Family Glitch Rule Fixed Just in Time for Open Enrollment
Just in time for Open Enrollment, The IRS’s 2013 interpretation of premium tax credit eligibility for families left millions of Americans with limited choices in affordable healthcare coverage. As Inflation is on the rise globally, this fix comes just in time to help individuals struggling to provide insurance coverage. The Federal government revised position on the premium tax credit will allow Marketplace insurance for 2023 to be more affordable than before. Here are the top 3 things you should know about the Family Glitch Fix.
- What is the Family Glitch?
The Internal Revenue Service (IRS) interpretation of premium tax credit eligibility for families created what is known as the “family glitch.” The family glitch made millions of Americans ineligible for Premium Tax Credits, which would help subsidize marketplace coverage. The IRS interpreted the Affordable Care Act ‘s (ACA) firewall provision as everyone that is offered affordable employee-only coverage through their employer should eliminate possible tax credits on premiums for spouses or dependents purchasing insurance on the Marketplace. The IRS considered affordable coverage to be when an employee’s contribution to their premium is less than 9.12% of their household income (for 2023). One study showed that this resulted in households spending anywhere from 12% to 22% of their income on healthcare coverage. This interpretation forced families to choose employer-sponsored health plans that consumed a significant amount of the household income or went without insurance.
2. How the Federal Government Fixed the Family Glitch
On October 11, 2022, the Federal Government issued a Final Rule that revised this interpretation, expanding the eligibility of millions of Americans for more affordable healthcare coverage through the Marketplace. President Biden and Secretary Becerra of the Department of Health and Human Services (HHS) statements accompanied this Final Rule. The Final Rule means family members like spouses and dependents can now get subsidized marketplace coverage, cutting healthcare costs for households across the country. The subsidies can include premiums and deductibles. The Final Rule will significantly impact women and children, increasing coverage to 1 million people through the Marketplace.
3. When does this fix go into effect?
Effective December 12, 2022, the ‘family glitch’ fix is just in time for Open Enrollment this year. The fix arrives when we see record-high marketplace enrollment and record-low uninsured rates. Creating this fix gives Americans fresh air with more generous marketplace subsidies during these financially challenging times. This fix can all be attributed to an extension of the American Rescue Plan Act’s enhanced subsidies by the Inflation Reduction Act. Not all eligible individuals are expected to enroll in the Marketplace. However, the Federal government is expecting enrollment to increase over time. Open Enrollment for the Marketplace begins on November 1 and ending January 15, 2015.
As the Federal government navigates the current recession, we will continue to see more forceful impacts to enhance healthcare in America.
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Premium Tax Credits – https://www.irs.gov/affordable-care-act/individuals-and-families/questions-and-answers-on-the-premium-tax-credit#:~:text=The%20premium%20tax%20credit%20is,based%20on%20a%20sliding%20scale.
One study– https://www.healthaffairs.org/doi/10.1377/hlthaff.2015.1491
President Biden –https://www.whitehouse.gov/briefing-room/statements-releases/2022/10/11/statement-by-president-joe-biden-on-family-glitch-final-rule/
November 1 and ending January 15, 2015- https://www.healthcare.gov/quick-guide/dates-and-deadlines/