Final Treasury Rule Contains Family Penalty

By Joe Touschner

In a move that will keep many children out of subsidized exchange coverage, the Department of Treasury today released a final rule that includes the “family penalty” in the Affordable Care Act’s premium tax credits. (Note that this problem is also frequently referred to as the “family glitch” or “firewall”).

We’ve been on our soapbox about this issue since 2011 trying to protect children and families from becoming ineligible for credits even though they don’t really have access to affordable coverage.   As Say Ahhh! readers know, the Affordable Care Act included tax credits, which will become available next year, for those who don’t have access to other affordable coverage.  The Department of the Treasury’s initial proposed regulations considered only the cost of single-only coverage in determining whether coverage is affordable for a whole family.  That is, if single-only coverage cost $1,000 a year for an employee and that $1,000 was determined to be affordable, then coverage would be considered affordable for the worker’s entire family, no matter the true cost of a family coverage plan.  But as we all know, family coverage costs a lot more than single-only coverage.  The latest Kaiser/HRET survey found the average employee premium for single coverage to be $951 per year, while a family plan cost $4,316.

This means hundreds of thousands of kids won’t be able to access the subsidies that would make private health insurance affordable for them.  See this post from last year for the Government Accountability Office’s estimates of how many children would be affected.  Also, a coalition of national and state advocates led by First Focus had urged the Administration to make sure the final rules made coverage affordable for families.

You can also read the comments we submitted when Treasury originally proposed this rule.