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,