Apply ACA PTC formula to historical premiums

changelog.d/8527.fixed.md

@@ -0,0 +1 @@
+Apply ACA premium tax credit formulas to years with historical SLCSP premiums.

policyengine_us/parameters/gov/aca/required_contribution_percentage/final.yaml

@@ -1,21 +1,49 @@
 description: Final (ending) contribution percentage for each ACA bracket.
 metadata:
   unit: /1
+  period: year
   label: ACA contribution percentage - final rate per bracket
   reference:
     - title: 26 U.S. Code § 36B(b)(3)(A) - Refundable credit for coverage under a qualified health plan
       href: https://www.law.cornell.edu/uscode/text/26/36B#b_3_A
+    - title: IRS Revenue Procedure 2017-36 - Applicable percentage table for 2018
+      href: https://www.irs.gov/pub/irs-drop/rp-17-36.pdf#page=2
+    - title: IRS Revenue Procedure 2018-34 - Applicable percentage table for 2019
+      href: https://www.irs.gov/pub/irs-drop/rp-18-34.pdf#page=2
+    - title: IRS Revenue Procedure 2019-29 - Applicable percentage table for 2020
+      href: https://www.irs.gov/pub/irs-drop/rp-19-29.pdf#page=3
     - title: IRS Revenue Procedure 2025-25 - Applicable percentage table for 2026
       href: https://www.irs.gov/pub/irs-drop/rp-25-25.pdf
 values:
-  # Original ACA (2015-2020): 6 brackets
+  # Original ACA: 6 brackets
   2015-01-01:
     - 0.02    # 0-133%: flat 2%
     - 0.04    # 133-150%
     - 0.063   # 150-200%
     - 0.0805  # 200-250%
     - 0.095   # 250-300%
     - 0.095   # 300-400%: flat 9.5%
+  2018-01-01:
+    - 0.0201
+    - 0.0403
+    - 0.0634
+    - 0.081
+    - 0.0956
+    - 0.0956
+  2019-01-01:
+    - 0.0208
+    - 0.0415
+    - 0.0654
+    - 0.0836
+    - 0.0986
+    - 0.0986
+  2020-01-01:
+    - 0.0206
+    - 0.0412
+    - 0.0649
+    - 0.0829
+    - 0.0978
+    - 0.0978
   # ARPA/IRA (2021-2025): 5 brackets, no 133% threshold
   2021-01-01:
     - 0       # 0-150%: flat 0%

policyengine_us/parameters/gov/aca/required_contribution_percentage/initial.yaml

@@ -1,21 +1,49 @@
 description: Initial (starting) contribution percentage for each ACA bracket.
 metadata:
   unit: /1
+  period: year
   label: ACA contribution percentage - initial rate per bracket
   reference:
     - title: 26 U.S. Code § 36B(b)(3)(A) - Refundable credit for coverage under a qualified health plan
       href: https://www.law.cornell.edu/uscode/text/26/36B#b_3_A
+    - title: IRS Revenue Procedure 2017-36 - Applicable percentage table for 2018
+      href: https://www.irs.gov/pub/irs-drop/rp-17-36.pdf#page=2
+    - title: IRS Revenue Procedure 2018-34 - Applicable percentage table for 2019
+      href: https://www.irs.gov/pub/irs-drop/rp-18-34.pdf#page=2
+    - title: IRS Revenue Procedure 2019-29 - Applicable percentage table for 2020
+      href: https://www.irs.gov/pub/irs-drop/rp-19-29.pdf#page=3
     - title: IRS Revenue Procedure 2025-25 - Applicable percentage table for 2026
       href: https://www.irs.gov/pub/irs-drop/rp-25-25.pdf
 values:
-  # Original ACA (2015-2020): 6 brackets
+  # Original ACA: 6 brackets
   2015-01-01:
     - 0.02    # 0-133%: flat 2%
     - 0.03    # 133-150%
     - 0.04    # 150-200%
     - 0.063   # 200-250%
     - 0.0805  # 250-300%
     - 0.095   # 300-400%: flat 9.5%
+  2018-01-01:
+    - 0.0201
+    - 0.0302
+    - 0.0403
+    - 0.0634
+    - 0.081
+    - 0.0956
+  2019-01-01:
+    - 0.0208
+    - 0.0311
+    - 0.0415
+    - 0.0654
+    - 0.0836
+    - 0.0986
+  2020-01-01:
+    - 0.0206
+    - 0.0309
+    - 0.0412
+    - 0.0649
+    - 0.0829
+    - 0.0978
   # ARPA/IRA (2021-2025): 5 brackets, no 133% threshold
   2021-01-01:
     - 0       # 0-150%: flat 0%

