The Department of Health and Human Services released a second round of exchange regulations on Friday that could undermine the affordability of health insurance for families receiving employer-based coverage, consumer advocates say. Under the Affordable Care Act, people between 133 and 400 percent of the federal poverty line and insured individuals who have to spend more than 9.5 percent of their household incomes on their employer sponsored plans qualify for subsidized coverage within the exchanges.
Following passage of the law, the Joint Committee on Taxation issued a memo explaining that an employee could only qualify to receive federal subsidies through the exchange if the cost of their single policies exceeded 9.5 percent of income. Friday’s regulations reiterated this interpretation, despite health groups’ efforts to expand the regulation to include the cost of family coverage in the calculation and allow far more people to qualify for subsidized insurance. Tim Jost explains:
The most controversial issue addressed by the NPRM is how to determined whether employer-sponsored coverage is unaffordable. Taxpayers who have an offer of coverage from their employer but who would have to pay more than 9.5 percent of their household income for their share of the premiums can decline that coverage and receive a premium tax credit to purchase insurance through the exchange. When this happens, the employer owes a penalty of $3,000 for each employee who does this up to a total of $2,000 times the number of all full-time employees in excess of 30. The statute is not entirely clear, however, whether the 9.5 percent applies only to the cost of self-only coverage or also to the cost of family coverage when the taxpayer has a family. This is obviously a significant question as employers usually charge employees much higher premiums for family than for single coverage.
As the Center for Budget Policy Priorities’ Judy Solomon writes, “By interpreting the ACA to require that the affordability of family coverage be measured by the cost of coverage for the employee alone, the proposed rule would mean that many spouses and dependents who are uninsured today because they can’t afford family coverage would remain uninsured in 2014. The better interpretation would allow these family members to get premium credits so they could purchase affordable coverage in the new state exchanges.”