New bill would let dependents access subsidies

For insurance agents, one of the most frustrating rules in the Affordable Care Act is the one that says that if employer-sponsored coverage is affordable for the employee, meaning that the employee’s share of the premium for single coverage would not exceed 9.5% of his or her household income, then the entire family is blocked from getting a premium tax credit in the individual market, even if the cost of family coverage is very high and the employer makes no dependent contributions. In fact, it’s the reason that many brokers are recommending that employers drop their group health coverage altogether – because many employees would pay less for family coverage in the individual market after the government pays its share of the premium, employers who offer group health coverage in many cases are hurting their employees.

Well, a new bill introduced by U.S. Rep. Annie Kuster (D-NH) called the Family Coverage Act would fix this “glitch” in the law, one that President Clinton said several months ago needed to be corrected. The new proposal would allow dependents to access subsidies if the cost of family, not single, coverage exceeds 9.5% of the household income. Because most employers do not contribute a significant amount toward dependent coverage, most families whose income is below 400% of the federal poverty level would qualify.

The bill has several co-sponsors, all Democrats, and companion legislation has been introduced by Sen. Al Franken (D-MN).

For more information, here’s an article in the New Hampshire Concord Monitor about the bill: Kuster introduces bill to expand tax credit, addressing ‘family glitch’ in Affordable Care Act

Unfortunately, it’s unlikely that this legislation will pass anytime soon. That’s because it would require a vote from Republicans agreeing to expand the subsidies, which is unlikely, but the fact that there is a bill to fix the problem is a step in the right direction. It gives those who support a change something to call their elected officials about.

For those opposed to expanding the subsidies, they may have a stronger argument than ever before. The CBO is now projecting that, instead of costing the country $10 billion, as it had predicted, this year’s subsidies could exceed $16.5 billion. The good news is that means people are signing up. The bad news is that somebody has to pay for it.

To learn how you can take advantage of the growing interest in individual health plans and premium tax credits, click here.

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