Family Affordability Glitch: Obamacare Discriminates Against Families

The Family Affordability Glitch refers to how some low-to-moderate-income families are locked out of receiving financial assistance to purchase health coverage through the health insurance Marketplaces.^[1]



Senator Al Franken writes:

However, due to a glitch in the way the law is being interpreted by the IRS, many middle-class families are prohibited from receiving these tax credits, even when the cost of family coverage is simply unaffordable.^[2]

The Family Affordability Glitch only applies to families who have have access to health insurance through an employer.

If your job offers you health insurance, and the premium for just you (employee-only) is less than 9.56 percent of household income, then no one in your household is eligible for premium subsidies in the ACA Marketplace.

It doesn’t matter how much the employee would have to pay to purchase family coverage. The family members are not eligible for exchange subsidies if the employee could get employer-sponsored coverage just for him or herself, for less than 9.56 percent of the household’s income.^[2]

This is ridiculous. Most, if not all, families will need a family plan--which comes with a higher premium. By ignoring the cost of the higher family premium, the Obamacare Individual Mandate is decidedly discriminating against families. These families have to choose between higher premiums or skipping health insurance (and paying the fine). The Obamacare Marketplace will not offer discounts/subsidies to these families, whereas other families without employer-sponsored coverage would have access to discounted plans on the Marketplace.

They considered the stupidity of this rule for a moment, but then decided that it stays:

When the IRS issued their final rule, the agency noted that some commenters had suggested that the earlier proposed regulation be modified to define the employee’s contribution as the total amount the employee must pay for family coverage. But ultimately the final rule was issued without changing the definition of the employee’s required contribution.^[3]

The only consolation for families that fall into this Family Affordability Glitch is that they can avoid the Obamacare "penalty." For these lower-to-middle class families, obtaining affordable health insurance is practically impossible.

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Notes:

1. Health Affairs, (2014, November 10). Health Policy Brief: The Family Glitch. Retrieved August 2, 2015.


2. Senator Al Franken. Summary of the Family Coverage Act. Retrieved August 2, 2015.


3. Louise Norris, (2015, January 15). No family left behind by Obamacare. healthinsurance.org. Retrieved August 2, 2015.