The Family Glitch Fix
If Meeting an Eligibility Test, You Can Choose Marketplace Health Insurance with Tax Credits For Spouse and Children Even If One Spouse is Covered Through Work.
Many families have one spouse whose employer offers group health insurance. The cost to the employee for their coverage is minimal…but the cost to cover the rest of the family is astronomical! The family seeks a lower cost health insurance plan for dependents elsewhere…maybe an ACA Marketplace health insurance plan with tax credits to lower the cost will work?
In the past they would run into the dreaded “family glitch”…because the spouse had an available employer-sponsored health insurance plan for dependents….the family (spouse and/or dependent children) was not eligible for the tax credits to make the coverage more affordable.
The great news….because of the “Family Glitch Fix” rule…if a calculation determines that the premium cost of the employer-sponsored plan to cover the family is higher than 9.02% of the family’s income then the dependent spouse and/or children can choose a separate health insurance plan through the Marketplace with an APTC (instant tax credit!) that really brings the premium cost down.
How the Family Glitch Fix Can Help Your Family (In “Plain Speak”)
Are you covering your spouse and children on your employer’s group health insurance plan, and paying a lot of money to do so? We suggest researching if you would benefit from the “Family Glitch” rule fix (contact Chip if you would like help, he can calculate the details for your family, then suggest best plan designs). Here are 3 steps to take advantage of the Family Glitch Fix rule:
Step 1: Calculate to See if the Cost of Employer-Sponsored Health Insurance is over 9.02% of Your Family’s Income
What would it cost for the spouse with health insurance through work to cover themselves and their dependents under the plan?
That monthly amount you would pay for the employer-sponsored health insurance…is that amount over or under 9.02% of your family’s monthly income? (count both spouses’ income, if any)
If under 9.02%…there is not so good news. Your dependents can still buy health insurance through the Marketplace, but they do not qualify for the tax credits.
If over 9.02%….great news! You can buy Marketplace health insurance with tax credits to lower the premium cost for your dependents.
(this can be confusing…Chip will be happy to compute the math for you and explain)
Step 2: If Your Income is Under the 9.02% of Income Threshold, Choose ACA Marketplace Health Insurance with Tax Credits to Lower the Cost
If the calculation of the cost of the employer-sponsored health insurance premium for the family is more than 9.02% of your family’s monthly income then you can choose an individual health insurance plan for your dependents (spouse and children), in either the AEP or SEP enrollment periods.
-AEP or “open enrollment period “(Nov. 1 -Dec. 15 to begin coverage January 1)
-SEP, or special enrollment periods, any time in the year…at your employer’s plan renewal date, or when you change jobs, etc.
You can choose any Marketplace health insurance plan in N.C., with the tax credits.
Chip can help by researching plans, making plan recommendations and enrolling your family in the coverage.
Step 3: Notify Your Employer You want to End Dependent Health Insurance Coverage (the Family Glitch Fix is a SEP Reason for Changing Coverage)
Once enrolled in the new health insurance plan, with confirmation….if your dependents are currently covered by your employer-sponsored health insurance plan, you will need to notify your employer to end their coverage when the new plan begins.
Note: Your employer or HR manager may not know about this new rule. They may try to tell you that you will need to wait until the group plan’s open enrollment period for you to make the change.
Point your employer or HR manager to IRS Notice 2022-41 outlining a new SEP in the Section 125 rules allowing this change.
We Help Individuals and Families With These Health Insurance Plans (And More)
2 Real Life Examples of Families Benefitting from the Family Glitch Rule Fix
The Family Glitch Rule Fix details are dense and confusing. We have found a better way to understand the benefits are in real life situations. Here are two of our clients and how they will benefit from the Family Glitch rule fix.
A Family of 3 in Chapel Hill
David and Genny and their college age son live in Chapel Hill. David works in RTP, and his insurer pays 100% of the “employee only” health insurance premium. The plan is very benefit-rich.
Genny is a self-employed consultant, and their son is not working, as he is a full-time college student.
The cost for David to cover his wife and son with his employer-sponsored health insurance is $1,700 monthly!
The calculation…David’s monthly income is $7,000 and Genny’s monthly income is $5,000.
$12,000 income x 9.02% = $1,082.40. So the $1,700 monthly cost of the group plan for dependent coverage is deemed unaffordable.
Thus, the Family Glitch Rule Fix allows David and Genny to shop for an health insurance plan to cover Genny and their son in the Marketplace with tax credits to help lower the cost. David remains with his employer-sponsored plan, that costs him nothing.
A Couple in Durham
Richard and Pauline live in Durham. Richard recently retired at age 63, but is putting off accepting Social Security or retirement benefits, so his current income is $0.
Pauline is a North Carolina state employee. She is covered by the State Health plan, Enhanced PPO 80/20.
The current State Health plan rates stipulate that Pauline must pay $50 monthly to be covered, and $650 monthly to cover her dependent spouse Richard. Her monthly income is $5,750.
The calculation…Pauline’s $5,750 income x 9.02% = $518.65. So the $700.00 monthly cost of the group plan is deemed unaffordable.
The Family Glitch Rule Fix allows Richard and Pauline to shop for an individual health insurance plan for Richard in the Marketplace with tax credits to lower the cost. Genny remains with the State Health plan at the low $50 monthly premium cost.
Chip Millard is a member of Healthcare.gov's "Champions Circle."
A distinction awarded by Healthcare.gov to health insurance agents and brokers who go above and beyond to increase access to health insurance (helping local people understand their benefits and costs options, and helping them enroll) in their communities.
Free Family Glitch Rule Fix Calculation and Quotes
Complete the form below and Chip will send you an email with a calculation of whether or not your family’s income and insurance details mean you qualify for tax credits in the Marketplace to cover your dependents due to the Family Glitch Rule Fix. He will include ideas of health insurance plans you can choose, along with details on costs and benefits.
Note: Privacy is something we take seriously. The minimum of information is shared with an insurance company to put together a detailed free quote and illustration for you.