Legislation Would Fix “Family Glitch” Problem by Ensuring Children and Spouses Get Tax Credits to Pay for Coverage When Employer Insurance Doesn’t Cover Families
WASHINGTON, D.C. [06/20/19]—Today, U.S. Senators Tina Smith (D-Minn.), Sherrod Brown (D-Ohio), Catherine Cortez Masto (D-N.V.), Bob Casey (D-Pa.) introduced the Family Coverage Act, which would ensure all spouses and children are able to get covered by fixing a glitch in the health care system that currently prevents families from getting tax credits needed to purchase affordable insurance on the exchanges.
Right now, if a mother or father has health insurance through their employer, but their employer does not offer affordable coverage for the spouse and/or kids, these family members can be kept from getting these credits. The Family Coverage Act specifies that affordability must be determined using the cost of family coverage rather than individual coverage, which would expand the eligibility of families for premium assistance tax credits.
“We need to make sure families in Minnesota and across the country can afford the health care they need,” said Sen. Smith. “Our fix is a step in the right direction toward that goal by making sure we expand families’ eligibility for tax credits so more Americans can get covered.”
“No one should ever have to worry about whether they can afford health care coverage for their family,” said Sen. Brown. “Fixing this glitch in the system will make sure more people can get the tax credits they are owed to buy health insurance.”
“Every Nevadan deserves access to affordable, quality health care. I’m working hard to make that a reality for hardworking families in Nevada, which is why I’m cosponsoring legislation to fix a glitch in federal law that prevents low-income families from accessing tax credits to afford their health insurance, and expand eligibility for premium subsidies,” said Sen. Cortez Masto.
“We need to protect families from undue financial burdens when it comes to health care,” said Sen. Casey. “This common sense legislation will provide much-needed financial relief by fixing the so-called ‘family glitch’ so more families can qualify for help purchasing health insurance when their employer does not offer affordable coverage.”
Under the ACA, large employers are required to offer comprehensive, affordable health coverage to their employees. If the employee is able to access affordable coverage through their employer, they become ineligible to receive the tax credits that can help purchase health insurance coverage through the ACA’s exchanges.
In interpreting this part of the ACA, the Internal Revenue Service (IRS) considers health insurance coverage to be “affordable” if the employee’s share of premiums for individual coverage—not the family’s share—is less than 9.86 percent of family income. This means that if an employee is able to access affordable health insurance coverage through his or her employer, but their family is not, the family is also barred from receiving the tax credits that can help them purchase other insurance for the family on the ACA’s exchanges. As a result of the IRS interpretation, many middle-class families are prohibited from receiving premium tax credits, even when the cost of family coverage is simply unaffordable.
The Family Coverage Act would fix the “family glitch” by allowing an employee’s dependents to access tax credits if the cost of family coverage offered by an employer is greater than 9.86 percent of household income (as adjusted by the IRS). This change not only helps families but also brings the definition of “affordable” into alignment with what Congress intended and is reflected in the rest of the ACA. Making this improvement to the law would strengthen the ACA and help millions of Americans gain access to meaningful, affordable health insurance coverage.