What the Fix of the Family Glitch in Insurance Means to Your BusinessJan 27, 2023 12:48PM ● By Guy Furay
Many families across the country are looking forward to January 1, 2023, because they will finally have access to affordable health insurance coverage for the first time since the Affordable Care Act was fully implemented in 2014. This open enrollment period has been different for many families because, for the first time in years, they are actually able to access affordable health coverage on the Marketplace as an alternative to the plans being offered by the employer to the employee in the family.
Many Americans get their health insurance through benefits offered by their workplaces, an arrangement that often works out great for a lot of families.
But soon after the affordable care act went into effect almost nine years ago, a “family glitch” became apparent when people started to realize that rules about what is considered “affordable” had some unintended consequences.
In 2022, the way the law worked was that if health insurance offered by the workplace was deemed affordable (meaning that the employee’s contribution is no more than 9.61 percent of their income), then the entire family was not eligible to get their health insurance through the Marketplace. This is usually not an issue for individual employees who need health insurance just for themselves.
However, when you consider that many workers also support entire families, then things become more complicated since the entire family is also subject to that definition of affordability based solely on just the income of one employee. So, suppose the employee is not eligible for Marketplace coverage due to the employer’s plan being deemed affordable. In that case, their entire family, not just the employee, will be blocked from going to the Marketplace and receiving government subsidies to help cover the costs of health insurance.
Unfortunately, this “family glitch” has negatively impacted many who actually need those subsidies in order to reasonably afford health insurance. Let’s say you make $25,000 a year and your health insurance through your workplace costs $200 a month for you. That would mean you pay $2,400 a year for your health insurance premiums, which most individuals would be able to manage.
However, if you are a family of five, in order to get the whole family covered it would cost you $1,000 a month or $12,000 a year. That is almost half of your income being spent just on your health insurance premiums. Most people would agree that those figures would not be reasonably considered affordable even though they would be deemed so according to the current rules that have been in place since 2014.
Under the new rules, if the family’s (not just the employee’s) employer-based health insurance premiums would cost more than 9.12 percent of their income, then only the employee would be ineligible for government subsidies, not the entire family. This means that the family of the employee is, for the first time since the beginning of the Affordable Care Act, able to go on the Marketplace and purchase government-subsidized health coverage that begins on January 1, 2023.
If you are a family member of someone who is offered employer-based health insurance but has previously missed out on affordable coverage because you were caught in the family glitch (meaning you were not once eligible to shop on the Marketplace) then this is the time to talk to a health insurance agent and see if you are now able to find more affordable health insurance than you were previously. The deadline to sign up for Marketplace health insurance that begins on January 1, 2023, is December 15, 2022. If you missed that deadline you still have until January 15 to enroll in coverage that begins February 1, 2023.
Except for some special circumstances, if you do not sign up before the end of January 15, 2023, then you will have to wait until the next open enrollment period which begins each year in November.
Guy Furay is owner of the Insurance Source, an independent brokerage specializing in health, life, disability and dental insurance. The Insurance Source has helped others protect what matters most since 2005 and is located in Greer, South Carolina. Learn more at www.theinsurancesourcesc.com.