The Family Glitch

Under the Affordable Care Act, an employee can qualify for premiums assistance if the current employer costs more than 9.83% of the employee’s income.  The “family glitch” is where the dependent’s costs are more than 9.83% of household income. Still, they do not qualify for premiums assistance because the affordability is based on the employee costs.

The “family glitch” may become a topic of debate as President Biden did indicate this is an issue his administration may take up.   The President noted that they would change the premium assistance eligibility for dependents, which would open the door for dependents on purchasing policies on the exchange with premium assistance.

Why does the “Family Glitch” matter?Affordable Care Act

The Kaiser Family Foundation reported that individuals impacted by the family glitch are in good health, which could be as high as 5.1 million.  For Indiana, KFF estimates 121K dependents would fall into the “Family Glitch.” Indiana’s 2021 open enrollment had 136K people enrolled in the federal marketplace. 

Indiana’s peak enrollment was in 2015, with 218K people enrolled and eight carriers offering coverage.  If all sudden that enrollment number doubled with healthy young people, that could lead to lower individual rates and possibly more carrier participation.  

The majority of Hoosier that falls into the family glitch is reported as low income, which could produce lower monthly costs but lower out of pockets through cost-sharing reduction on the exchange.  

From an employer standpoint, a company may change their contribution strategy if they know their employees’ dependents could get lower costs going through the exchange.  

The “Family Glitch” could be an issue that gains bipartisan support, leading to additional changes in the health insurance markets.

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