By now you’ve heard the screaming over outages and other glitches in www.HealthCare.gov, the Web site for the new federal Affordable Care Act. In short, it’s swamped and it can’t keep up with demand from the public. It now appears that, once the site is reliable, some consumers may find gaps in the affordability of their insurance under the new health care system.
One gap — nicknamed “the family glitch” on the Internet — already has come to light. Briefly, some taxpayers could end up paying unaffordable costs for insuring dependents because of the way “affordable” is interpreted.
Here’s the gap in the law. Most employers are required to offer health insurance to both employees and their families, or dependents. However, the new regulations require “affordable” premiums only for employee’s portion of the insurance – not for the dependent coverage. Employers can decide to bear more of the cost to make family coverage less burdensome, but that is not required.
At the same time, the new law requires all parents to buy health insurance for their dependents or to pay penalties at tax time. (There are some exceptions for low-income people receiving government assistance and other situations..)
The ACA foresaw that some people would be stuck paying unaffordable premiums and authorized a federal tax credit to help pay them. But consumers caught by this “family glitch” cannot claim the credit because, technically, the insurance obtained through their job is regarded as “affordable.”
The Affordable Care Act is extremely complicated, and we expect some current gaps will be closed as rules are revised in coming months. In the meantime, employers should alert workers about their rights and consumers should decide how they will seek insurance, if they don’t already have it.
We at EricJohn Ltd. can help both employers and consumers in navigating the new Affordable Health Care Act.