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Howard the Health Insurance Guys Blog/See how you can Save with fixed ACA Family Glitch?

See how you can Save with fixed ACA Family Glitch?

Wednesday, May 17, 2023

Unraveling the Updated ACA Family Glitch Rules and Their Potential Benefits.

by Howard VanBooven

Healthcare in the United States has always been a complex issue. The Affordable Care Act (ACA), also known as Obamacare, has been instrumental in expanding healthcare coverage across the United States. Despite the ACA's numerous benefits, some aspects of the law have proven challenging for many American families. One such issue is the infamous "Family Glitch". In this blog post, we'll delve into the details of the Family Glitch, the recent changes made to address it, and what these changes could mean for American families navigating the healthcare landscape.

What is the Family Glitch?

The Family Glitch was a rule that determined the affordability of a family's employer-sponsored health insurance based on the cost to cover only the employee. If the employee's portion of the premium was affordable (defined as less than 9.5% of the household income), the family was ineligible for premium tax credits through the ACA marketplace, regardless of the total cost to cover the whole family. As a result, many families found health insurance unaffordable because the cost to include family members was significantly higher.

Fixing the Glitch

Soon after taking office, President Biden issued an executive order that indicated a willingness to tackle the Family Glitch. After a year of regulatory reviews and proposals, the IRS finalized a rule change in October 2022, just in time for the 2023 open enrollment period.

The updated rule is straightforward: affordability for a family's employer-sponsored health insurance will now be determined based on the cost to cover the employee plus family members, if applicable. This means that if a family has to pay more than a certain percentage of household income (9.12% in 2023) for the employer-sponsored plan, they could be eligible for premium tax credits in the marketplace.

Impact on Families

This rule change has significant implications for families. If an employer provides a plan that's affordable for the employee but not for the family, the family members could potentially be eligible for a premium tax credit in the marketplace. However, the employee would not be eligible if their self-only coverage is deemed affordable.

A noteworthy aspect of the new rule is that the cost to cover non-dependent family members is not considered. For instance, young adults can stay on a parent's health plan until they turn 26, but are generally not considered a tax dependent in the last few years of that window. If they enroll in the family plan, the cost to cover them is not counted when determining the affordability of the family plan.

Looking Ahead

While the new rule is a step in the right direction, it's important to note that it doesn't mean all families previously affected by the Family Glitch will now find coverage affordable. There are still situations where a family's total premium costs could remain unaffordable, for example, when some family members are covered under one or more employer-sponsored plans and/or Medicare.

Historically, about 5 million people were affected by the Family Glitch. With the new rule, the White House expects about 200,000 uninsured people to gain coverage, and nearly 1 million Americans to see their coverage become more affordable. However, the actual numbers will depend on a variety of factors, including how the subsidies are determined, the number of deductibles and out-of-pocket maximums a family would have if they keep the employee on an employer-sponsored plan and enroll the rest of the family in a marketplace plan, and the desire of families to retain the benefits and provider network offered by the employer.

Closing Thoughts

The rule change addressing the Family Glitch is a testament to the ongoing efforts to strenghten the ACA. I personally think it would be crazy to not look into possible big savings! 

Call me Howard VanBooven at 636-497-2680

Hi, I Am Howard VanBooven

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