When a Glitch Turns to an Opportunity
The "family glitch" is a provision of the Affordable Care Act (ACA) that has long been criticized for making it difficult and expensive for some families to access affordable health insurance coverage. The provision, which has now been eliminated by recent legislation, had the unintended consequence of limiting access to affordable coverage for certain family members, particularly spouses and children.
Under the ACA, individuals and families were eligible for premium tax credits to help them purchase health insurance if their income was below a certain threshold and they did not have access to affordable employer-sponsored coverage. However, the ACA defined "affordable" employer-sponsored coverage as coverage that cost no more than 9.83% of an employee's income for self-only coverage. This definition excluded family coverage from the affordability calculation, effectively creating a "family glitch" that made it difficult for some families to access affordable coverage.
For example, if an employee had access to employer-sponsored coverage that cost less than 9.83% of their income for self-only coverage, but the cost of family coverage was more than 9.83% of their income, their family members would not be eligible for premium tax credits to help them purchase coverage on the individual market. This left many families in the difficult position of either paying for expensive family coverage through their employer, or going without coverage altogether.
The elimination of the family glitch addresses this issue by changing the ACA's definition of "affordable" employer-sponsored coverage. Under the new provision, coverage is considered affordable if it costs no more than 8.5% of an employee's income for self-only coverage, regardless of whether the employee's family members have access to affordable coverage. This change will make it easier for families to access affordable coverage through their employer or the individual market, and will help ensure that more Americans have access to the health care they need.
For employers, the elimination of the family glitch means that they may need to review their health insurance plans and make changes to ensure that they meet the new affordability standards. Employers should also be prepared for an increase in the number of employees and family members who are eligible for premium tax credits to help them purchase coverage.
Overall, the elimination of the family glitch is a positive step for American families and employers, and will help ensure that more people have access to affordable health insurance coverage.