policyengine_us/tests/policy/baseline/gov/aca/ptc/aca_ptc.yaml

@@ -1,11 +1,24 @@
-- name: ACA PTC returns zero before 2024
+- name: ACA PTC calculated for 2023 using historical premiums
   absolute_error_margin: 0.01
   period: 2023
   input:
     is_aca_ptc_eligible: true
     slcsp: 1_200
     aca_magi: 25_000
     aca_required_contribution_percentage: 0.04
+    tax_unit_is_filer: true
+  output:
+    aca_ptc: 200  # 1200 - 0.04 * 25000 = 200
+
+- name: ACA PTC remains zero before available rating-area premium data
+  absolute_error_margin: 0.01
+  period: 2017
+  input:
+    is_aca_ptc_eligible: true
+    slcsp: 1_200
+    aca_magi: 25_000
+    aca_required_contribution_percentage: 0.04
+    tax_unit_is_filer: true
   output:
     aca_ptc: 0
 
@@ -169,3 +182,51 @@
   output:
     is_aca_ptc_eligible: [true]
     aca_ptc: 200
+
+- name: ACA PTC remains zero in 2017 before available rating-area premium data
+  absolute_error_margin: 0.01
+  period: 2017
+  input:
+    is_aca_ptc_eligible: true
+    slcsp: 1_200
+    aca_magi: 25_000
+    aca_required_contribution_percentage: 0.04
+    tax_unit_is_filer: true
+  output:
+    aca_ptc: 0
+
+- name: ACA PTC applies to the same household in 2018 with rating-area premium data
+  absolute_error_margin: 0.01
+  period: 2018
+  input:
+    is_aca_ptc_eligible: true
+    slcsp: 1_200
+    aca_magi: 25_000
+    aca_required_contribution_percentage: 0.04
+    tax_unit_is_filer: true
+  output:
+    aca_ptc: 200
+
+- name: ACA PTC calculated for 2024 using historical premiums
+  absolute_error_margin: 0.01
+  period: 2024
+  input:
+    is_aca_ptc_eligible: true
+    slcsp: 1_200
+    aca_magi: 25_000
+    aca_required_contribution_percentage: 0.04
+    tax_unit_is_filer: true
+  output:
+    aca_ptc: 200
+
+- name: ACA PTC covers full SLCSP when ARPA contribution percentage is zero
+  absolute_error_margin: 0.01
+  period: 2022
+  input:
+    is_aca_ptc_eligible: true
+    slcsp: 1_200
+    aca_magi: 25_000
+    aca_required_contribution_percentage: 0
+    tax_unit_is_filer: true
+  output:
+    aca_ptc: 1_200

policyengine_us/tests/policy/baseline/gov/aca/ptc/aca_required_contribution_percentage.yaml

@@ -22,13 +22,13 @@
   output:
     aca_required_contribution_percentage: 0.0314
 
-- name: Flat at 100% FPL in 2019 (pre-ARPA, should be 2%)
+- name: Flat at 100% FPL in 2019 (pre-ARPA, should be 2.08%)
   period: 2019
   absolute_error_margin: 0.0001
   input:
     aca_magi_fraction: 1.0
   output:
-    aca_required_contribution_percentage: 0.02
+    aca_required_contribution_percentage: 0.0208
 
 - name: aca_required_contribution_percentage unit test 1
   period: 2022
@@ -101,3 +101,99 @@
     aca_magi_fraction: 4.0
   output:
     aca_required_contribution_percentage: 0.0996
+
+- name: 2026 ACA contribution percentage is zero above 400 percent FPL.
+  period: 2026
+  absolute_error_margin: 0.0001
+  input:
+    aca_magi_fraction: 4.01
+  output:
+    aca_required_contribution_percentage: 0
+
+- name: 2018 ACA contribution percentage at 100 percent FPL.
+  period: 2018
+  absolute_error_margin: 0.0001
+  input:
+    aca_magi_fraction: 1.0
+  output:
+    aca_required_contribution_percentage: 0.0201
+
+- name: 2018 ACA contribution percentage at 350 percent FPL.
+  period: 2018
+  absolute_error_margin: 0.0001
+  input:
+    aca_magi_fraction: 3.5
+  output:
+    aca_required_contribution_percentage: 0.0956
+
+- name: 2019 ACA contribution percentage at 350 percent FPL.
+  period: 2019
+  absolute_error_margin: 0.0001
+  input:
+    aca_magi_fraction: 3.5
+  output:
+    aca_required_contribution_percentage: 0.0986
+
+- name: 2020 ACA contribution percentage at 100 percent FPL.
+  period: 2020
+  absolute_error_margin: 0.0001
+  input:
+    aca_magi_fraction: 1.0
+  output:
+    aca_required_contribution_percentage: 0.0206
+
+- name: 2020 ACA contribution percentage at 350 percent FPL.
+  period: 2020
+  absolute_error_margin: 0.0001
+  input:
+    aca_magi_fraction: 3.5
+  output:
+    aca_required_contribution_percentage: 0.0978
+
+- name: 2018 ACA contribution percentage at 400 percent FPL.
+  period: 2018
+  absolute_error_margin: 0.0001
+  input:
+    aca_magi_fraction: 4.0
+  output:
+    aca_required_contribution_percentage: 0.0956
+
+- name: 2018 ACA contribution percentage is zero above 400 percent FPL.
+  period: 2018
+  absolute_error_margin: 0.0001
+  input:
+    aca_magi_fraction: 4.01
+  output:
+    aca_required_contribution_percentage: 0
+
+- name: 2019 ACA contribution percentage at 400 percent FPL.
+  period: 2019
+  absolute_error_margin: 0.0001
+  input:
+    aca_magi_fraction: 4.0
+  output:
+    aca_required_contribution_percentage: 0.0986
+
+- name: 2019 ACA contribution percentage is zero above 400 percent FPL.
+  period: 2019
+  absolute_error_margin: 0.0001
+  input:
+    aca_magi_fraction: 4.01
+  output:
+    aca_required_contribution_percentage: 0
+
+- name: 2020 ACA contribution percentage at 400 percent FPL.
+  period: 2020
+  absolute_error_margin: 0.0001
+  input:
+    aca_magi_fraction: 4.0
+  output:
+    aca_required_contribution_percentage: 0.0978
+
+- name: 2020 ACA contribution percentage is zero above 400 percent FPL.
+  period: 2020
+  absolute_error_margin: 0.0001
+  input:
+    aca_magi_fraction: 4.01
+  output:
+    aca_required_contribution_percentage: 0

