The Government Administration proposed a rule to strengthen the Affordable Care Act by creating the family glitch fix. This family glitch affects about 5.1 million people . Therefore it has made it impossible for some families to get subsidies to purchase an affordable health insurance plan. Let’s take a closer look at this proposal.
What is the “family glitch”?
Under the ACA, financial assistance to buy health insurance is primarily available for people who can’t get coverage through their employer. However, there are some exceptions made. For example, a person may qualify for subsidies if their company health plan premium exceeds 9.83% of their household income.
Current regulations define health insurance through a job as “affordable” based on the cost of the employee’s self-only coverage. And, it does not consider the premium required to cover any dependents. So if an employee’s premium doesn’t exceed the threshold of 9.83% of his household income, he won’t qualify for a premium tax credit to purchase coverage.
Even if the cost of adding dependents to the health plan far exceed this percentage. Currently, this definition of “affordable” job-based coverage has come to be known as the “family glitch.”
What is the family glitch proposal?
The Treasury Department and the Internal Revenue Service proposed to eliminate the family glitch. The proposed rule would allow family members of workers to receive subsidies if their employer-offered dependents coverage costs more than 9,61% of household income.
Premium tax credits
In other words, it would extend premium tax credits to the family members of employees who are not offered affordable job-based family coverage. It wouldn’t affect the employee’s individual healthcare costs.
Family Glitch Fix impacts on American families
Changing the family glitch would make affordable coverage more widely available. It’s estimated that nearly 200,000 uninsured people would gain coverage, and about 1 million Americans would see their health insurance coverage become more affordable if this proposed change is implemented.
$400 savings for families
A study made by Urban Institute estimated that addressing the family glitch through this change would make 4,8 million people eligible for premium tax credits. Also, that fix would save thousands of families about 400 dollars per person a year.
What should you do if this proposal is implemented?
Find out if you fall into the family glitch today. If you’re not sure, call a health insurance expert.
If you do fall into the family glitch, talk to your health insurance expert and see how you can save money with premium tax credits.
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