A fix to the infamous Family Glitch would eliminate a coverage gap in the Affordable Care Act (ACA) that led to unaffordable coverage for 5.1 million individuals. Proposed legislation aims to expand low to no cost Marketplace plans to families beginning in 2023.
With families flocking to affordable plans on the ACA, businesses can adapt their coverage options to make sure employees get high-quality plans at a low price.
The Family Glitch Explained – How Millions of Families Lack Access to Affordable Coverage
Under the ACA, individuals can qualify for Marketplace subsidies if their employer-sponsored insurance premium costs over 9.61% of their annual household income. But affordability calculations don’t factor in dependents. Only costs for the individuals, and not the dependents, are used to determine affordability.
As a result, many families pay for employee-sponsored insurance far beyond what other families with similar household incomes pay on the Marketplace. A Health Affairs study reports that families impacted by the glitch pay an average of 12% of their yearly household income.
There are those that currently cannot afford employee coverage and do not qualify for Marketplace subsidies, leaving them uninsured. Of the 5.1 million estimated individuals impacted by the glitch, 54% are children under 18, according to a brief released by the Kaiser Family Foundation.
COVID-19 made the situation even worse. The KFF estimates that nearly three million people lost company-sponsored health insurance between March and September of last year. Some may have transitioned to a spouse’s plan, while others went without health insurance entirely. Most scenarios, however, point to more people falling into this family glitch trap during 2021 and 2022.
Under Biden’s proposal, costs for all family members will be considered when determining affordability and Marketplace eligibility.
The Family Glitch Fix Would Increases ACA Enrollment Rates
Fixing the Family Glitch will make Marketplace coverage much more affordable for millions of people.
“Out of the estimated 5.1 million people caught in the family glitch, the White House estimates nearly 1 million would switch from employer to ACA plans to get lower premiums and 200,000 uninsured people would newly gain insurance,” the Kaiser Family Foundation’s Larry Leavitt explains.
2021 saw the highest Marketplace enrollment rates in history, reaching 14.5 million individuals through January 15, 2022.
These rates are expected to continue to rise with the support of the Biden administration. Fixing the Family Glitch is only one piece of the pie. Navigator programs, the American Rescue Plan Act, and the end of the Public Health Emergency all contribute to the ongoing growth of the ACA Marketplace.
ICHRA’s Growth Potential is Sky High
The Individual Coverage Health Reimbursement Arrangement (ICHRA) allows employers to offer tax-free health insurance reimbursements.
Adopting ICHRA gives employees the option to use Advance Premium Tax Credits (APTC) on the Marketplace. After fixing the Family Glitch, families will find affordable coverage and greatly benefit from the freedom that ICHRA brings.
An increase in the availability of APTC for families lowers premiums and allows employees covered by ICHRA to enjoy high-quality plans available at a lower cost.
Coupled with the reimbursed funds being tax-exempt, ICHRA’s flexibility in allowing employees to take advantage of Marketplace savings will greatly increase the availability of quality health plans.
The renewed energy and support for the ACA positions ICHRA in a position of unparalleled growth. If you haven’t yet explored the many ICHRA benefits for your business and staff, now is an excellent time to look.
The recent surge in energy and support for the ACA is only making the ICHRA model more attractive to employers and brokers. If you’re ready to explore your ICHRA options, contact W3LL! We can help you from inception to integration and beyond to ensure your business realizes the financial benefits countless other companies are already leveraging.
Reach out to Pete English for a 15-minute consultation!
Pete English
With nearly two decades in health insurance, Pete English’s diverse experience makes him uniquely qualified to help health plans and brokers leverage innovative technology in partnership with W3LL. From growing sales staff by 126% over 4 years at a large health plan, to building his own health insurance brokerage firm with over $7.2MM in annualized premium, Pete has done it all.
