Family Glitch

The Family Glitch rule change, and how it may effect your family.

What is the Family Glitch?

The “Family Glitch” was a hole in the Affordable Care Act (ACA) that affects low to moderate income families to not qualify for premium assistance on the health exchange. This is due to the rules that determine the “affordability” of employer offered health insurance.

The “Family Glitch” based eligibility for a family’s premium subsidies on whether available employer-sponsored insurance is affordable for the employee only, even if it’s not actually affordable for the whole family.

IRS regulations fix the ACA’s ‘family glitch’ as of 2023

The rule change is fairly simple and straightforward: Instead of basing the affordability determination for a family’s employer-sponsored health insurance on just the cost to cover the employee, the determination will now be made based on the cost to cover the employee plus family members, if applicable. Here are the important points to understand about this:

  • The family glitch fix will be in effect as of 2023. So when families apply for 2023 coverage during the open enrollment period (November 1 – January 15), the new rules will be used to determine whether anyone in the household qualifies for a premium subsidy.
  • If a family has to pay more than a certain percentage of household income (9.12% in 2023) for the employer-sponsored plan, they will potentially be eligible for premium tax credits in the marketplace.
  • There will be a separate affordability determination for the employee (based on self-only coverage), and for family members (based on the total cost of family coverage). So depending on how an employer subsidizes the cost of family coverage, it’s possible that coverage could be considered affordable for the employee but not for family members. In that case, the family members would potentially be eligible for a premium tax credit in the marketplace, but the employee would not.


Who will this effect?

About 1 million Americans will either gain coverage or see their insurance become more affordable as a result of the new rule. Nearly half of those newly eligible are families of low-income families (those earning between 100-250 percent of the federal poverty level, or between $28,000-$70,000 a year for a family of four).

Statement by President Joe Biden on “Family Glitch” Final Rule

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