The Treasury Department and IRS released on July 8, 2016 proposed regulations relating to premium tax credits under the Affordable Care Act. This included a rule clarifying the inclusion of subsidies for stand-alone pediatric dental plans, as part of the premium tax credit, for plans purchased in a Health Insurance Exchange. This is a positive victory for children because it strengthens pediatric oral health coverage as an "essential health benefit" under the ACA. The AAPD joined with the American Dental Association, Children’s Dental Health Project, Delta Dental Plans Association, and National Association of Dental Plans (NADP) in expressing support for this proposal.

The treatment of premiums for stand-alone pediatric dental plans as relate to tax credit support for low income families has been an issue of concern under the ACA. Under the ACA, the premium tax credit is applied to the cost of a plan that covers "essential health benefits," which includes pediatric oral health coverage. However, if the benchmark plan does not include pediatric dental benefits, a family’s federal tax credit will not include any subsidies for pediatric dental coverage. Since May 2013, a dental coalition formed by NADP found that numerous states did not include pediatric dental coverage within medical benchmark plans. With the help of Senator Debbie Stabenow (D-Michigan), this dental coalition urged the Treasury to equally apply the Advanced Premium Tax Credits (APTC) under the ACA to pediatric dental benefits when they are purchased as a stand-alone dental plan. The AAPD was a signatory on a letter to the Treasury Department in 2014 requesting this change, to include any separate dental premium cost under the calculation of a tax subsidy for low income families.

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Impact of Regulation
In this latest decision, the Treasury Department clarified that the benchmark calculation will include pediatric dental care regardless of whether the benefit is embedded in a medical policy or is offered as a stand-alone plan. The cost of pediatric dental coverage will be accounted for in determining the premium tax credit for families with children, just like other essential health benefits.

This proposed regulation will take affect for taxable years after December 31, 2018. Below is the clarification for benchmark plans:

"In constructing this ranking, the premium for the lowest-cost silver plan that does not include pediatric dental benefits is added to the premium allocable to pediatric dental benefits for the lowest cost stand-alone dental plan, and similarly, the premium for the second lowest-cost silver plan that does not include pediatric dental benefits is added to the premium allocable to pediatric dental benefits for the second lowest-cost stand-alone dental plan. The second lowest-cost amount from this combined ranking is the taxpayer's applicable benchmark plan premium."[1]

This ruling ensures that the APTC applies to all of the ten Essential Health Benefits outlined by the ACA and that more families will have access to affordable dental care for their children under this regulation. As Senator Stabenow notes:

"For young children, early dental care is especially important and this decision will help make dental coverage more affordable for families in Michigan and across the country."

Click here for a copy of the final regulation, issued on December 19, 2016.