Does your Family Qualify for a Subsidy on Health Insurance?
What is Affordable? I’ve always joked that the only place that affordability is mentioned in the entire Affordable Care Act (ACA) Law is in the title. The Federal Governments idea of affordable may not line up with what most Americans consider as affordable for coverage for Health Insurance.
Does your Family Qualify for a Subsidy on Health Insurance?
The ACA gave families who did not have access to group health a lower cost option for coverage with marketplace subsidies through www.Healthcare.gov. As we all know, things aren’t always that clear cut. What about families where only one parent has group coverage paid for at work? What if some employers don’t pay very much for spouse and children? On October 13, 2022, President Biden requested, and IRS finalized regulations giving the ability to partially subsidize families because of something called “The Family Glitch”.
How did we Get Here?
The Family Glitch was being created when regulations were being built for the ACA. The Advanced Premium Tax Credit (APTC or Credit) would help individuals and families cover their healthcare premium costs. Employers would only be penalized if coverage for a single employee exceeded a certain amount of their income (9.5% as indexed). The Credit and the employer penalty are tied together. So, if group coverage was affordable for the employee (only), both the employee and the family lost the Credit. APTC didn’t consider the Family Coverage paid for by an employer, because an employer doesn’t have the right to ask anyone’s income except their employee. They cannot ask or be expected to consider spouse income, due to privacy.
Employer Contributions to Medical Plan Affect Subsidy
Now that the Family Glitch is removed, if a family has access to group coverage through one parent, but the contributions paid by that employer are low or absent for spouse and dependents; Spouse and dependents may now qualify for the Advanced Premium Tax Credit for the 1st time effective January 1, 2023.
New Life Event Created
Not all employer plans begin January 1, which coincides with individual and family open enrollment through www.healthcare.gov. So, the IRS has adopted a new special enrollment reason for employers: If one or more family members qualify for a new APTC and enrolls in The Marketplace – they can make a change to their elections mid-plan-year.
Employer Cafeteria Plan Adoption
The IRS allows employee to take their portion of Health Insurance Premiums from their pay Pre-Tax by use of a Cafeteria Plan, or Premium Only Plan. It is expected that an employer will need to “Adopt” a new permitted election. Employers will need to communicate the change to the employees no later than the beginning of the 2023 plan year. Keep in mind that the individual and family open enrollment ends December 15, 2022, for January 1, 2023, coverage through Healthcare.gov.
Even if an employer has a January 1 plan effective date, it is highly recommended that they adopt this change, as there is no reason not to. Most vendors do not have direction yet as to how these documents need to be adopted, or the wording. These vendors are working on the final process of adoption, and it should be ready soon. Once we know how to adopt this new life event – we will contact you. Our agency has been told by several vendors that it should occur very soon, and prior to January 1, 2023.
Split Premium Families / What this means for Employees
Individual and Family open enrollment is now open through December 15, 2022. An employee may stay on the group health insurance plan, and spouse and children would have a separate policy through Healthcare.gov if they qualify for a subsidy. Spouse and children should apply for coverage and once application is finalized, then notify employer of the new subsidy and enrollment, removing spouse and/or children from their group plan effective January 1.
If your company doesn’t contribute to spouse or children coverage, employees may want me to help them find out about the Credit through Healthcare.gov. Individuals and Families will pay the same rate if they use me as their agent or not, so why not have the extra help? Click on the link below to begin applying for coverage with my assistance:
Unfortunately, right now, the calculators for eligibility are not yet published through Healthcare.gov. There is no estimation from them when they will be available, but you can begin an application now for coverage to secure your January 1 application.
Employer Affordability Does Not Change
Employers can be assured that the Affordable Care Act Pay or Play regulations for affordability and offer have not changed. The calculation used to make sure your plan is affordable are the same, no changes needed there. If you have more than 50 Full Time Equivalent Employees, make sure you test your medical plan affordability annually!
Need to test for affordability? Let me know!
Helpful Links:
Alera Group News:
IRS Final Regulations:
IRS Notice 2022-41
NAHU Podcast
HR Service Inc October 2022 Legal Update
