will be significantly less.
Therefore, we are not finalizing our proposal to include the MTSF in the 2022 payment methodology.
7. Income Reconciliation Factor IRF
For persons enrolled in a QHP
through an Exchange who receive APTC, there will be an annual reconciliation following the end of the year to compare the APTC to the correct amount of PTC based on household
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circumstances shown on the federal income tax return. Any difference between the latter amounts and the APTC paid during the year would either be paid to the taxpayer if too little APTC was paid or charged to the taxpayer as additional tax if too much APTC was paid, subject to any limitations in statute or regulation, as provided in 26 U.S.C. 36Bf.
Section 1331e2 of the Patient Protection and Affordable Care Act specifies that an individual eligible for the BHP may not be treated as a qualified individual under section 1312 of the Patient Protection and Affordable Care Act who is eligible for enrollment in a QHP offered through an Exchange. We are defining eligible to mean anyone for whom the state agency or the Exchange assesses or determines, based on the single streamlined application or renewal form, as eligible for enrollment in the BHP. Because enrollment in a QHP is a requirement for individuals to receive APTC, individuals determined or assessed as eligible for a BHP are not eligible to receive APTC for coverage in the Exchange. Because they do not receive APTC, BHP enrollees, on whom the BHP payment methodology is generally based, are not subject to the same income reconciliation as Exchange consumers.
Nonetheless, there may still be differences between a BHP enrollees household income reported at the beginning of the year and the actual household income over the year. These may include small changes reflecting changes in hourly wage rates, hours worked per week, and other fluctuations in income during the year and large changes reflecting significant changes in employment status, hourly wage rates, or substantial fluctuations in income. There may also be changes in household composition. Thus, we believe that using unadjusted income as reported prior to the BHP program year may result in calculations of estimated PTC that are inconsistent with the actual household incomes of BHP
enrollees during the year. Even if the BHP adjusts household income determinations and corresponding
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