With open enrollment on the federal health insurance exchange available until December 15th, two recent articles may merit attention:
The first reports on a change to the IRS regulations to fix what’s been called the “family glitch.”
Some quick background: The Affordable Care Act provides health insurance subsidies through the federal exchange (www.healthcare.gov). People who have affordable insurance available through another source are generally not eligible for subsidies. But the IRS originally interpreted the law in a way that made family members of an employee also ineligible for subsidies based on the affordability of the employee’s coverage, even if the premium for the family would not be affordable. As a policy matter, of course, this holding made no sense, but the agency believed the statute required it.
The IRS recently completed a revision of these regulations. Under the new rule, a family’s eligibility for subsidies is tied to what you would expect it to be tied to: the cost of insurance for the family. Coverage is considered unaffordable—potentially making an employee’s family members eligible for subsidized coverage through the exchange—if the premium for coverage of the employee and the employee’s family would be more than a certain percentage of the family’s household income (9.12% for 2023).
Find the story here.
The second article highlights the importance of awareness of the minimum income threshold for subsidies on the exchange. Most people probably understand that the subsidies phase out over certain income thresholds. But it is not so obvious that a person can make too little to be eligible for a subsidy. That is the case, however, in the states—like Tennessee—that have elected not to expand their state Medicaid programs to provide coverage for people below the poverty line. (More information on that “coverage gap” here.)
That means that underestimating low income can be a costly mistake. With estimated income just above the poverty line, the subsidy would likely cover most or all the cost of insurance. But below that threshold the subsidy on the exchange would not be available at all.
For someone near the poverty line, then, planning on picking up a little more work might be the difference between having insurance and not. And, in the face of inevitable uncertainty about the future, that person would certainly not want to be overly pessimistic. With a bit of a wink and a nod, the story notes that the government does not verify the income estimates after the fact.
Find the story here.