- The Biden administration on Tuesday published a final rule that expands eligibility for insurance premium tax credits for Affordable Care Act marketplace plans.
- The so-called family glitch fix means the dependents of a worker with access to employer-sponsored health insurance are now eligible for premium subsidies on ACA plans if the family premium under the employer coverage exceeds 9.5% of the family's income in 2022. Previously, family member eligibility was determined by the single employee premium alone.
- The White House said about 1 million Americans will gain coverage or see their insurance become more affordable under the rule change. The new policy applies to people signing up for 2023 marketplace coverage during the open enrollment period that begins Nov. 1.
Some employer-sponsored health plans require hefty employee contributions toward the cost of premiums for family coverage. About 12% of workers pay more than $10,000 a year in premiums for enrolling dependents in employer plans, according to the Internal Revenue Service.
President Joe Biden proposed the family glitch fix in April at a press conference attended by former President Barack Obama, who in 2010 signed the healthcare reform law establishing the insurance exchanges.
The newly finalized IRS regulation revising the eligibility standard for family coverage premium subsidies available to marketplace enrollees replaces a 2013 IRS rule that created the family glitch. Biden called the glitch a regulatory flaw.
Since 2013, the average annual employee contribution for family coverage has increased by more than 30%, nearly double the rise in the consumer price index in that period, the IRS said.
The Kaiser Family Foundation estimates the glitch fix could benefit 5.1 million spouses and children who are offered unaffordable family coverage through an employer.
“Fixing the ACA's family glitch is the single, biggest thing the Biden Administration can do on its own without Congress to improve the accessibility and affordability of health coverage,” Larry Levitt, KFF executive vice president for health policy, said in a tweet.
Critics of the glitch fix contend the rule lacks a legal basis for extending Obamacare subsidies. Brian Blase, president of Paragon Health Institute, argued in a Forbes article that the policy will result in as many as 2 million dependents to replace employer coverage with subsidized exchange coverage, causing a large increase in federal spending.
Healthcare provider organizations including the American Medical Association and American Hospital Association backed the Biden administration's initiative to rectify the family glitch, as did payer lobby AHIP.