The 'Family Glitch' Fix

What is it? How it may affect you and how it may affect employers that offer medical benefits.

What is the 'Family Glitch'?

You first need to understand a little background about current law regarding the Affordable Care Act's (ACA) employer insurance affordability test. Employer sponsored insurance must be 'affordable' solely for the employee, and not for family members, making family members ineligible for a premium tax credit through the ACA's health insurance marketplace. When family coverage is too expensive, many people may have no choice but to forego coverage. This is the basis of the 'Family Glitch'.

The 'Family Glitch' Fix proposed by the Biden Administration...

Family members of workers who are offered affordable self-only coverage but unaffordable family coverage may qualify for premium tax credits to buy ACA coverage.

How may this affect employers?

Employers may see their cost for insurance premiums decrease as a result of some employees changing their family plans to individual coverage. Generally there are many factors that go into insurance premiums so it not really clear how it will really affect employers overall.

How may this affect you?

If you have employer sponsored family coverage, you will be able to purchase cheaper individual coverage and purchase more affordable family coverage through the ACA's health insurance marketplace. However it is important to keep in mind that you will have two separate policies for your family. You will have two premiums, two different deductibles possibly and two different out of pocket limits for each policy. It will also be possible that you have two different in-network providers for the employee and their family members.

If passed, it would not likely begin until 2023.