More families will be able to access Affordable Care Act subsidies next year, under a final rule issued by the Biden administration Tuesday.
The announcement comes less than a month before the start of open enrollment for 2023 coverage on the Obamacare exchanges. Americans can start signing up on November 1.
The final rule aims to address a longstanding problem with Obamacare’s regulations pertaining to the affordability of employer coverage, known as the “family glitch.”
Under the health reform law, workers who don’t have “affordable” health insurance options through their jobs can qualify for subsidized coverage on the Obamacare exchanges. A work-based policy is considered “affordable” if it costs the employee less than roughly 10% of his or her income for single coverage.
However, the Affordable Care Act doesn’t take into account the increase in premiums for adding family members to the policy, even if it pushes the cost above the threshold. In these cases, workers and their families aren’t eligible for financial assistance to buy Affordable Care Act coverage.
The average annual premium for a single worker was just over $7,700 in 2021 but topped $22,000 for a family, according to the Kaiser Family Foundation.
Some 5.1 million Americans, a majority of them children, are affected by the family glitch, according to Kaiser.
The rule allows family members of workers who are offered affordable single coverage but unaffordable family policies to qualify for subsidies on the Obamacare exchanges.
In addition to affordability of job-based coverage, the final rule specifies that family members must be offered policies that meet minimum value requirements and have substantial coverage of hospitalizations and physician services, said Karen Pollitz, a senior fellow at Kaiser.
“This marks the most significant administration action to implement the Affordable Care Act since the law was first put into place,” President Joe Biden said in a statement.
About 1 million people would either gain coverage or see reductions in premiums, according to the White House.
If finalized, the rule would go into effect in January 2023, but families can take advantage of it when they sign up during open enrollment.
The Congressional Budget Office has previously pegged the cost of the plan at $45 billion over 10 years.
A record 14.5 million people signed up for 2022 coverage during open enrollment – lured in part by enhanced federal subsidies.
The Democrats’ $1.9 trillion coronavirus relief package, which was enacted in March 2021, has temporarily made the subsidies more generous and opened them up to more middle-class Americans. It also allows lower-income Americans to sign up for Obamacare coverage with $0 premiums on the federal exchange outside of the open enrollment period.
The enhanced subsidies, which were originally scheduled to expire at the end of the year, were extended through 2025 as part of the Inflation Reduction Act, which passed in August.