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Ms. Lisa Zarlenga

Ms. Lisa Zarlenga, Tax Legislative Counsel, U.S. Department of the Treasury

Good morning, Chairman Miller, Ranking Member Michaud, and Members of the Committee.  I am pleased to appear before you today to discuss the Treasury Department’s implementation of the Affordable Care Act as it relates to health care provided to our Nation’s veterans, including coverage through the Department of Veterans Affairs (VA).  I am accompanied today by Mr. Jason Levitis, Senior Advisor to the Assistant Secretary for Tax Policy.


There is no higher priority than giving veterans the honor and benefits they have earned through their service and sacrifice for our Nation.  We appreciate this Committee’s commitment to veterans and look forward to working with you to ensure that their needs are met.
The Treasury Department’s work to implement the Affordable Care Act has been guided by this principle of serving our veterans.  We have worked in close collaboration with the VA to help us understand the needs of veterans and VA health programs.  Our goal has been to ensure that the tax provisions of the Affordable Care Act protect the health care veterans have today while also giving them access to additional options.  

Veterans Eligibility for Premium Tax Credits

The Affordable Care Act provides for the establishment of Affordable Insurance Marketplaces (also known as Exchanges), which will open on October 1, 2013, to help individuals compare health plans and enroll in the one that is best for them.  The Affordable Care Act created a refundable premium tax credit to help make coverage offered through a Marketplace affordable by reducing the out-of-pocket premium cost paid by individuals and families.  A taxpayer may qualify for advance payments of the premium tax credit, which are paid directly to health insurance issuers and reduce a taxpayer’s monthly premiums for health insurance.    

The premium tax credit is generally not available to an individual who is eligible to enroll in other “minimum essential coverage,” which generally includes coverage through government-sponsored programs and employer-sponsored plans.   
In developing our regulations implementing the premium tax credit, we worked closely with the VA to ensure that the rules worked properly for our Nation’s veterans.  As part of this process, we determined that the general policy that denies the premium tax credit to individuals eligible for government-sponsored coverage could create problems for certain veterans and their families because eligibility for veterans’ coverage cannot be firmly determined at the time an individual is seeking an eligibility determination at a Marketplace for advance payments of the premium tax credit.
After consulting with our colleagues at VA and considering this issue, we concluded that a specific rule was needed to ensure that veterans were not inappropriately denied the opportunity to receive a premium tax credit to lower the monthly premium of a health insurance plan purchased in a Marketplace.  Accordingly, our proposed regulations contained a rule that treats an individual as eligible for VA coverage only if he or she is actually enrolled in the coverage.  The general result of this rule is that a veteran who is eligible for VA coverage may choose between enrolling in VA coverage or enrolling in coverage through a Marketplace and if eligible, receiving a tax credit that reduces the monthly premium of a health insurance plan purchase in a Marketplace.  Our final regulations retain this general rule.  In addition, to avoid excluding individuals who are eligible for VA medical benefits but who are not veterans, we amended the rule to apply to non-veteran individuals (such as dependents) who may receive VA medical benefits under certain programs.  Thus, the special eligibility rule applies not just to veterans but to individuals who are eligible for benefits under the Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA) or the VA’s Spina Bifida Health Care program.

    VA health coverage and the individual coverage requirement

Beginning in 2014, the Affordable Care Act generally directs non-exempt individuals to maintain minimum essential coverage for themselves and their dependents or make an individual responsibility payment on their federal income tax return.   

Section 5000A of the Internal Revenue Code, added by the Affordable Care Act, defines minimum essential coverage to include coverage under specified government-sponsored programs, coverage under an eligible employer-sponsored plan, and coverage under a health plan offered in a Marketplace.  The statute requires the Secretary of Veterans Affairs, in coordination with the Secretary of Health and Human Services and the Secretary of the Treasury, to determine which VA health care programs should be considered minimum essential coverage for purposes of the Affordable Care Act.  In implementing our proposed regulations under section 5000A, we worked closely with the VA to identify those VA health care programs that provide comprehensive medical benefits.  Based upon the recommendations of our VA colleagues, our proposed regulations specify that the comprehensive medical benefits package authorized for eligible veterans, the CHAMPVA program, and the comprehensive health care program for certain children suffering from spina bifida are each treated as minimum essential coverage for purposes of the individual coverage requirement.  Thus, under the proposed regulations, veterans and other VA beneficiaries who are enrolled in these VA health care programs will satisfy the individual coverage provision of the Affordable Care Act.  We will continue to consult with our VA colleagues as we prepare to issue final regulations on this provision before the end of the year.


Ensuring implementation of the Affordable Care Act in a manner that understands and is responsive to the needs of our Nation’s veterans is a top priority of the Department of the Treasury.  I have outlined above some of the issues we addressed in recent guidance regarding the Affordable Care Act provisions within Treasury’s jurisdiction.  As we move forward with implementation, we look forward to working with the VA as well as with this Committee to ensure that the Affordable Care Act works as well as possible for the veterans and their families who have given so much to our country.  My colleague, Mr. Levitis, and I would be happy to answer any questions you might have.