Legislation introduced to fix “family glitch” in Obamacare


Dedicated to affordable, quality health care and coverage for all Americans.

By Consumers Union on Friday, June 6th, 2014

Obamacare has helped more than 8 million Americans get affordable health care coverage to date and introduced an array of new consumer protections like ending discrimination based on your health history. Attention is now shifting to remaining health reform issues like closing the coverage gap in states that didn’t expand Medicaid and bringing down the overall cost of health care.

But there’s a lesser known and urgently needed improvement that is leaving family members without an affordable option for coverage.

This so-called “family glitch” affects people who depend on a spouse’s or parent’s employer sponsored insurance but find that option unaffordable. The glitch? Obamacare’s measure of affordability says it is affordable.

Under the Affordable Care Act, employer-sponsored coverage is deemed affordable if it doesn’t cost more than 9.5% of the employee’s family income. If coverage costs more, then that employee is eligible to receive tax credit subsidies to buy health insurance at healthcare.gov or the state’s marketplace.  These tax credits help families quite high up the income stream- a family of four, for example, might qualify with income up to $94,000 a year.

But as IRS interpreted it, the affordability measure only applies to the employee cost, not dependents, meaning that the cost of putting dependents on your employer’s health insurance doesn’t factor into the calculation. So even if the total cost to cover an employee and dependents through employer coverage is more than 9.5% of total family income, but the cost of employee-only coverage is less than 9.5%, that spouse or child can’t simply forego the insurance and seek discounted coverage in the Marketplace.  Proportionately, employers make a much smaller contribution to the cost of family coverage, making this especially burdensome for employees.

The glitch leaves families deciding whether to pay the ever increasing amount required to add dependents on at work, buy coverage on their own without any financial assistance, or simply remain uninsured. Up to 500,000 children could be affected by the family glitch.

Yesterday, Senator Franken introduced the Family Coverage Act to close this loophole. The bill changes the definition of affordability to allow family members who are not offered affordable employer-sponsored coverage to access tax credit subsidies in the health insurance marketplace. Consumers Union has advocated for a fix to this glitch since passage of the Affordable Care Act and we applaud Senator Franken for taking this important step.

If passed, the Family Coverage Act will help many thousands of hard working Americans access an affordable coverage option to their spouses and children.

Email mhutson at consumer dot org if you or someone you know fell into this family glitch. We need your help to get this solution passed.

7 responses to “Legislation introduced to fix “family glitch” in Obamacare”

  1. Mike says:

    The younger retired spouse gets a USELESS subsidy when
    the older goes to medicare

    Whereas, currently, our subsidy is 60% of the premium,
    next year, for me, it will only be 15% (used various web
    sites months ago that estimate the subsidy; they were
    very close for 2015), yet didn’t even consider the
    HUGE(!!!) 40% increase in premiums for 2016! Bottom line,
    my premiums will TRIPLE what I’m paying now! How exactly
    is this affordable? This would be about 35% of my(!)
    income, which is hardly affordable, and WAY ABOVE the
    expected 9.5%! WHAT A JOKE!

  2. Julia Gibbins says:

    I am a stay at home mom with 2 girls, 12 and 6. My husband makes around $79,000/yr. His employer offers him insurance for $264.00/mo.,….well within 9 1/2 percent. For him to cover his wife and two daughters it bumps up to $1,202.00/mo……around 18.5% of his salary. This is about the same as our mortgage! We had catastrophic insurance before because of this, which is no longer available. The girls and I don’t qualify for discounted rates because of this “glitch”.
    No bank would give us a loan for a second mortgage, yet the government is now requiring it? To think I voted for this! My Republican husband is saying “I told you so” continuously…..

  3. Linda Severson says:

    I am a Grandmother concerned for my son and his family. He just started a new job which provides for his insurance however a family plan will cost him $14,000 per year with no family credit due to the “Family Glitch”. That leaves him $36,000 a year which puts him below the poverty level. Then to be further burdened if he doesn’t get insurance there he will be assessed a heavy penalty. It is almost impossible to provide for a family of four on a salary this small. Young families have a mortgage, school loans, vehicle and monthly utilities. The solutions are unacceptable. In our society we should support the American family. This So called “Family Glitch” does not support this American family it supports divorce, separation or taking a part time low paying job which then further burdens the government with providing more aide to families. My son has values and wants to provide for his family but Congress refuses to deal with this. I would think that it would be a priority to support financial independence.

  4. jamie rainey says:

    the glitch is affecting us badly my wifes insurance for just her is only 79.00 but for the family is over 600.00 a month and we only make about 800.00 a month what are we suppose to do?

  5. shelly says:

    I was also affected by this “family glitch”. My husband’s job offers health insurance that is affordable to him but to add me and 2 kids it is actually $1000. Who has $1000 extra laying around each month? My daughter got sick so I was forced to get her health insurance alone at $300 a month with private insurance. The fine that will be taken out of our tax return will be a huge hit as well. I was anxiously keeping up with the “Family coverage Act”, but nothing came of the bill, it died in Congress. I’m hoping something will happen to fix this after the upcoming elections in 2016. I have no idea what to do if it doesn’t.

  6. Mae says:

    We are one of the families affected by this “family glitch”. My husband’s premium for himself is only $60 per month but if he add me and the kids its $600+. He only makes 2800 a month so obviously we cannot afford. So here am I, uninsured and hoping I will never ever need to see the doctor.

  7. Laura Madsen says:

    Tomorrow morning I stat a new job. Instead of sleeping so I can start the job fresh, I am awake at 3 a.m. literally losing sleep over the family glitch that will now affect my family. (I just learned about it, and am shocked.) My employer offers me “affordable” healthcare as an individual, but the price to insure my family would be roughly half my income! We were far better off with our Marketplace plan. Should I not have accepted this job? I still don’t know what to do and start my new job in a few hours. I pray that Al Frankin’s bill passes.

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