Do you or your spouse have (Family Glitch) Employer Coverage Available?

• New Family Glitch Rule!    ^CMS
  • You could enroll in the  affordable  9.96% HealthCare.gov**   Covered CA Affordability Calculator  job-based coverage,
    • while your spouse  APTC/CSR Subsidy -eligible family members enroll in a Covered CA plan.
      • Get Instant Quotes!  
  • keep in mind that:
    • This may mean they need to meet multiple deductibles and would have separate out-of-pocket maximums for each policy.
    • The separate plans may have different provider networks and coverage for prescription drugs.
    • Mus update your Covered CA Application   ^{Agent Broker FAQ} *
• More information for  newly eligible for savings  (Offers of Employer Coverage) on Covered CA  plans?
  • Special Enrollment Period (SEP) if your  job-based coverage affordability changes outside of the annual Open Enrollment Period?  CMS *
• Family Glitch Covered CA Tool Kit
• Navigating the Family Glitch Fix: Hurdles for Consumers with Employer-sponsored Coverage  KFF
• 10 Quick Facts About the New IRS Final Health Premium ‘Family Glitch’ Regs
• Federal  Register    –    36 B
• Our webpage on Covered CA Subsidies…
• Get Instant Quotes!  

More Explanation of Minimum Value & Affordability 

Under the law, those workers whose employers offer “affordable coverage” will not be eligible for subsidies in the exchanges. To be eligible, per the law’s definition, the cost of employer-based health insurance must exceed 9.61% of the worker’s household income. In January 2013 the Internal Revenue Service (CFR 1.36 B 2) ruled that only the cost of covering the individual employee would be considered in determining whether the cost of coverage exceeded 9.5% of income.

Metal Levels – Bronze 60% Actuarial Value –

#Minimum.Value Definition ==>An employer-sponsored plan provides minimum value if it covers at least 60 percent of the total allowed cost of benefits that are expected to be incurred under the plan.  AKA Bronze Plan

See Notice 2014-69 for additional guidance regarding whether an employer-sponsored plan provides minimum value coverage if the plan fails to substantially cover in-patient hospitalization services or physician services  ^{IRS.gov  *  Covered CA Bulletin page 2  * Our Ben E Lect Webpage  * Employer is mandated to tell you 1095 C  *  IRS  Notice 2012-31 *}

Citations & Details

Example 2. Basic determination of affordability for a related individual. The facts are the same as in Example 1, except that C is married to J and X’s plan requires C to contribute $5,300 for coverage for C and J for 2014 (11.3 percent of C’s household income). Because C’s required contribution for self-only coverage ($3,450) does not exceed 9.5 percent of household income, under paragraph (c)(3)(v)(A)( 2 ) of this section, X’s plan is affordable for C and J, and C and J are eligible for minimum essential coverage for all months in 2014 ^{CFR §1.36 B 2 Eligibility for Premium Tax Credit}

However, the cost of a family plan is often higher, but the ruling means that those higher costs will not be considered even if the extra premiums push the cost of coverage above the 9.5% income threshold. The New York Times said this could leave 2–4 million Americans unable to afford family coverage under their employers’ plans and ineligible for subsidies to buy coverage elsewhere.^{[136][137]  Wikipedia}

Alternatives – Solutions?

One possible solution to the Family Issue would be to have the Employer get a program thru the SHOP exchange, Kaiser Direct or check with us [email protected] many other companies may do it, exclude dependents, then they are NOT eligible and can then select “None of the Above” and get subsidies based on household income.

Insure Me Kevin.com Explanation 9.29.2015

Self Employed Health Care Deduction?

FAQ?

Question

What about an adult child under 26 * filing their own taxes, are they subject to affordability  rule, being as they could go on the parents policy?

Are they a member of the household?

Dependent?

Answer

We are not authorized to give tax advise, however check out:

The definition of Household Income & Taxpayer Family 

#Household.income means ^{Code of FEDERAL Regulations – IRS Income Taxes – 1.36B 1 – (e) …(1)}

(d) … A taxpayer’s family means the individuals for whom a taxpayer properly claims a deduction for a personal exemption under section 151 for the taxable year.

Family size [Medi-Cal Household Size Flow Chart ♦ Blog – Insure Me Kevin.com] means the number of individuals in the family. Family and family size may include individuals who are not subject to or are exempt from the penalty [mandate] under  §5000 A  (f)  (1) for failing to main

IRS Tools and Publication 974 Premium Tax Credit See Page 5 for chart on who can take premium tax credit.

Minimum Essential Coverage  which includes most Group Employer Plans

IRS Interactive Tool says OK see video

Affordability and minimum value.

