The family glitch was a flaw in the Affordable Care Act (ACA) that left many families without access to affordable health insurance. It occurred because the law’s definition of “affordable” only applied to the individual coverage offered by employers, not the more expensive family coverage. This meant that some families were unable to qualify for premium tax credits, even if they were offered individual coverage that was affordable. In this article, we’ll discuss the family glitch and the negative impact it had on families, as well as the family glitch final rule that was introduced to address this problem.

What is the family glitch?

The family glitch is a term used to describe a gap in the Affordable Care Act (ACA) that left many Americans without affordable health insurance. The glitch was a result of the law’s definition of “affordable coverage” being tied to the cost of individual insurance rather than family coverage. This meant that some families who had access to coverage through an employer but couldn’t afford the family premiums were not eligible for the ACA’s subsidies to help pay for coverage.

The family glitch was a problem that arose from the way the ACA defined affordability of health insurance. The law considered coverage affordable if the employee’s share of the premium for individual coverage was less than 9.5% of their household income. However, if the employee’s employer offered affordable individual coverage, but the family coverage was deemed unaffordable, then the family would not be eligible for premium tax credits. This meant that many families were priced out of the market for health insurance.

Who did the family glitch impact?

The family glitch primarily affected low- and middle-income families who were offered individual coverage that was affordable but couldn’t afford the much higher cost of family coverage. This left many families in a bind, unable to qualify for premium tax credits and unable to afford coverage on their own.

How does the family glitch rule work?

The family glitch rule was introduced to address the problem created by the family glitch. The rule made it easier for families to qualify for premium tax credits by adjusting the affordability requirement. Under the family glitch rule, employer-sponsored coverage is considered affordable if the employee’s share of the premium for the lowest-cost plan that covers the entire family does not exceed 9.5% of their household income. This makes it easier for families to qualify for premium tax credits and gain access to affordable health insurance.

The family glitch impacted millions of Americans. According to a study by the Commonwealth Fund, an estimated 6.9 million people were affected by the glitch in 2018, and that number was expected to rise to 7.5 million by 2020. Families who fell into this gap often faced high out-of-pocket costs, limited access to healthcare services, and even the possibility of being uninsured. The family glitch rule was created to address this issue. The rule, which went into effect in 2020, changes the way that “affordable coverage” is defined for families. Now, if the cost of a family’s coverage through an employer exceeds 8.5% of their income, they will be eligible for subsidies to help pay for coverage on the ACA marketplace. This means that families who were previously stuck in the family glitch gap may now be able to afford healthcare coverage.

When did the family glitch fix go into effect?

The family glitch fix went into effect on January 1, 2020, after years of advocacy and lobbying by health care reform advocates. The change was part of a larger package of reforms aimed at improving access to affordable health insurance for all Americans.

Limitations of the family glitch rule

While the family glitch rule was an important step forward in addressing the problem created by the family glitch, it has some limitations. For example, the rule only applies to families who are offered employer-sponsored coverage, and it only applies to premium tax credits, not cost-sharing reductions. Additionally, there are still some families who fall through the cracks and are unable to access affordable health insurance because of the way the law is structured.

The family glitch was a flaw in the ACA that left many families without access to affordable health insurance. The family glitch final rule was introduced to address this problem and make it easier for families to qualify for premium tax credits. While the rule is an important step forward, there are still limitations to its effectiveness, and more work needs to be done to ensure that all Americans have access to affordable health insurance.

While the family glitch rule has helped to close the gap for many families, it does have some limitations. For example, the rule only applies to families who have access to coverage through an employer. Families who do not have access to employer coverage may still face affordability issues when it comes to purchasing coverage on the ACA marketplace. Additionally, the 8.5% threshold may still be unaffordable for some families, particularly those with lower incomes. To address these limitations, some advocates are calling for further changes to the ACA, such as expanding eligibility for Medicaid or creating a public option for healthcare coverage. 

However, such changes would likely face opposition from those who argue that they would be too costly or would represent government overreach. Despite its limitations, the family glitch final rule represents an important step towards making healthcare more accessible and affordable for American families. As the debate over healthcare reform continues, it is clear that addressing issues like the family glitch will be a key part of creating a more equitable and effective healthcare system for all Americans.

What is the American Rescue Plan Act (ARPA)?

The ACA’s goal of making healthcare more affordable and accessible to Americans has been undermined by the family glitch. But while the Affordable Care Act did not address the family glitch, the American Rescue Plan Act (ARPA) did.

The ARPA, which was signed into law on March 11, 2021, includes several provisions that address the family glitch. One of the most significant changes is the expansion of premium subsidies for those purchasing coverage on the ACA marketplace. These expanded subsidies make coverage more affordable for many families affected by the family glitch.

Prior to the ARPA, premium subsidies were only available to those whose income did not exceed 400% of the federal poverty level (FPL). However, the ARPA expanded the availability of premium subsidies to those whose income exceeds 400% of the FPL. This means that families who were previously unable to afford coverage on the ACA marketplace due to the family glitch may now be eligible for financial assistance.

Additionally, the ARPA includes a provision that ensures that all plans offered on the ACA marketplace meet the affordability standards set by the law. This means that families who were previously unable to access affordable coverage on the marketplace due to the family glitch may now be able to find plans that meet their needs.

Despite the progress made by the ARPA, there are still limitations to the IRS family glitch rule. The expanded premium subsidies and affordability standards apply only to plans offered on the ACA marketplace. Families who purchase coverage through their employer may still be subject to the family glitch and may not be eligible for financial assistance.

In addition, while the ARPA expanded premium subsidies for those purchasing coverage on the ACA marketplace, the expansion is temporary and set to expire in 2022. This means that families who were previously unable to afford coverage due to the family glitch may only have temporary relief.

In conclusion, the family glitch is a significant barrier to affordable healthcare for many American families. While the family glitch fix included in the ARPA is a step in the right direction, it is not a complete solution. Families who purchase coverage through their employer may still be subject to the family glitch, and the expansion of premium subsidies is temporary. It is crucial that policymakers continue to work towards a permanent solution to the family glitch to ensure that all Americans have access to affordable healthcare.

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