Affordability of Employer Coverage for Family Members of Employees

Earlier this week, the Internal Revenue Service released a final rule changing the way health insurance affordability is determined for members of an employee’s family under Affordable Care Act (ACA) regulations.

As discussed in the prior post, need-based calculations to determine eligibility for the federal ACA program and its subsidies consider only the employee, ignoring the spouse and children.  In many cases, an employer pays all or a portion of the employee's premium but nothing towards other members of the household.  In this case, ACA calculations determine that subsidized insurance is not available since the employer's health insurance is deemed "affordable" for the employee; but in fact, the family premium is prohibitively expensive and would be deemed unaffordable if the ACA need-based calculations included family members.

Under the new rules that begin in 2023, if a consumer has an offer of employer-sponsored coverage that extends to the employee’s family, the affordability of that offer of coverage for the family members will be based on the family premium amount, not the amount the employee must pay for self-only coverage.

This is a long-awaited solution to the "family glitch", which has been an issue since the ACA program's inception.  The change will be reflected in the online application through the HealthCare.gov enrollment platform and Enhanced Direct Enrollment certified partner applications during this year’s Open enrollment period that starts on November 1, 2022.  State-based Marketplaces not using the HealthCare.gov enrollment platform are also working to implement this change, but may have different implementation timelines. 

To view the final rule, please visit:

"https://www.federalregister.gov/documents/2022/10/13/2022-22184/affordability-of-employer-coverage-for-family-members-of-employees"