policyengine_us/tests/policy/baseline/gov/aca/ptc/integration.yaml

@@ -92,3 +92,29 @@
     selected_marketplace_plan_premium_proxy: 3_929.25
     used_aca_ptc: 3_929.25
     unused_aca_ptc: 394.31
+
+- name: 2023 aca_ptc_los_angeles_single
+  absolute_error_margin: 0.01
+  period: 2023
+  input:
+    people:
+      person1:
+        age: 40
+        employment_income: 30_000
+        is_aca_eshi_eligible: false
+    tax_units:
+      tax_unit:
+        members: [person1]
+    households:
+      household:
+        members: [person1]
+        state_fips: 6  # CA
+        county: LOS_ANGELES_COUNTY_CA
+        three_digit_zip_code: 902
+  output:
+    is_medicaid_eligible: [false]
+    is_aca_ptc_eligible: [true]
+    slcsp: 4_250.01
+    aca_magi_fraction: 2.20
+    aca_required_contribution_percentage: 0.028
+    aca_ptc: 3_410.01

policyengine_us/tests/policy/contrib/aca/ptc_700_fpl_cliff.yaml

@@ -127,10 +127,10 @@
   output:
     aca_required_contribution_percentage: 0.0996
 
-- name: Baseline comparison at 500% FPL - shows new eligibility
+- name: Baseline comparison at 500% FPL - above post-ARPA cliff
   period: 2026
   absolute_error_margin: 0.00001
   input:
     aca_magi_fraction: 5.0
   output:
-    aca_required_contribution_percentage: 0.0996
+    aca_required_contribution_percentage: 0

policyengine_us/variables/gov/aca/ptc/aca_ptc.py

@@ -8,12 +8,17 @@ class aca_ptc(Variable):
     unit = USD
     definition_period = YEAR
     reference = "https://www.law.cornell.edu/uscode/text/26/36B"
+    documentation = (
+        "IRC section 36B applies before 2018, but PolicyEngine applies the "
+        "ACA PTC formula from 2018 onward because rating-area SLCSP premium "
+        "data currently begins in 2018."
+    )
     defined_for = "is_aca_ptc_eligible"
 
     def formula(tax_unit, period, parameters):
         return 0
 
-    def formula_2024(tax_unit, period, parameters):
+    def formula_2018(tax_unit, period, parameters):
         plan_cost = tax_unit("slcsp", period)
         income = tax_unit("aca_magi", period)
         applicable_figure = tax_unit("aca_required_contribution_percentage", period)

policyengine_us/variables/gov/aca/ptc/aca_required_contribution_percentage.py

@@ -51,4 +51,11 @@ def formula(tax_unit, period, parameters):
         # Interpolate between initial and final rates
         initial = initial_rates[bracket_idx]
         final = final_rates[bracket_idx]
-        return initial + position * (final - initial)
+        applicable_figure = initial + position * (final - initial)
+
+        income_eligible = parameters(period).gov.aca.ptc_income_eligibility.calc(
+            magi_frac
+        )
+        above_fpl_limit = magi_frac > thresholds[-1]
+        capped_out = above_fpl_limit & ~income_eligible
+        return where(capped_out, 0, applicable_figure)