The Biden Administration released a new final rule this morning that fixes the ACA’s family glitch:
These final regulations provide that, for purposes of determining eligibility for PTC, affordability of employer coverage for individuals eligible to enroll in the coverage because of their relationship to an employee of the employer (related individuals) is determined based on the employee’s share of the cost of covering the employee and the related individuals. As further explained in the Summary of Comments and Explanation of Revisions, the affordability rule for related individuals in these final regulations represents the better reading of the relevant statutes and is consistent with Congress’s purpose in the Affordable Care Act (ACA) to expand access to affordable health care coverage
What is the family glitch?
The ACA’s individual market is subsidized. It is the market of effectively last resort for people who can not get coverage. Or at least it is the subsidy of last resort. The market is set up so that if an individual has eligibility or an offer of adequate coverage from another source, the federal government won’t pay for the premium tax credits for an ACA plan for that buyer. An offer of adequate coverage can be Medicare, Medicaid, VA, or employee sponsored insurance among other sources. It is not unusual for a family with multiple members in it to be on multiple plans. It is quite conceivable for a family to have Adult #1 on an employer plan, Adult #2 on Medicaid, and all the kids on CHIP or Medicaid.
There was a problem known as the family glitch when Adult #1 has an offer of coverage through work which was deemed to be adequate and affordable for a single individual but totally not affordable for the rest of the family. Affordability of coverage means the employee portion of premium is under 9.61% of gross income. If the rest of the family could get other coverage through other means, great! However, the IRS interpreted the ACA to say that the rest of the family would be ineligible for ACA subsidies. It is not unusual for employee only coverage to be offered at 5% to 9.61% of gross salary but the family portion could easily cost more than 10% of salary.
This is the “family glitch.”
This is a regulatory interpretation of statutory language.
The new rule changes that interpretation. The new rule says that affordability of an offer of coverage will be determined at the level of the individual being offered coverage and not the household unit. If Adult 1 receives an affordable offer of employee only coverage, Adult 1 would no longer be eligible for ACA subsidies. If the family offer of coverage is not affordable, the rest of the family members are assessed for ACA subsidy eligibility independently of the employed adult.
Baud
👍
WaterGirl
Joe Biden is getting things done.
is this a rule that can be un-done in the future, or would a law have to be passed in order to change it?
Jerry
Aside: did you ever get your car woes fixed?
buskertype
this is huge for my family.
Miss Bianca
This seems like a BFBD (Big Fucking Biden Deal) to me.
Jerry
Q: How do you end or overturn an Executive Order?
A: The President who issued an Executive Order can revoke it. Likewise, an incumbent President has the power to revoke an Executive Order issued by a predecessor. Congress also has the power to overturn an Executive Order by passing legislation that invalidates it. (The President, of course, may veto such legislation, in which case Congress may override the veto by a two-thirds majority). Congress could also effectively thwart an Executive Order calling for an action that requires funding by using its power of the purse to deny the necessary funding. Finally, the courts have the power to stay enforcement or ultimately overturn an Executive Order that is found to be beyond the President’s constitutional authority.
David Anderson
@WaterGirl: This is a rule that can be undone by a future administration as long as the future administration goes through the APA’s notice and comment period.
Assuming that reversing this rule was #1 priority for another administration and they started on January 21, XXXX, the rule would be in place for at least another full policy year. Notice and comment takes a lot of time.
David Anderson
@Jerry: Not really.
FledtheUS
@WaterGirl: This is a regulation published in the federal register which means it can be undone, but not always easily. Rewriting the rule has to go through the same process that writing the rule did.
As I understand it, federal rulemaking is generally ‘this is how we interpret and will be enforcing this legislation.’
Kelly
When I went on Medicare ACA coverage for Mrs Kelly alone shot up several hundred dollars compared to ACA coverage for the two of us. Will this fix that weirdness to?
cmorenc
I suspect an incoming GOP Administration would initially do what the previous one did – try to erode the ACA by obscurity, i.e. deliberate failure to promote its availability, because that involves much less work and administrative complication than using the rulemaking or legislative process to undermine it in more substantial ways. Not that there won’t be some GOP legislators or GOP activists ambitious to eliminate it entirely, but that’s a much heavier political lift than simple malignant neglect.
WaterGirl
@Kelly: If you don’t see an answer to that in the thread, try sending your question to Dave by email. He may not answer today, but he will answer!
david-anderson at balloon-juice.com
david anderson
@Kelly: I don’t know enough to know a good answer to that question. Speak with a navigator or an agent as they have the fine grained expertise to get into those weeds.
Mark Regan
@David Anderson:
But first, of course, the lawsuits. No good Biden Administration deed goes unlitigated.
David Anderson
@Mark Regan: standing????
Maybe an insurance agent losing a commission?
MTCinVA
I’m guessing this policy change applies going forward but is not retroactive? This change would’ve helped me in prior years but not now. Still relieved that they’re making the change as the original interpretation was so far removed from the reality of employer coverage for families.
David Anderson
@MTCinVA: Correct, this is a prospective policy change.