{"id":2193,"date":"2022-11-18T09:00:19","date_gmt":"2022-11-18T15:00:19","guid":{"rendered":"https:\/\/www.bbrown.com\/?post_type=insight&p=2193"},"modified":"2023-06-13T15:26:01","modified_gmt":"2023-06-13T20:26:01","slug":"fixing-the-family-glitch","status":"publish","type":"insight","link":"https:\/\/www.bbrown.com\/us\/insight\/fixing-the-family-glitch\/","title":{"rendered":"Affordability of Employer Coverage for Family Members of Employees \u2013 Fixing the \u201cFamily Glitch\u201d"},"content":{"rendered":"

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Employee Benefits<\/p>\n

\n Affordability of Employer Coverage for Family Members of Employees \u2013 Fixing the \u201cFamily Glitch\u201d\n <\/h1>\n\t\n <\/div>\t\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t<\/div>\n\n\t<\/div>\n\n\t\n[\/vc_column][\/vc_row][vc_row][vc_column width=”2\/3″]\n
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\n Affordability of Employer Coverage for Family Members of Employees \u2013 Fixing the \u201cFamily Glitch\u201d\n <\/h1>\n\t\n <\/div>[vc_column_text]<\/p>\n

Background<\/h3>\n

Under previous rules, a premium tax credit (PTC)1<\/sup> was only available to an employee and their family members (termed \u201crelated individuals\u201d in the final regulations) if the employee\u2019s contribution towards employee-only coverage offered by an employer group health plan was considered \u201cunaffordable\u201d under the Employer Mandate. This meant that so long as an employee\u2019s cost for employee-only coverage was considered \u201caffordable\u201d under the Employer Mandate, and regardless of the expense of family coverage (e.g., employee plus spouse\/ dependent child) to the employee, the employee and family members could not receive a PTC.<\/p>\n

The IRS recently released two important sets of guidance resolving the above \u201cFamily Glitch\u201d that existed under the ACA\u2019s employer shared responsibility penalty (Employer Mandate) rules. The two sets of IRS guidance provide for the ability of family members to now receive a PTC if employersponsored family coverage is considered \u201cunaffordable\u201d to the employee and also allow an employee to make a midyear election change in a Section 125 cafeteria plan to allow family members to enroll in exchange\/marketplace coverage.<\/p>\n

Premium Tax Credits for Family Members<\/h3>\n

On October 13, 2022, the IRS published final regulations<\/a> regarding the eligibility for premium tax credits (PTC) for an employee\u2019s family members. As noted in our previous article<\/a> discussing the proposed regulations, the regulations aim to fix what has been referred to as the ACA\u2019s \u201cFamily Glitch.\u201d The new rules adopted by the IRS on October 13th, 2022, expand the ability for an employee\u2019s family members to receive a marketplace PTC if an employee\u2019s cost for family coverage under an employer\u2019s health plan is considered \u201cunaffordable\u201d to the family members, even if the plan\u2019s employee-only coverage is considered affordable to the employee. The final regulations apply to taxable years beginning after December 31, 2022.<\/p>\n

Affordability Rule<\/strong><\/p>\n

The final regulations resolving the \u201cFamily Glitch\u201d implement the proposed regulations<\/a> with no significant changes. Under the final regulations, employer-sponsored coverage for certain spouses and dependents (i.e., family members) is considered affordable for PTC purposes if the employee\u2019s annual cost of family coverage does not exceed 9.5% (indexed for inflation each year) of the employee\u2019s household income.<\/p>\n

Minimum Value Rule<\/strong><\/p>\n

The affordability of family coverage will be based on the lowest-cost Minimum Value plan offered by the employer. This is to ensure that the affordable coverage offered by an employer meets a minimum standard. The final regulations state that \u201can eligible employer-sponsored plan provides minimum value for related individuals only if the plan’s share of the total allowed costs of benefits provided to related individuals is at least 60% and the plan benefits include substantial coverage of inpatient hospital services and physician services.\u201d[\/vc_column_text]\t

\n\t\t\t\t\t\n\t\t\t\tContinue Reading<\/span>\n\t\t\t<\/a>\n\t\t\t<\/div>\n[vc_column_text]1<\/sup> A premium tax credit is used to reduce an individual\u2019s cost for coverage within a state\u2019s or the federal exchange\/marketplace.[\/vc_column_text][\/vc_column][vc_column width=”1\/3″][vc_single_image image=”1390″ alignment=”center” style=”vc_box_circle_2″][vc_separator border_width=”2″ el_width=”60″][vc_column_text]<\/p>\n
Regulatory and Legislative Strategy Group<\/h6>\n

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[vc_row row_style=”page-hero” full_width=”stretch_row_content”][vc_column][\/vc_column][\/vc_row][vc_row][vc_column width=”2\/3″][vc_column_text] Background Under previous rules, a premium tax credit (PTC)1 was only available to an employee and their family members (termed \u201crelated individuals\u201d in the final regulations) […]<\/p>\n","protected":false},"author":66,"featured_media":2194,"template":"","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"insight_category":[31,73],"class_list":["post-2193","insight","type-insight","status-publish","has-post-thumbnail","hentry","insight_category-employee-benefits","insight_category-regulatory-and-legislative-strategy"],"acf":[],"yoast_head":"\nAffordability of Employer Coverage for Family Members of Employees \u2013 Fixing the \u201cFamily Glitch\u201d - Brown & Brown<\/title>\n<meta name=\"description\" content=\"Learn about the implications of the family glitch on affordable healthcare options for families and explore strategies to address this issue.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.bbrown.com\/us\/insight\/fixing-the-family-glitch\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Affordability of Employer Coverage for Family Members of Employees \u2013 Fixing the \u201cFamily Glitch\u201d\" \/>\n<meta property=\"og:description\" content=\"Learn about the implications of the family glitch on affordable healthcare options for families and explore strategies to address this issue.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.bbrown.com\/us\/insight\/fixing-the-family-glitch\/\" \/>\n<meta property=\"og:site_name\" content=\"Brown & Brown\" \/>\n<meta property=\"article:modified_time\" content=\"2023-06-13T20:26:01+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.bbrown.com\/wp-content\/uploads\/2022\/10\/elevenphotographs-ueyhzkL1_0k-unsplash-2-scaled.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"2560\" \/>\n\t<meta property=\"og:image:height\" content=\"1706\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.bbrown.com\/us\/insight\/fixing-the-family-glitch\/\",\"url\":\"https:\/\/www.bbrown.com\/us\/insight\/fixing-the-family-glitch\/\",\"name\":\"Affordability of Employer Coverage for Family Members of Employees \u2013 Fixing the \u201cFamily Glitch\u201d - 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