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October 21, 2022

IRS Finalizes Rule Fixing the “Family Glitch” For ACA Health Insurance Coverage

On October 13, the IRS published the Affordability of Employer Coverage for Family Members of Employees final rule in the Federal Register. This new rule eliminates what has been referred to as the “family glitch” for ACA health insurance coverage. The “family glitch” generally prevented family members of an employee who had access to an affordable employer-sponsored health plan from receiving premium subsidies for ACA health insurance coverage, due to the fact that the affordability of health insurance coverage for the employee’s family members was based solely on the cost of the health insurance coverage for the employee and not the cost for adding additional family members to the employee’s coverage which is often significantly more expensive. The final rule eliminates the “family glitch” by basing the affordability of employer-sponsored coverage for family members of an employee on the employee’s share of the cost of covering the employee and their family members, not only the cost of the employee. Because of this change, more family members will now be eligible to receive premium subsidies for ACA health insurance coverage. Further, the IRS notes studies that estimate between 600,000 and 2.3 million newly-eligible individuals would enroll in coverage through the federal Exchange, and between 80,000 and 700,000 previously uninsured individuals would gain coverage because of this new rule.  The new regulations become effective on December 12, but the IRS and HHS are making sure the marketplaces implement the changes before the 2023 open enrollment period begins on November 1.

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