Tag Archives: family glitch

Obamacare ‘Family Glitch’ Puts Subsidies Out Of Reach

Obamacare ‘Glitch’ Puts Subsidies Out Of Reach For Many Families : Shots – Health News : NPR.

The Affordable Care Act is expected to provide around $10 billion in subsidies this year to make health insurance affordable for low- and middle-income people. But a quirk in the law is denying subsidies to a significant number of low-income people, especially those with families.

Benfield has run up against this quirk. To cover only himself, Benfield would have to pay a little more than $2,200 a year. He says he can’t afford that, but that’s an affordable amount, according to Obamacare regulations, and that means Benfield could not get subsidies if he tried to get coverage on the Obamacare exchange.

To be clear, the glitch is related to the employer offering affordable coverage to the employee. If that happens and the employer will allow adding the employees dependents, the dependents are disqualified from being eligible for a subsidy regardless of the cost of the employer offered coverage.


What to consider before deciding to go without health insurance

What to consider before deciding to go without health insurance – latimes.com.

Valuable information, except the information regarding why Sarah and her daughter are not eligible for premium assistance in incorrect.

Sarah and daughter are not eligible for a subsidy because her husband’s coverage is deemed “affordable” for him and the plan offers to cover the rest of the family. How much it costs to cover the rest of the family is not relevant to this situation. This is known as the “family glitch”.

If his plan did not offer to cover the rest of the family, then the household income would come into play.


Obamacare prices: Expensive or cheap?

Opinions vary – Obamacare prices: Expensive or cheap? – Oct. 4, 2013.


This example sounds like a potential “family glitch” issue:

But for Deb Hornbacher, 58, the high deductibles are just too much for her and her husband. While she’s enrolled in her employer’s plan, the Colorado couple can’t afford to extend the coverage to her husband, a self-employed carpenter.

So she was hoping to sign them both up for a plan on the exchange if they qualify for a federal subsidy. She found a bronze-level plan for roughly $357 a month, after their subsidy, which they could swing. But it comes with a $12,600 family deductible. (If they don’t qualify for a subsidy, they would pay nearly $1,275 on the exchange for that policy.)

“This is like a catastrophic plan, said Hornbacher, a public school nurse who pays more than $300 a month for coverage at work and will now look to add her husband for 2014. “I am totally shocked and taken aback at how little it did provide at the level I could afford.” To top of page

If Deb’s coverage is deemed “affordable” for ONLY her, but it DOES offer the option to add her husband then she is NOT SUBSIDY ELIGIBLE. It doesn’t matter that extending her school coverage to her husband is very expensive.


Worst Law Passed in Four Decades

Obamacare: Worst Law Passed in Four Decades Must Be Stopped, Says Stockman | Daily Ticker – Yahoo Finance. (video at link)

So why should it be repealed?

It is the worst law ever passed in the last four decades by the federal government,” Stockman argues in the video above. “It is a massive entitlement to end all entitlements. It is going to cause a fiscal hemorrhage that is not even yet anticipated. It will tie up one-sixth of GDP in the most monstrous, massive, bureaucratic snarl that you can’t imagine. So therefore this needs to be stopped before it becomes operational.”

Lauren Lyster goes on to note…

Healthcare consultants like Jon Kingsdale — who helped set up some of the state exchanges — say these online Obamacare insurance “stores” will affect only the 5% to 10% of Americans who are uninsured (where they can now shop for insurance with transparency). Americans who purchase insurance this way qualify for government subsidies so that monthly premiums are not more than 9.5% of their income.

This is only partially true. Everyone who has an individual insurance plan IS affected. I repeat, EVERYONE who has an individual insurance plan IS affected. Ok, ok, one exception, if you purchased a plan prior to March 23rd, 2010 it has grandfathered status. But lets move on….

If you have an individual plan, regardless of income, it will either terminate or changed into an Obamacare Qualified Plan (QHP) sometime in 2014. The list price of your coverage will SOAR. Perhaps you will qualify for a subsidy but there are lots of loopholes such as:

  • Family glitch
  • CHP+ for children
  • Medicaid if your income is below 133% or 100% of the Federal Poverty Level depending on the state

There is also the issue of potential partial subsidy recapture if your income increases during the year OR even worse, a TOTAL subsidy recapture if you income ends up above the 400% FPL threshold for the year. That recapture can be quite high if you live in a region with high insurance costs, such as the resort area here in Colorado.

Getting back to David Staockman’s concern, Obamacare is an ever expanding ever growing entitlement. It does nothing to control costs except make sure that most of the plans offered on the exchange have small doctor/facility networks so it will be very easy to be out of network. Furthermore, the out of network coverage will be substantially less favorable than what is found today. So when the government gets around to trying to control costs, the blunt knife of government will only result in worse care for all and a very broken system.


