The Family Glitch
Some low-to-moderate income families may be locked out of receiving financial assistance to purchase health coverage through the Marketplaces.
Families that are affected and cannot afford coverage will have a last opportunity to claim an exemption from the tax penalty if they have not already done so when they file taxes for 2014.
What's the Issue:
The Affordable Care Act’s (ACA’s) "family glitch" bears no relationship to the early technology deficiencies that dominated the news and plagued the rollout of healthcare.gov and the state-based Marketplaces. Instead, it refers to how some low-to-moderate-income families may be locked out of receiving financial assistance to purchase health coverage through the new health insurance Marketplaces.
Eligibility is not solely determined by income. It is also subject to whether a family has access to affordable employer-sponsored insurance. The problem is that the definition of "affordable"—for both an individual employee and a family—is based only on the cost of individual-only coverage and does not take into consideration the often significantly higher cost of a family plan.
This shortcoming is a trouble spot in how the ACA is being implemented. As its name clearly conveys, the law was intended to make coverage more affordable, and for millions of Americans, it has. Families caught up in this glitch, however, cannot qualify for premium tax credits to reduce the cost of a Marketplace plan or for cost-sharing reductions to lower their out-of-pocket payments for health services, even if the family cannot afford coverage otherwise.
While a large number of children in these families are eligible for coverage through Medicaid or the Children’s Health Insurance Program (CHIP), spouses and some children will remain uninsured without a path to affordable insurance if the family glitch is not fixed. However, many more children could be affected if Congress does not act to extend funding for CHIP after the current appropriation ends in September 2015.
If the family glitch remains unresolved, it is likely to become a critical issue as Congress considers the future of CHIP. Without CHIP, the Government Accountability Office (GAO) ups the number of children impacted by the family glitch from its estimate of 460,000 to 1.9 million. The Medicaid and CHIP Payment and Access Commission (MACPAC), which provides policy and data analysis and advises Congress and the secretary of health and human services, estimated the impact on children to be even higher. It projects that more than half (56%) of the 5.3 million children enrolled in separate CHIP programs could be subject to the family glitch.