Obamacare affordability “glitch” hits home for New Jersey family

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By Consumers Union on Thursday, June 26th, 2014

We wrote recently about the “family glitch” where unsuspecting families get left out of new health insurance coverage options under Obamacare because of a flaw in how affordability is calculated. Jack’s family is one.

As a full time casino dealer in New Jersey, Jack’s employer offers health insurance. His wife is a stay-at-home mom, taking care of the couple’s two daughters. “My employer offers affordable care for me,” Jack says, “but to add my wife and two daughters it would cost $1,500 a month!” The cost of insuring his wife and children on his employer-sponsored plan would amount to 30 percent of Jack’s yearly income.

Unfortunately, this clearly unaffordable coverage offer disqualifies Jack’s family from getting tax credit discounts to buy private insurance under Obamacare.

The Affordable Care Act says that employer-sponsored insurance is only considered affordable if it doesn’t cost more than 9.5% of the employee’s family income. If it costs more, then the employee is eligible to receive tax credit subsidies to buy health insurance on the marketplace. But right now, the IRS definition of “affordability” applies only to the employees cost, not that of their dependents. For people like Jack’s wife, the current IRS interpretation means that they don’t have access to affordable health insurance – either through Jack’s employer or the marketplace.

The family was fortunately able to put both daughters on New Jersey Family Care, a CHIP program, for about $80 a month. But when they looked at how much it would cost to insure his wife on the marketplace, even the low cost bronze plans were too much because she can’t access tax credit discounts.

“The cost for a bronze level policy for my wife on the exchange without a subsidy was around $300 a month with a $2,350 deductible and 50% coinsurance after the deductible was met! That’s not affordable!”

To make matters worse, Jack’s wife is greatly in need of health insurance – she has Lupus and needs to take several medications. Right now they can afford to buy just 2 of the 4 medications she should be on –those two alone cost the family $150 a month. And that doesn’t count extra expenses that occur when she gets sick.

“There was a recent ER trip for my wife because of shortness of breath and chest pains,” Jack said. Doctors attributed the incident to her Lupus. “We were billed $12,000.” Luckily Jack negotiated that bill down to $1,400.

Jack’s family would benefit greatly from the Family Coverage Act recently introduced in Congress to change the definition of affordability so that family members who aren’t offered affordable employer-sponsored insurance can get tax credit discounts to buy coverage on the marketplace.

“I hope this legislation is passed to help our and other families left out in the cold,” said Jack.

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.

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