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Topics of interest to both consumers and agents related to Covered California and the ACA biased in favor of the successful implementation of the Exchange and deliberately apolitical.

Bad News for Families with Modest Incomes

By on | 6 Comments

The ACA says that someone with access to affordable employer-sponsored coverage cannot get a premium subsidy from state exchanges in 2014, unless the cost of the employer-based health care coverage for that employee exceeds 9.5 percent of the worker’s household income. The IRS ruled last week that the calculation of affordability will be based on the cost of employee-only coverage, not family coverage.

Many Families Priced Out

This is highly disappointing ruling. Estimates made in 2011 by respected research organizations suggested that some 2 million to 3.9 million non-working spouses and dependents would be harmed by the strict ruling. It could leave millions of Americans with modest incomes unable to afford family coverage under their employers’ health insurance but ineligible for subsidies to buy coverage in the Exchange. A Kaiser Family Foundation survey found that in 2012, employees’ annual share of insurance premiums averaged $951 for individual coverage and $4,316 for family coverage. Under the I.R.S. rule, such costs would be considered affordable for an employee with a household income of $35,000 a year — making the employee’s spouse and children ineligible for a premium subsidy on a health exchange, even though that family would have to spend 12 percent of its income for the employer’s family plan.

Exempt form Penalties

The IRS said in a proposed rule also issued today that most families in such a situation won’t have to pay a penalty if they choose not to buy insurance coverage. This helps some, but it still leaves families that can’t afford health coverage either through an employer or on their own without the subsidy they need. There will be a substantial number of families who are priced out of needed health care,


This has been a common question lately. People are saying their work insurance has gotten so expensive, they can't afford it and wonder if they should be shopping the open market or if they'll be helped by the Covered California exchange. Sounds like the working poor won't qualify.

Why is the IRS even involved in this decision? Where do they get the authority to decide?

Good question. I have no answer for that.

If you are philosophically opposed to ACA in the first place, don't complain that nobody is subsidizing your premium.

If you are in the pro-ACA camp, you already know how messed up the healthcare system is. It just means that you are last in line and the goodies have run out by the time you got to the head of the line.

May be new supplies will be rolling in if the the right people are put in power. You need to work towards that.

The IRS is involved because they are the ones who collect the penalty if you don't have insurance under the Federal mandate

Jerred, The IRS should be *given* policy decisions to implement, they should not be *making* them. The IRS does not make law.The IRS implements the laws the are given, the courts interpret the law, not the IRS.

My employer covers most of my health insurance premium, but will not cover *any* of my wife's so to put her on my work plan would cost over 1K more per year than to keep her on the private plan we currently pay for. Under the IRS interpretation, she is *NOT* eligible to use the new "Covered California" system, because she "could possible be covered" by my employer's plan, even though we could not possible afford to do so...

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