"Family Glitch' leaves many without health coverage

A young married mother of two called my office at Mat-Su Health Services this past week to find out about getting health insurance for herself through the Affordable Care Act. Her two children already are covered through Denali KidCare and her husband is insured through his Valley employer.

Logically, it seems like she would be able buy a Moda Health or Premera Blue Cross policy for herself through Healthcare.gov. However, because her husband’s employer offers coverage to her and the children, that disqualifies her from the tax credits and cost-sharing reductions that would help pay for ObamaCare coverage.

It doesn’t matter that it would cost $1,600 per month to add her to her husband’s health insurance policy. The IRS only looks at the cost of coverage for the employee only, which in this case is a little over $100 per month. It doesn’t take into consideration the $1,600-per-month it would cost to add his spouse.

This is what’s known as the “Family Glitch” and it’s preventing many hard-working families from getting health insurance. In order for the insurance to be considered “unaffordable,” the $104 the husband pays each month for his own coverage would have to cost more than 9.5 percent of his household income. It’s very rare for the employee cost to actually meet that threshold.

Some employers like mine have chosen to no longer offer coverage to spouses and children so that they could, instead, buy a more affordable policy from the Health Insurance Marketplace through the Healthcare.gov website. Smaller companies could even opt out of covering employees all together to enable them to shop for policies through the Affordable Care Act.

Some companies might not realize the quandary they are causing by offering health coverage to spouses and children of employees. Perhaps if they knew this, more of them would drop that option and free up local families for more affordable insurance.

In some cases, families are still finding policies on Healthcare.gov more affordable — even without the tax credits — than what it would cost to be insured through the spouse’s company. But that is usually more feasible for families with a higher income.

ACA assisters across the country are hoping the Family Glitch is fixed very soon. Minnesota Senator Al Franken has proposed legislation known as The Family Coverage Act that would change the way “affordable coverage” is calculated by the IRS when it comes to employees’ families. Instead of basing it only on what the insurance costs the employee, it would take into consideration the cost to add the employee’s family to the policy.

So if it costs $1,600 per month to insure the entire family through an employer, that would be $19,200 per year. If the annual household income for that employee is $50,000, the cost of that insurance would be deemed “unaffordable” if it was more than 9.5 percent of $50,000. In this case that insurance would only need to cost more than $4,750 per year to be considered unaffordable. And, therefore, that family would be free to shop on the Health Insurance Marketplace under the Affordable Care Act and would qualify for tax credits and cost-sharing reductions that would make that insurance affordable.

According to estimates, more than 3 million family members across the country are being affected by this glitch. Franken’s bill is co-sponsored by 19 other Democratic senators, including Alaska’s Mark Begich.

“When we passed the Affordable Care Act, we intended that all working families should get affordable health coverage,” Sen. Franken said in a press release about his bill. “Right now, many children and families in Minnesota and around the country could lose out on coverage because of the way that the Obama administration is misinterpreting the law. My legislation, which is supported by the Small Business Majority, the American Academy of Pediatrics, and many others, would give families access to tax credits if the cost of their family coverage at work exceeds 9.5 percent of their family income. It fixes an unintended problem with the way the ACA is being implemented that is now preventing families from getting the coverage they need.”

K.T. (Kate) McKee is a Certified Application Counselor for the Affordable Care Act at Mat-Su Health Services Inc., in Wasilla.