Kansas Twist — The proposed rule aims to modify the “Family Glitch” in the ACA Marketplace (May 13, 2022).
Changes may improve Kansas coverage and lead to modest savings
Phillip Steiner, MA | May 13, 2022
Record 107,784 Kansans chose the Affordable Care Act (ACA) Marketplace plan during the 2022 open registration period, which ended January 15, 2022. Many who chose the plan were able to take advantage of the more generous federal tax deductions offered by federal Americans. Rescue Planning Act 2021. This has increased the eligibility of more individuals and families to receive financial support to reduce their monthly premiums. However, not everyone who can benefit from these enhanced tax credits has been able to do so. It is estimated that 40,000 Kansans are not eligible for a premium tax credit due to what is called a “family defect”.
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What is a “family glitch”?
Under ACA, low- and middle-income consumers are eligible for a premium tax credit to help pay health insurance premiums for plans purchased on the ACA Marketplace. However, employees who are provided with “affordable” and “appropriate” employer-sponsored compensation will not receive premium support. Currently, under ACA, an employer’s coverage is considered “affordable” if the premium for a self-employed employee plan is less than 9.61% of the employee’s household income. However, this affordable decision applies to all families, even if the cost of purchasing a family’s coverage far exceeds 9.61% of the family’s income. Family members affected by “glitch” either pay or do not pay a significant amount of health insurance coverage.
What can change?
On April 5, the Biden administration announced a draft rule entitled “Affordability of Employer’s Coverage for Employees’ Families.” Rather than using the cost of self-employed employer compensation to determine if dependents are eligible for a premium tax credit, the proposed rule uses the employee’s contribution to family compensation. Create a separate test for. Under the new rules, the ACA Marketplace will (1) determine if employees are offering affordable self-only compensation. (2) Employee families provide affordable family compensation. (3) One of these families offers affordable coverage from another employer.
Who can benefit from the proposed changes?
Low- and middle-income households are most likely to benefit from the proposed changes, and savings will vary as low-income households have more savings, depending on the modest savings of middle-income households. Employees who decide whether it makes economic sense to purchase some family coverage at the ACA Marketplace are the family income, employer coverage costs, family size, and family geography. It also depends on factors such as the ACA plan available in the area. Expected medical needs.
Based on the latest data (2020), Kansas employees enrolled in the employment plan pay an average of $ 1,541 a year, an average deduction of $ 2,017, and pay an annual premium for their own compensation. I did. The average annual deduction for family insurance is $ 3,765. Applying this data to a family of four (two 30-year-old adults and two children) in 2020, household income is $ 65,500 (250% of federal poverty levels in 2020), an adult that covers only oneself. It is an annual premium for one person. It was considered affordable under the ACA, as it was only 2.3% of the family’s income. However, under the current rules, the cost of family compensation is 11% of the family’s income, but if other families choose to buy cheaper compensation at the ACA Marketplace, they will receive a premium tax credit. Not eligible. Under the proposed rules, the employer’s family coverage exceeds 9.61% of the family’s household income, so three dependents are eligible for the ACA premium tax credit and can purchase the ACA marketplace coverage. However, employees with their own coverage are still not eligible.
What does this mean for the Kansas marketplace?
If all of the 40,000 Kansas estimated to be eligible for the premium tax credit are registered (not yet included in the ACA plan), the total number of registrations in the Kansas Marketplace will be in 2020 and 2021 (a few years before the plan). It may increase by about 42% compared to the total number of registrations. To the enhanced tax credit provided by ARP). However, the proposed rules provide some reasons why some families may choose to remain uninsured or enrolled in an employer plan.
- Savings are seen after all new tax credits have been tax deducted for their dependents, and after adding the employee-paid cost of their own employer compensation to the cost of the ACA Marketplace Plan. It is not possible.
- Multiple plans within a family mean multiple deductions and maximum out-of-pocket limits, which can increase total out-of-pocket costs.
- Employer-sponsored plans may have more generous profits and provider networks than plans for the ACA Marketplace.
The proposed rules are open for public comments until June 6th, with public hearings scheduled for June 27th. Plan your insurance premiums. However, it is unclear whether the proposed rules will lead to significant changes envisioned by the Biden administration. More potential savings and registrations could be realized if Congress extends the enhanced premium tax credits offered by the US Rescue Planning Act beyond 2022.
The Kansas Health Institute supports effective policymaking through nonpartisan research, education and involvement. KHI believes that evidence-based information, objective analysis, and civic dialogue can help policy leaders become healthier Kansas advocates. Founded in 1995 with a multi-year grant from the Kansas Health Foundation, KHI is a Topeka-based non-profit, non-partisan educational institution.
