White House Proposes to Fix “Family Glitch” in the ACA

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On April 5, 2022, the Biden Administration announced that the Treasury Department and the Internal Revenue Service (IRS) proposed a rule that would end the “family glitch” in the Patient Protection and Affordable Care Act (ACA). Under the ACA, if an individual does not have access to “affordable” health insurance through their employer, then they may qualify for a premium tax credit to purchase an ACA marketplace plan. In 2022, an employer-sponsored health plan was considered affordable under current regulations if just the employee’s coverage cost less than 9.61 percent of that households income. The current affordability determination does not consider the cost of adding family members to the health plan. For some families, the cost of a family health plan can be 25 percent or more of their household income. As of result of this family glitch,many families cannot afford health insurance through their employer-based options and are also ineligible for health insurance subsidiaries under the ACA. The April 2022 rule by the Treasury Department and IRS would require the affordability determination to be based on the entire family obtaining coverage through the employer-sponsored plan, not only the cost of the employee’s coverage. Read more about the new rule here.  

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