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Rule would make it easier for spouses, dependents to get health care coverage

It would be more affordable for many spouses and dependents who are currently covered under employer-sponsored family health insurance plans or currently uninsured to buy coverage through the Affordable Care Act (ACA) Marketplace, under a proposed rule issued by the U.S. Treasury Department and the IRS.

Under the proposal, nonemployee family members would be eligible for financial assistance in the ACA Marketplace for health care coverage if the coverage for their whole family costs more than 10 percent of household income under the least expensive employer’s option. The rule would go into effect on Jan. 1, 2023.

Critics of the proposal contend that it would force millions of people out of their employer-sponsored plans and into taxpayer subsidized plans when they already have coverage in place.

The proposal does not indicate how the new subsidies would be funded.  The comment period for the proposal has closed and it is unclear whether it will be revised before moving forward.

The ‘family glitch’

Under the ACA, employees and their family members do not get a premium tax credit to buy subsidized health insurance coverage in the ACA Marketplace if the employee has access to “affordable” employer-sponsored health insurance.

“Affordable” is defined as coverage for an individual that costs no more than 9.61% of the employee’s income.

Current regulations, however, define employer-based health insurance as affordable if the coverage solely for the employee, and not for family members, is affordable, making family members with limited income ineligible for the premium tax credit.

The proposal would eliminate the “family glitch.”

“Should the proposed change be made, it’s estimated that 200,000 uninsured people would gain coverage, and nearly 1 million Americans would see their coverage become more affordable,” according to a fact sheet from The White House. “Many families would be able to save hundreds of dollars a month thanks to lower premiums.”

If this change goes into effect, new reporting requirements on health plans could be developed for employers.

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