THE FAMILY GLITCH
The Family Glitch under the Affordable Care Act (ACA) 2010 is a term that means that family members are eligible to get the subsidized Affordable Care Act marketplace coverage if the employee is offered affordable group insurance. Their dependent or family members are restrained from getting ACA financial assistance or premium subsidies. Under ACA, the worker also sometimes fails to get premium subsidies from the employer coverage. This is a barrier between employer coverage and subsidized coverage. It is the gap in the law, and it only calculates the cost of employees covered under employer-sponsored health insurance plans, not the family members of the employees. Its affordability is calculated based on the cost of employee-only coverage; thus, spouses and children are not covered under employer contribution to get health coverage. Employees contribute to it, which is 9.5% of employees’ household income.
This family glitch is a major loophole in ACA; it makes health options unaffordable for families. As per the estimates, about 05 million Americans are affected by the family glitch, and half of the people are children. The unaffordable health care options make most families uninsured.
FIXING THE GLITCH
Internal Revenue Service (IRS) has proposed to make revisions to the current rule to fix the family glitch. President Joe Biden has instructed the Treasury Department and IRS to fix the so-called family glitch, which will benefit workers’ families to be covered under the insurance plan. The fixing of the family glitch is important under the American Rescue plan. As per ARP, a person with income above 400% of the federal poverty level can get premium tax credits by paying 8.5% of their income.
WHO ARE ELIGIBLE TO GET BENEFIT FROM THE FIX?
The changes in regulations would alter ACA’s affordability measure of health insurance beyond employee-only charge coverage with family eligibility to cover all under the employer insurance plan. This fix will benefit the beneficiaries who suffered from the family glitch. This will allow families to get more affordable options, and it also allows families to save around $ 400 per person annually.
The revision in rules will allow families to divide into two health groups- one covered under affordable single coverage by the employer and the family under the ACA marketplace insurance. This policy will mostly benefit the families of the worker from the service, mining, construction, or agriculture sector as they are mostly from lower to middle-class families and mostly don’t have affordable coverage plans. The proposed solution also clarifies the eligible family members to assess coverage affordability. This helps to determine the tax calculation of the employee’s family. The final regulations are intended to take effect at the start of 2023, as announced by IRS for the next year’s health insurance plan. It is also expected that the Family glitch fix would likely increase the enrollment rate in the Affordable Care Act as it will make marketplace insurance coverage affordable to many.
If you have questions about the ACA, the Family Glitch, or any others aspect concerning insurance, give us a call or fill out our online contact form. Let us help you understand everything!
It’s time to Say Good Bye to The Family Glitch!