Some Families Will Be Ineligible For Insurance Subsidies Under Final Rule
Some families with costly job-based health coverage may be ineligible for federal subsidies to help them buy less expensive coverage through new online insurance markets, under final rules released Wednesday by the IRS.
The two rules,聽published by the Treasury Department聽听补苍诲听,聽uphold earlier proposals outlining what is considered affordable, employer-sponsored coverage.
Under the federal health law, low and moderate-income workers with job-based coverage that is deemed unaffordable can opt out of that and turn to new marketplaces, called exchanges, to buy coverage聽with government subsidies.
But the rule defines the standard for affordability more narrowly than most consumer groups had hoped — as an amount less than 9.5 percent of household income to cover just that employee鈥檚 share of premium costs, not on what he or she must pay to cover their entire family, which is generally more expensive.
to base the affordability threshold on the cost of a family plan, saying the rules could prevent some children and spouses from getting coverage. A from the U.S. Government Accountability Office estimated that a small percentage of uninsured children 鈥 6.6 percent of the total, or at least 460,000 鈥 may be shut out because of how the government proposed to define affordable coverage.
鈥淚t doesn鈥檛 make sense to test the affordability of children鈥檚 coverage by looking at the cost of covering one person, the employee,鈥 said Joe Touschner, senior health policy analyst at Georgetown University鈥檚 Center for Children and Families. More than 100 groups, including the March of Dimes, the American Academy of Family Physicians and the Children’s Defense Fund, had signed a letter to Treasury making that argument.
Touschner acknowledged聽that if the IRS had used the cost of family coverage as the threshold it would have boosted the cost of the law because more people would become eligible for subsidies.
Supporters of the rule, among them employer groups and insurance brokers, say it closely follows the wording in the law and will be easier to administer.
The final to the federal law鈥檚 rule requiring most Americans to carry health insurance coverage, including not being able to afford coverage.
The exchanges and subsidies, as well as the requirement that most Americans carry insurance, go into effect on Jan. 1, 2014.
