Par. 3. Section 1.36B-2 is amended by: 1. Removing paragraph (b)(5) and redesignating paragraphs (b)(6) and (7) as new paragraphs (b)(5) and (6), respectively; 2. Revising the introductory text of newly redesignated paragraph (b)(5)(i); 3. Revising newly redesignated paragraph (b)(5)(ii); 4. Removing newly redesignated paragraphs (b)(5)(iii) and (iv); 5. In newly redesignated paragraph (b)(6), removing the language “or (b)(6)”; 6. Revising paragraphs (c)(2)(ii) and (v); 7. Redesignating paragraph (c)(2)(vi) as paragraph (c)(2)(vii) and adding new paragraph (c)(2)(vi); 8. In newly redesignated paragraph (c)(2)(vii), designating Example 1 through Example 6 as paragraphs (c)(2)(vii)(A) through (F), respectively; 9. In newly designated paragraph (c)(2)(vii)(C), removing the language “ Example 2” and adding the language “paragraph (c)(2)(vii)(B) of this section ( Example 2 )” in its place; 10. In newly designated paragraph (c)(2)(vii)(F), removing the language “ Example 5” and adding the language “paragraph (c)(2)(vii)(E) of this section ( Example 5 )” in its place; 11. Adding paragraphs (c)(2)(vii)(G), (H), and (I); and 12. Revising paragraphs (e)(1), (2), and (6) and adding paragraph (e)(7). The revisions and additions read as follows:
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(b) * * *
(5) * * *
(i) * * * A taxpayer whose household income for a taxable year is less than 100 percent of the Federal poverty line for the taxpayer's family size is treated as an applicable taxpayer for the taxable year if—
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(ii) Exceptions. This paragraph (b)(5) does not apply for an individual who, with intentional or reckless disregard for the facts, provides incorrect information to an Exchange for the year of coverage. A reckless disregard of the facts occurs if the taxpayer makes little or no effort to determine whether the information provided to the Exchange is accurate under circumstances that demonstrate a substantial deviation from the standard of conduct a reasonable person would observe. A disregard of the facts is intentional if the taxpayer knows the information provided to the Exchange is inaccurate.
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(c) * * *
(2) * * *
(ii) Obligation to complete certain requirements to obtain coverage— (A) Administrative requirements. An individual who meets the criteria for eligibility for government-sponsored minimum essential coverage must complete certain administrative requirements in order to receive benefits. Except as provided in paragraph (c)(2)(ii)(B) of this section, an individual who fails by the last day of the third full calendar month following the event that establishes eligibility under paragraph (c)(2)(i) of this section to complete the requirements to obtain government-sponsored minimum essential coverage (other than a veteran's health care program) is treated as eligible for government-sponsored minimum essential coverage as of the first day of the fourth calendar month following the event that establishes eligibility.
(B) Medicaid community engagement requirement. For taxable years beginning after December 31, 2026, an individual who is determined or assessed (within the meaning of 45 CFR 155.302(b)) by an Exchange to be not eligible for Medicaid solely because the individual failed to meet the requirement to demonstrate community engagement under 42 U.S.C. 1396a(xx)(1) is treated as eligible for minimum essential coverage under section 5000A(f)(1)(A)(ii) as of the later of the first day of the first full month the individual would have been eligible to receive benefits under the Medicaid program or the first day of the first calendar month beginning after the assessment or determination that the individual would have been eligible for Medicaid but for the failure to meet the requirement to demonstrate community engagement under 42 U.S.C. 1396a(xx)(1).
(C) No longer ineligible for failing to demonstrate community engagement. For any month in which an individual described in paragraph (c)(2)(ii)(B) of this section is determined or assessed by an Exchange to be, or becomes, no longer ineligible for Medicaid solely for failing to meet the requirement to demonstrate community engagement under 42 U.S.C. 1396a(xx)(1), paragraph (c)(2)(ii)(B) of this section does not apply.
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(v) Determination of Medicaid or Children's Health Insurance Program (CHIP) ineligibility —(A) In general. Except as provided in paragraph (c)(2)(v)(B) of this section, an individual is treated as not eligible for Medicaid, CHIP, or a similar program such as a Basic Health Program, for a period of coverage under a qualified health plan if, when the individual enrolls in the qualified health plan, an Exchange conducts an eligibility determination or, if applicable, eligibility assessment (within the meaning of 45 CFR 155.302(b)) for Medicaid, CHIP, or a similar program and determines or assesses the individual to be not eligible for coverage under the program.
