A new study from the American Action Forum finds that “1.9 Million Americans [Are] Falling into the ACA Created ‘Family Glitch.'”
AAF defines the glitch by saying it “happens when an individual is offered employer sponsored health insurance but the offer is not extended to that person’s family.”
The ACA promises Medicaid coverage to anyone whose household income places them below 138 percent of the Federal Poverty Level (FPL) —contingent on states agreeing to expand their programs. Those above 138 percent, and up to 400 percent FPL, are eligible for tax subsidies to purchase insurance in a state-established Health Insurance Exchange under the ACA—assuming no one in their family is offered affordable employer-sponsored insurance (ESI).
This provision of the law lacks clarity on the point of whether or not the coverage offered must be family coverage, or whether individual coverage is sufficient. The Internal Revenue Service (IRS), through rule making, has interpreted the statute as only requiring an employer to offer individual coverage, and pegged affordability at 9.5 percent of the employee’s household income. The glitch occurs when one (or both) spouses are offered affordable individual ESI under the IRS definition, but family coverage is either not offered or is unaffordable. Spouses and children of an employee offered ESI could be unable to afford the employer plan, but because it is offered to one family member, the rest are made ineligible for subsidies in the Exchanges.
The IRS has determined that its interpretation of the law was the least disruptive available interpretation of the ambiguous language of the statute. This is in spite of the fact that the IRS’ interpretation contributed to the creation of the Family Glitch. The IRS has therefore decided not to enforce the individual mandate against families with members impacted by the glitch.
This provision of the law lacks clarity on the point of whether or not the coverage offered must be family coverage, or whether individual coverage is sufficient. The Internal Revenue Service (IRS), through rule making, has interpreted the statute as only requiring an employer to offer individual coverage, and pegged affordability at 9.5 percent of the employee’s household income. The glitch occurs when one (or both) spouses are offered affordable individual ESI under the IRS definition, but family coverage is either not offered or is unaffordable. Spouses and children of an employee offered ESI could be unable to afford the employer plan, but because it is offered to one family member, the rest are made ineligible for subsidies in the Exchanges.
The IRS has determined that its interpretation of the law was the least disruptive available interpretation of the ambiguous language of the statute. This is in spite of the fact that the IRS’ interpretation contributed to the creation of the Family Glitch. The IRS has therefore decided not to enforce the individual mandate against families with members impacted by the glitch.
The breakdown of the estimated 1.9 million Americans is as follows: “We estimate this glitch will impact 1.93 million Americans. Up to 947,000 spouses and 984,000 children could be left uninsured by this conundrum. Up to 428,000 women will fall into the glitch, and 519,000 adult men. An additional 2.28 million children could fall into this glitch when the Children’s Health Insurance Program (CHIP) funding expires or if it is altered.”
