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Report: Health Law Regulation Could Leave Some Children Ineligible For Subsidies

Most uninsured children will qualify for health coverage under Obamacare, but hundreds of thousands of children — about 6 percent of the total — could be denied coverage because of the government’s definition of “affordable” coverage, according to a report from the U.S. Government Accountability Office (GAO).

The Treasury Department’s proposed rule would make families ineligible for federal subsidies to help pay for health insurance if an employer offers them affordable coverage at work. Under this regulation, the Treasury considers an employer’s office to be affordable if the worker’s share is less than 9.5 percent of household income; however, the affordability is based on what a single employee would pay instead of the generally higher cost to cover an entire family. The GAO recommends that Treasury and IRS officials consider if an “alternative approach” could work:

“Under the proposed standard, an offer of affordable employer-sponsored health insurance to one family member could impede other family members’ access to affordable insurance — an outcome which would not further the broader goals of [the] PPACA,” the report says.

The GAO says the proposed standard could affect more than 460,000 children if states stop funding the Children’s Health Insurance Program (CHIP) beyond 2015. Under the health care law, CHIP is not funded beyond 2015, and even if federal funding is extended, states may opt to reduce or eliminate programs beginning in 2020, the report said.

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Since the proposed rule was announced in 2011, groups have complained that it hurts families. “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,” Center for Budget Policy Priorities’ Judy Solomon wrote last year. And First Focus, a child advocacy group, accused the Obama administration of undermining the Affordable Care Act’s affordability standards because the interpretation “would disproportionately harm children and women.”