(B) Determination of Medicaid community engagement. For taxable years beginning after December 31, 2026, paragraph (c)(2)(v)(A) of this section does not apply for an individual who is determined or assessed by an Exchange to be not eligible for Medicaid solely because the individual failed to meet the requirement to demonstrate community engagement under 42 U.S.C. 1396a(xx)(1).
(C) Determination of Medicaid ineligibility after enrollment. If an individual treated as eligible for Medicaid due to an Exchange determination or assessment that the individual was ineligible for Medicaid as described in paragraph (c)(2)(ii)(B) of this section enrolls in a qualified health plan and, after the enrollment, an Exchange conducts an eligibility determination or, if applicable, eligibility assessment (within the meaning of 45 CFR 155.302(b)) for Medicaid and determines or assesses the individual to be not eligible for Medicaid for a reason other than the individual failing to meet the requirement to demonstrate community engagement under 42 U.S.C. 1396a(xx)(1), then the individual is treated as not eligible for Medicaid for the period of coverage under the qualified health plan as of the first day of the first calendar month after the Exchange makes such determination or assessment.
(vi) Inapplicability due to intentional or reckless disregard of the facts. Paragraphs (c)(2)(ii)(C), (c)(2)(v)(A), and (c)(2)(v)(C) of this section do not apply for an individual who, with intentional or reckless disregard for the facts, provides incorrect information to an Exchange for the year of coverage. A reckless disregard of the facts occurs if the taxpayer makes little or no effort to determine whether the information provided to the Exchange is accurate under circumstances that demonstrate a substantial deviation from the standard of conduct a reasonable person would observe. A disregard of the facts is intentional if the taxpayer knows that information provided to the Exchange is inaccurate.
(vii) * * *
(G) Example 7: Medicaid ineligibility determination—community engagement. Taxpayer H is determined to be ineligible for Medicaid as of January 1, 2027, solely because of H's failure to meet the requirement to demonstrate community engagement under 42 U.S.C. 1396a(xx)(1). H begins a new job in March of 2027 that makes H ineligible for Medicaid due to H's income being above the income threshold for Medicaid eligibility in H's state. In March, H goes to the Exchange in H's rating area and enrolls in a qualified health plan and is determined to be eligible for advance credit payments beginning in April 2027. H was not enrolled in a qualified health plan before April 2027. Under paragraph (c)(2)(v)(A) of this section, H is treated as ineligible for Medicaid for the period of H's qualified health plan coverage in 2027 because, when H enrolled in a qualified health plan, the Exchange determined that H was ineligible for Medicaid for a reason other than failing to meet the requirement to demonstrate community engagement under 42 U.S.C. 1396a(xx)(1).
(H) Example 8 -( 1 ) Mid-year Medicaid ineligibility redetermination—community engagement. The facts are the same as in paragraph (c)(2)(vii)(G) of this section ( Example 7 ), except that H enrolled in a qualified health plan as of January 1, 2027, and paid the total amount of the premiums for the coverage for January through March. Thus, January and February are not coverage months for H because H's ineligibility for Medicaid for those months is solely due to H's failure to meet the requirement to demonstrate community engagement under 42 U.S.C. 1396a(xx)(1).
( 2 ) No longer ineligible for failing to demonstrate community engagement. Because H's income for March is above the income threshold for Medicaid eligibility in H's state, March is the month H becomes no longer ineligible for Medicaid solely for failing to meet the requirement to demonstrate community engagement under 42 U.S.C. 1396a(xx)(1), as described in paragraph (c)(2)(ii)(C) of this section. For March, H does not meet the criteria for eligibility for Medicaid as described in paragraph (c)(2)(i) of this section and March may be a coverage month for H.
( 3 ) Determination of Medicaid ineligibility after enrollment. Under paragraph (c)(2)(v)(C) of this section, H is treated as ineligible for Medicaid in April and the months of H's 2027 enrollment after April. This is because after H's January enrollment in a qualified health plan, the Exchange conducted an eligibility determination for Medicaid in March and determined H to be ineligible for Medicaid for a reason other than failing to meet the requirement to demonstrate community engagement under 42 U.S.C. 1396a(xx)(1). Thus, April, the first calendar month after the Exchange made such determination, and the months after April in which H was enrolled in a qualified health plan, may be coverage months for H.