Even if you had the opportunity to enroll in coverage offered by your employer that qualifies as MEC, [Minimum Essential Coverage  which includes most Group Employer Plans ]  you are considered eligible for an employer-sponsored plan (and cannot get the PTC [subsidies] for your coverage in a qualified health plan) only if the employer-sponsored coverage is affordable (defined later) and the coverage provides minimum value (defined later). Your tax family  members may also be unable to get the PTC for coverage in a qualified health plan for months they were eligible to enroll in employer-sponsored coverage offered to them by your employer but only if the  coverage qualifies as MEC and was affordable and provided minimum value for you. In addition, if you or your family member enrolls in the employer coverage that qualifies as MEC, the individual enrolled cannot get the PTC for coverage in a qualified health plan, even if the employer coverage is not affordable or does not provide minimum value  ^{IRS Publication 974 page 11} *

Historical

Exemption 

If your employer health plan offers you  affordable coverage and it has

• • “minimum value [Bronze 60%]” and
  • your contribution is less than 9.61% of income for employee SELF ONLY in 2022 ^SHRM * ^{(CFR 1.36 B 2 * ThomsonReuters  * Revenue Procedure 2018-34 * Revenue Procedure 2014-62)} * ^{Western Poverty Law} * ^{Health Care.gov} * ^{Publication 974} *  ^{Revenue Procedure 2020-36 * Covered CA *} 

neither you or your dependents – family qualifies for the APTC Advance Premium Tax Credit-subsidy from Covered CA, Health Care.Gov or any exchange. ^{Covered CA FAQ}   

FLASH!!!

Biden admin plots to fix Obamacare’s ‘family glitch,’ expand coverage

The move would target loophole that keeps about 5 million people from qualifying for subsidized health plans ^{Politico 4.4.2022}  *

The Treasury Department and the Internal Revenue Service are proposing to eliminate the “family glitch.” Should today’s proposed rule be finalized, family members of workers who are offered affordable self-only coverage but unaffordable family coverage may qualify for premium tax credits to buy ACA coverage.  ^{White House.gov Fact Sheet} *   The rule would begin to take effect beginning Jan. 1, 2023, if enacted, and Americans will be able to sign up to get financial assistance during the next open enrollment period.  ^{ABC News} *

Resources & Links

• time.com/biden-affordable-care-act-family-glitch
• whitehouse.gov/2021/01/28/executive-order-on-strengthening-medicaid-and-the-affordable-care-act
• whitehouse.gov/2022/04/05/fact-sheet-proposes-rule-to-fix-family-glitch-and-lower-health-care-costs
• Kaiser Foundation – ACA Family Glitch & Affordability of Employer Coverage
• Proposed Rule – Federal Register
• chcf.org/biden-administration-proposes-fix-family-glitch
• seattle times.com/glitch-may-soon-be-fixed

Here’s the questions the Covered CA Application asks…

This employee only contribution percentage is all the  Employer Shared Responsibility Mandate Provision requires to avoid penalties for employers with over 50 employees. 

It doesn’t matter if covering your whole family coverage would go over the 9.83% limit.  That just the way the law and rulings work.  Some call this the “Family Glitch.”

There is some talk about fixing this SNAFU, but it  would likely involve changing the eligibility calculation for marketplace subsidies — pegging the affordability standard to the coverage cost of the whole family rather than just an individual’s coverage. Doing so would increase federal spending by about $9 billion or $10 billion, since many more people would qualify for subsidies. ^{CA Health Line} *

Note that if rates increase or employer contribution lowers, that may trigger a special enrollment period, rather than wait for open enrollment.

See also the 8% rule if you want an exemption from the individual mandate or permission to get a catastrophic – minimum coverage plan.

Cal Choice Premium Affordability Calculator

Note also, that ARPA the 2021 American Rescue Plan limits your family contribution to 8.5% for all income limits – ^{Income Chart – Premium, Benefit & Subsidy calculator.}

Resources & Links

• coveredca.com/employer-coverage-and-financial-help
  • Job Aid Income Section
• Commonwealth Fund – Eliminating the family glitch
• FAQ on how employer might eliminate coverage for dependents to avoid “Family Glitch“

Process to fix Family Glitch

• Biden’s Proposed Fix To The “Family Glitch” Illegally Sidesteps Congress  Peter J. Nelson  JUNE 23, 2022
• The IRS Cannot “Fix” The “Family Glitch”  Doug Badger  JUNE 23, 2022
• Council for Affordable Health Coverage: Fixing the ‘Family Glitch’ Should Not Create New Problems

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