Rocky Mountain Health Plans blogs on the Family Glitch

Premium Assistance and the Family Glitch

The problem…

This creates a situation where some families cannot afford to pay for employer sponsored coverage. However, if the employee contribution for “self-only” coverage is less than 9.5% of household income, family members are not eligible for premium assistance. This applies even if the employee has to contribute more than 9.5% for family coverage. (emphasis added)


The solution to the family glitch? Well there is no good solution…

At this point, it seems the only way to fix the situation is through legislation. Given the climate in Washington, this may not be possible.

As a result, these families are stuck in limbo. They are eligible for employer sponsored insurance. Thus, they are not eligible for premium assistance even though they may not be able to pay for their health coverage. (emphasis added)

Just to make sure you understand…

  1. The employee is offered coverage by his employer
  2. The coverage offered to the employee by himself is deemed affordabe (less than 9.5% of household income).
  3. The family is NOT eligible for a subsidy due to the family glitch. It does not MATTER how much more more it costs for them to join the employee’s group plan. It also does NOT matter if the employee refuses coverage from his employer, the STILL offered him affordable coverage.
  4. The family has two options for major medical coverage:  Join the employees group plan and pay whaterver the cost is OR purchase a qualified plan either ON or OFF the exchange. There is no need to purchase ON the exchange since they are not eligible for a subsidy.

NOTE: This emphasizes the point that the only place you can purchase a plan and receive a subsidy is on the exchange (better known as a marketplace).

Guess they should have read the bill before they passed it?


UPS drops spousal coverage, teachers get hours cut due to ObamaCare

UPS drops spousal coverage, teachers get hours cut due to ObamaCare « Hot Air.

Finally someone discusses the “family glitch” issue. The only way around the family glitch is for the employer NOT to offer benefits. It’s not as simple as the employee declining benefits, if that’s even an option. Ed Morrisey comments…

As I pointed out a couple of weeks ago, the law requires employers to subsidize health-insurance costs for employees, but not for dependent children (meaning the employee has to pay full price), and they don’t have to cover spouses at all — even if the spouses don’t have their own jobs. Under that scenario, employees with children and stay-at-home spouses are better off going into the exchanges and getting taxpayer-fueled subsidies to buy their own family insurance — even though a mass migration into those exchanges will create an avalanche of unforeseen cost to ObamaCare.

The solution is to have the employer end health-care coverage so that workers then qualify for the exchanges. The business will have to pay a penalty, but that’s far below the cost of providing subsidized health insurance, so they win, too. The only losers in this scenario are taxpayers who have to fork over billions more than anticipated in exchange subsidies.

Single payer makes a complicated thing simple…. until it doesn’t. Of course, it will be too late by then.


PPACA to Congress: Come and join the waters fine

The Volokh Conspiracy » Lawmakers Upset with PPACA as It Applies to Them.

Cry me a river. Perhaps they were in a little too much of a hurry to pass the bill so they could find out what’s in it. The “hurry to pass the bill” issue is also addressed at the link.

The bottom line is the law dictates that the politicians and their staff must purchase through their state exchanges but there is no mechanism for them to be reimbursed as they are now.

Well Congress, you’re not the only people with this problem. Just wait until you hear from families tha are affected by the “family glitch”. You can learn more about the Obamacare family glitch here and here.

Prediction: Chaos


But nobody needs a federal bureaucrat to tell him what health insurance to buy…

Examiner Editorial: Obamacare is a 19th-century answer to a 21st-century question | WashingtonExaminer.com.

The Wall Street Journal’s Daniel Henninger captured it well with this observation last week: “Even if you are a liberal and support the goals of the Affordable Care Act, there has to be an emerging sense that maybe the law’s theorists missed a signal from life outside the castle walls. While they troweled brick after brick into a 2,000-page law, the rest of the world was reshaping itself into smaller, more nimble units whose defining metaphor is the 140-character Twitter message.”

Simply put, the digitization of social interaction, economic transaction, the political process and everything in between is decentralizing the world, moving it in the opposite direction of the massive centralization of Obamacare. But nobody needs a federal bureaucrat to tell him what health insurance to buy when anybody with an Internet connection can simultaneously solicit bids from thousands of competing providers, pay the winner via electronic fund transfers, manage the claims process with a laptop, consult with physicians and other medical specialists via email, and even be operated on remotely by surgeons on the other side of the globe. Rather than imposing a top-down, command-economy, welfare-state health care model with roots in Otto von Bismarck’s Germany of 1881, a 21st-century government would ask what is needed to apply to health care access the Internet’s boundless capacity to empower individual choice.

Well said. I read in the WSJ today about some exchange simulations that Blue Cross Blue Shield has been running in Rhode Island. For the number one issue in plan selection, by FAR price the most important factor at 48%. A distant 2nd at 11% was maximum out of pocket.

