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The Family Glitch

The Affordable Care Act upholds measures to ensure individuals working at companies with 50+ employees have access to affordable healthcare. For a long time "affordability" was determined based on the cost of employee-only coverage. For families, it is not uncommon for rates to be deemed unaffordable, even if employee-only coverage is. However, if employee-only coverage is affordable, employees would not be eligible for a government subsidy for their family's coverage.

For years, only when employee-only coverage was deemed unaffordable and the employer was fined, could an employee receive a subsidy. With 2023 comes changes. Now, employee-family rates will be used to determine if healthcare is considered affordable. Plans that are not considered affordable at the employee-family tier will trigger a subsidy but employers will no longer receive a fine.

What is "Affordable"?

Affordability will now be determined by household income. If an employer contributes less than 9.12% of a household income to healthcare for the year, healthcare coverage is deemed unaffordable.

For example, a household of 4 that is at the national poverty threshold has a household income of $27,750. To be considered affordable coverage, the employer must contribute at least $2,555.78 toward an employee's healthcare coverage for the year.

What is the impact?

The National Association of Health Underwriters (NAHU) estimates that these changes will gain 200,000 people coverage. Now, more families will have access to comprehensive healthcare, either from their employers or through government subsidies.

As these changes take effect and the family glitch is lost, employers must consider if they want to pay toward employee coverage directly or if government subsidies will pick up the initial bill.


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