(I) Example 9 -( 1 ) Mid-year Medicaid eligibility redetermination—community engagement. Taxpayer J is determined by an Exchange to be ineligible for Medicaid as of January 1, 2027, solely because of J's failure to meet the requirement to demonstrate community engagement under 42 U.S.C. 1396a(xx)(1). J enrolls in a qualified health plan through the Exchange as of January 1, 2027, and is determined to be ineligible for advance credit payments consistent with paragraph (c)(2)(ii)(B) of this section. Subsequently, J meets the requirement to demonstrate community engagement under 42 U.S.C. 1396a(xx)(1) and meets the criteria for eligibility for Medicaid as described in paragraph (c)(2)(i) of this section as of April 1, 2027.
( 2 ) No longer ineligible for failing to demonstrate community engagement. Because J becomes eligible for Medicaid as of April 1, 2027, J is no longer ineligible for Medicaid solely for failing to meet the requirement to demonstrate community engagement under 42 U.S.C. 1396a(xx)(1), as described in paragraph (c)(2)(ii)(C) of this section. Thus, paragraph (c)(2)(ii)(B) of this section does not apply to J starting with the month of April 2027.
( 3 ) Administrative requirements. Under paragraph (c)(2)(ii)(A) of this section, J must complete certain administrative requirements necessary to receive Medicaid benefits because J meets the criteria for eligibility for Medicaid as described in paragraph (c)(2)(i) of this section. If J does not complete the administrative requirements necessary to enroll in Medicaid by June 30, 2027, which is the last day of the third full calendar month following the event that establishes J's eligibility (J meeting the requirement to demonstrate community engagement and, thus, the criteria for eligibility for Medicaid), J is treated as eligible for government-sponsored minimum essential coverage under paragraph (c)(2)(ii)(A) of this section as of July 1, 2027, the first day of the fourth calendar month following the event that establishes J's eligibility.
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(e) * * *
(1) Except as provided in paragraphs (e)(2) through (7) of this section, this section applies to taxable years ending after December 31, 2013.
(2) Paragraph (c)(2)(vi) of this section applies to taxable years beginning after December 31, 2026. The last three sentences of § 1.36B-2(c)(2)(v) as contained in 26 CFR part 1 edition revised as of April 1, 2025, apply to taxable years beginning after December 31, 2016, and ending before January 1, 2027. Paragraph (b)(5)(i) of this section applies to taxable years beginning on or after October 15, 2026. Section 1.36B-2(b)(6)(i) as contained in 26 CFR part 1 edition revised as of April 1, 2025, applies to taxable years ending after December 31, 2013, and beginning before October 15, 2026. Paragraphs (b)(5)(ii), (c)(3)(i), and (c)(3)(iii)(A), the last three sentences of paragraph (c)(3)(v)(A)( 3 ), and paragraph (c)(4) of this section apply to taxable years beginning after December 31, 2016. Section 1.36B-2(b)(6), (c)(3)(i), (c)(3)(iii)(A), and (c)(4) as contained in 26 CFR part 1 edition revised as of April 1, 2016, apply to taxable years ending after December 31, 2013, and beginning before January 1, 2017.
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(6) Paragraph (c)(2)(v) of this section applies to taxable years beginning after December 31, 2026. The first sentence of § 1.36B-2(c)(2)(v) as contained in 26 CFR part 1 edition revised as of April 1, 2025, applies to taxable years beginning on or after January 1, 2025, and ending before January 1, 2027. The first sentence of § 1.36B-2(c)(2)(v) as contained in 26 CFR part 1 edition revised as of April 1, 2024, applies to taxable years ending after December 31, 2013, and beginning before January 1, 2025.
(7) Paragraphs (c)(2)(ii) and (c)(2)(vii)(G) through (I) of this section apply to taxable years beginning after December 31, 2026. Paragraph (c)(2)(ii) of this section as contained in 26 CFR part 1 edition revised as of April 1, 2025, applies to taxable years beginning before December 31, 2026. Paragraph (b)(6) of this section applies to taxable years beginning on or after October 15, 2026. Section 1.36B-2(b)(5) and (7) as contained in 26 CFR part 1 edition revised as of April 1, 2025, applies to taxable years ending after December 31, 2013, and beginning before October 15, 2026.