The problem with a top down design of Obamacare is it’s the elite behind the castle walls that know what’s best for us. Between the bumbling implementation, the increased cost, the family glitch subsidy (which I have many clients that fall into that category) they better hope they’re right.


Full comparisons of Colorado exchange health insurance rates, courtesy of consumer analysts

Full comparisons of Colorado exchange health insurance rates, courtesy of consumer analysts.

Remember, as we said in a blog Wednesday and in the paper Thursday, that these rates do not account for the subsidies people might get when they actually apply to the exchange at the opening on Oct. 1. These are what you would call the retail rates, but few people will pay full retail. These prices can be adjusted somewhat, either direction, depending on the applicant’s location, age and smoking status; they cannot, however, be adjusted higher for a previous illness, a key feature of “Obamacare.” The prices will also be lowered when people find out if they qualify for a federal tax subsidy; the subsidies are generous, applying even to families of four with income up to $94,000 a year.

I will post the Silver plan spreadsheet analysis that CCHI has created under the Obamacare resources tab.

My quick analysis comes down to this: Unless you qualify for a substantial subsidy, you will find these plans expensive. When it comes down to subsidy qualification, beware the family glitch.


I.R.S. to Base Insurance Affordability on Single Coverage

I.R.S. to Base Insurance Affordability on Single Coverage – NYTimes.com.

Under the law, most Americans will be required to have health insurance starting next year. Low- and middle-income people can get tax credits to help them pay premiums, unless they have access to affordable coverage from an employer.

The law specifies that employer-sponsored insurance is not affordable if a worker’s share of the premium is more than 9.5 percent of the worker’s household income. The I.R.S. said this calculation should be based solely on the cost of individual coverage, what the worker would pay for “self-only coverage.”


Obamacare family glitch: Can employed people get Obamacare subsidies?

Can employed people get Obamacare subsidies?.

Tim Ricchuiti is a schoolteacher in Dallas and had read a previous Health Reform Watch where I noted that employees who were offered insurance plans that met “coverage and affordability requirements” by their employers would not be eligible for tax subsidies on the health exchange.

“The ‘those that meet the coverage and affordability requirements’ that’s giving me trouble,” he wrote in an e-mail. “Next year, my school district (I’m a teacher working for Dallas ISD) will offer a plan I could use to cover my family of three; but it would cost about $1,000 a month (that’s after the district contribution of $300, which is standard for all employees), or about 25 percent of my salary.”

So, Ricchuiti’s question is this: “Will my family be eligible for subsidies? And if so, can I only access them if I sign up for a health exchange plan?”

And the answer is “most likely not”.

As Sarah Kliff explains, if Ricchuiti’s plan alone is deemed affordable, then the remainder of his family is NOT eligible for a tax subsidy when purchasing an ACA plan through the health exchange.

What is the definition of affordability?

In January, it issued guidance that said the health law would use the cost of an individual policy to determine whether an employer had exceeded the 9.5 percent threshold. This has been worrisome to consumer advocates, mostly because of cases like Ricchuiti’s, where a family policy could eat up a big chunk of household income.

So Ricchuiti has two choices:

  1. Add his family to his school districts group plan at a total cost of $1300/mo of which $1000 comes out of his pocket
  2. Only Ricchuiti sign up for his group plan and the remainder of his family can purchase a plan either on the exchange or off the exchange. Since there is no tax subsidy available, there is not an advantage of purchasing a plan on the exchange.
  3. There may be a 3rd option of the entire family purchasing an ACA plan on or off the exchange. There will still be no subsidy available if Ricchuiti has an affordable group plan available to him.

Why would the Obama administration/IRS rule against families like this?

There was a lot riding on how the administration decided to define the 9.5 percent threshold, whether it would use an individual or family plan as the standard. Economist Richard Burkehauser wrote a paper in 2011 estimating that, if the Obama administration went with the family-based definition, it could mean an additional $48 billion in federal subsidies as many Americans would not have their policies counted as affordable.

That’s right, $$$$’s, $48 billion of them.


Family Glitch: Affordable coverage for an employee does NOT mean affordable coverage for the family

ObamaCare’s “Family Glitch” Hurts the Middle Class.

Despite everyone’s assumption, dependents of full-time workers will not be automatically covered under ObamaCare. According to the IRS, employers will not be required to provide an affordable insurance plan that covers an employee’s family.

Instead, any individual plan that is below the 9.5 percent threshold qualifies as affordable. And because the individual plan now qualifies as “affordable” under ObamaCare, the IRS interpretation also disqualifies employees from getting federal subsidies to help cover the cost of insuring their families.

Wow! Let’s review, assuming a family with a single breadwinner who works for a business with 50 or more employees: Continue reading Family Glitch: Affordable coverage for an employee does NOT mean affordable coverage for the family