Ambiguity in the ACA threatens coverage for some workers

Under the Affordable Care Act (ACA), beginning in 2014, low- and middle-income Americans will be eligible for tax credits and other subsidies to help pay their premiums, unless they have access to affordable coverage through their employer.  The law specifies that employer-sponsored insurance is not affordable if a worker’s share of the premium exceeds 9.5 percent of the worker’s household income.  Under rules proposed by the Internal Revenue Service (IRS), this calculation would be based solely on the cost of individual coverage for the employee (“self-only coverage”), regardless of whether that employee chooses family coverage (Source: Ambiguity in Health Law Could Make Family Coverage Too Costly for Many, New York Times, Aug. 11, 2012).  Under this definition, some employees would be unable to afford family coverage offered by their employers, and yet would also not qualify for subsidies.

 “The effect of this wrong interpretation of the law will be that many families remain or potentially become uninsured,” said a letter to the Obama administration from Democrats who helped pass the ACA in the House in 2009-10.

As the IRS works to finalize the rules, it welcomes comments from stakeholders and consumer groups.  One potential compromise being considered is to still look at the cost of “self-only coverage” to determine whether insurance is affordable to an employee, but if family coverage under the employer’s plan is too expensive, a family could get subsidies to buy insurance for dependents in the exchange, and the employer would not be penalized.