The Biden Administration To Propose New Change to ACA This Week
The Biden administration is planning on April 7 to propose an important change to the Affordable Care Act aimed at lowering health insurance costs for millions of Americans.
The new policy is designed to close a loophole in the ACA that has been referred to as the “family glitch” that’s prevented an estimated 5 million people from qualifying for subsidized health plans.This has kept them from finding affordable coverage elsewhere since ACA is the only option.
Why the change to the ACA law?
This change has been talked about for a while now. The proposed rule flows from an executive order on the ACA and Medicaid issued by President Biden in January 2021 which hinted at the possibility of fixing the family glitch by directing federal officials to examine policies or practices that may reduce the affordability of coverage or financial assistance for coverage, including for dependents. There have been arguments that the family glitch interpretation is inconsistent with the text, structure, and goals of the ACA and unfairly penalizes family members of lower-income workers. There is also broad support among a range of health care stakeholders to fix the family glitch: a majority of diverse health care stakeholders urged the Biden-Harris presidential transition team to revise the interpretation that created the family glitch.
Enrollment in ACA-subsidized plans spiked during the COVID-19 pandemic, with a record 14.5 million Americans signing up for coverage in 2021. But more generous financial aid for coverage that was included in COVID-19 relief bills is set to expire by the end of this year, and Mr. Biden's efforts to boost coverage through his social spending legislation have stalled in Congress.
Will this affect the employer mandate?
The proposed rule should not affect liability under the employer mandate since the employer mandate requires certain large employers to offer coverage to employees and dependents. Penalties for violating the mandate are triggered only when an employee receives premium tax credits through the marketplace. The new rule would extend marketplace tax credits to only the family members of workers who are not offered affordable job-based family coverage. It would do nothing to affect the eligibility of employees, so it shouldn’t implicate the employer mandate.
When may the new rule take effect?
Once the rule is proposed, comments will be due in 60 days. The IRS will then hold a hearing on the proposed rule on June 27.Once IRS finalizes the rule as proposed, the family glitch would no longer exist, and dependents who are offered unaffordable job-based family coverage could be eligible for more affordable marketplace coverage, beginning in 2023.
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