AHIP lauds rulemaking to fix 'family glitch' in healthcare coverage
AHIP said the Treasury and IRS proposed rule should be passed mostly as is, but should address minimum value calculations.
Photo: Marko Geber/Getty Images
Insurer group AHIP has come out in favor of a proposed rule from the Treasury Department and Internal Revenue Service to tweak a "family glitch" in the Affordable Care Act, provided health plans receive timely guidance on the requirements.
The proposed rule would create a minimum value for family members of employees that can receive ACA tax credits. A recent Kaiser Family Foundation analysis found that about 5.1 million people fall into the ACA's family glitch, most of whom are enrolled in employer-based coverage but could pay lower premiums if allowed to buy subsidized marketplace coverage.
In the current scenario, the "glitch" is a provision that allows someone to get tax credits that lower premiums if their employer requires they spend more than 9.5% of their household income on premiums. But this threshold only applies to the patient's individual coverage, not the premium required to also cover dependents. A family wouldn't be able to receive assistance even if the person in question met the 9.5% benchmark.
WHAT'S THE IMPACT?
The idea behind the rule is to ensure access to affordable coverage and financial assistance for dependents, and to determine whether a plan's contribution exceeds 9.5% of total household and family income.
"The approach proposed by the Treasury and IRS would make affordable coverage options available to families without jeopardizing coverage through employer-sponsored group health plans," AHIP said in its comments. AHIP said the rule would preserve the integrity of the employer market while expanding access to affordable coverage through the ACA marketplaces for those who need coverage.
"Specifically, by proposing a new affordability test for related individuals, family members of the employee's household may be determined eligible for premium tax credits (PTCs) if an employer offer of family coverage is deemed unaffordable," the group said.
An affordability test would provide significant relief for low- and middle-income families, AHIP claimed.
Although AHIP said the rule should be finalized largely as proposed, it did have a couple of recommendations. For minimum value calculations, the group wants them to continue to be based on a standard population that includes both employees and dependents. This would result in a single, composite minimum value for employees and dependents unless the plan's benefit design for employees is different from its design for related individuals. Separate standard populations, the group said, should not be required.
"To effectuate any changes to the minimum value calculation rules, we reiterate as we have in the past that the minimum value calculator maintained by CMS should be updated from its existing version," wrote AHIP. "The current minimum value calculator is based on outdated data and assumptions. As a result, permitted plan designs may not meet minimum value using the calculator or limit plan design options available to employers in the large group market."
AHIP recommended the rule be finalized as proposed, amended by addressing the minimum value calculations.
THE LARGER TREND: REACTION
When the proposed rule was first issued in April, it garnered positive reaction from several groups.
Rick Pollack, president and CEO of the American Hospital Association, said, "Hospitals and health systems strongly support the Biden Administration's efforts to help more Americans secure affordable health insurance by proposing to eliminate the 'family glitch.'"
Dr. Gerald E. Harmon, president of the American Medical Association, said the administration "has taken a crucial step in the campaign to cover the five million uninsured people who fall into the family glitch. The family glitch is inconsistent with the goals of the Affordable Care Act and unfairly penalizes family members of lower-income workers. The American Medical Association has repeatedly asked Congress and administrations to fix the glitch, and the Biden Administration has made good on its promise to make healthcare coverage more affordable."
"The Affordable Care Act opened the doors for millions of Americans to get health insurance, but there were always concerns that the 'family glitch' was preventing too many from accessing affordable insurance," said Heather Korbulic, senior policy and strategy lead at GetInsured. "By strengthening this law so more families get subsidies on premiums, the White House is lowering insurance costs for many families who were left behind. This is a step in the right direction to getting all Americans the affordable coverage they need and deserve, which will strengthen the economy and better prepare us for future health emergencies."
Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com
