New regulations are coming in 2023 that will make affordable health coverage available to more families across the United States. The Biden Administration recently announced changes to a loophole in the Affordable Care Act (ACA) that left many employees and their dependents paying incredibly high premiums for their health care coverage, with few alternatives to secure affordable health insurance.
Previously, if an employee was offered health insurance through their employer the coverage had to pass an affordability test for the employee only. In 2022, the threshold to determine affordability was whether the plan exceeded 9.61% of an employee’s household income. If an employer offered health insurance to the family or dependents of an employee, the cost for the insurance did not have to pass an affordability test beyond what was used for an individual plan. Family health plans are sometimes significantly more expensive than individual plans because an employer will often heavily subsidize an employee’s medical premiums, but not those of their family members or dependents. In addition, families who were eligible for health insurance through their employer or their spouse’s employer were not eligible to receive premium tax credits to purchase health coverage through the federal marketplace at a discounted rate. Their options were to pay high monthly premiums for employer-sponsored health insurance or to pay full price for a health plan on the federal exchange. These regulations, known as “the family glitch,” left many families paying thousands of dollars each month for health insurance.
Beginning in 2023, employer-sponsored health insurance will be required to pass an affordability test that includes the cost of family coverage. In 2023 that rate will be 9.12% of an employee’s household income, according to the IRS. If a family health plan exceeds the threshold of affordability, the employee will still need to enroll in the company’s offered health plan, but their family members will be able to apply for premium tax credits based on their income eligibility to purchase affordable health insurance on the federal exchange. The White House estimates that roughly 1 million Americans will either gain coverage or see their insurance become more affordable as a result of the new rule.
If you or your family members are currently enrolled in a health plan offered by your employer or your spouse’s employer, now is the time to review your plan and the cost of your premiums. A licensed insurance broker can help determine if your family qualifies for taxpayer credits that could make your health insurance more affordable. At Translating Insurance, we are licensed in multiple states and offer free consultations. Call us at 503 324 4511 to schedule an appointment.