Navigator Guide FAQs of the Week: Family Glitch Fix

Open Enrollment for 2023 is in full swing, and a change in federal rules has expanded access to premium subsidies. In the past, if someone had a family member with an affordable offer of self-only employer-sponsored insurance, the dependent was ineligible for marketplace subsidies even if the cost of the employer’s family plan was unaffordable. This is known as the “family glitch,” and it has blocked millions of Americans from affordable health insurance. Starting with the 2023 plan year, these individuals will qualify for marketplace financial assistance. The FAQs from our Navigator Guide highlighted this week delve into the new eligibility rules and some considerations for consumers weighing this new coverage option.

I heard a new rule will let my spouse and children enroll in a marketplace plan with subsidies if the cost to enroll in my employer’s plan is unaffordable. How do we find out if the new rule applies to our family?

Yes, a new rule fixing the “family glitch” means your spouse and children may be eligible to buy a marketplace plan with subsidies if your offer of employer-sponsored insurance is considered “unaffordable” based on the premium for family coverage. The marketplace considers your coverage unaffordable if the cost of coverage for a family premium under your employer plan is more than 9.12 percent of your household income in 2023 (for 2022, it was 9.61 percent of household income). If you are eligible for premium tax credits and/or cost-sharing subsidies, you can get a rough estimate of how much you’ll save on marketplace plan premiums by visiting HealthCare.gov and completing the brief cost estimator form. You can find out the exact amount you would pay by completing the marketplace application and picking a plan.

Keep in mind that if you decide to decline employer-sponsored coverage for your family during the plan’s annual open enrollment period, you will not be able to enroll them later if you learn that they aren’t eligible for marketplace subsidies. You may therefore choose to enroll your family in your employer’s plan and then cancel that plan once you know they will enroll in a marketplace plan. To avoid double coverage, you should confirm with your employer that they will allow you to revoke enrollment in the employer’s family plan. If you decide to disenroll your family from your employer plan, ask your employer for proof of the disenrollment so you have documentation of that decision should the marketplace request it. (IRS Not. 2022-41)

I want to add my spouse and/or children to my employer-sponsored plan but I can’t afford the family premium. Can my spouse buy a more affordable plan on the health insurance marketplace?

Potentially yes. If your offer of employer-sponsored insurance is considered “unaffordable” based on the premium for family coverage, your spouse and kids may be eligible for marketplace premium and/or cost-sharing subsidies. The marketplace considers your coverage unaffordable if the cost of coverage for a family premium under your employer plan is more than 9.12 percent of your household income in 2023 (for 2022, it was 9.61 percent of household income).

If you are eligible for premium tax credits and/or cost-sharing subsidies, you can get a rough estimate of how much you’ll save on marketplace plan premiums by visiting HealthCare.gov and completing the brief cost estimator form. You can find out the exact amount you would pay by completing the marketplace application and picking a plan. Keep in mind that your children may be eligible for your state’s Children’s Health Insurance Program (CHIP), depending on your income and the eligibility rules of your state. Once you know what your family is eligible for, compare the premiums and out-of-pocket costs for your plan options. It may be that buying two different plans – the employer plan for your spouse, and a marketplace plan for you and/or your children – with two premiums and two deductibles, would cost your family more than paying the family premium for your spouse’s employer plan and having just one family deductible to meet.

My family signed up for my employer-sponsored plan, but I’d like to switch them to a more affordable marketplace plan. My employer’s open enrollment period is ending soon. If I switch my family to a marketplace plan, can I drop them from my employer plan?

That depends. Once your employer’s annual open enrollment period has ended, your employer may, but is not required to, allow you to revoke your election of an employer-sponsored family plan before the start of the plan year as long as your family is enrolled in marketplace coverage effective January 1st (for calendar year plans) or the day immediately after the final day of your employer-sponsored insurance (for non-calendar year plans). Before signing your family up for a marketplace plan, you should confirm with your employer that they will allow you to revoke their enrollment in the employer’s family plan. When you disenroll your family from your employer plan, ask your employer for proof of the disenrollment so you have documentation of that decision should the marketplace request it. (IRS Not. 2022-41)

Stay tuned for additional FAQs on CHIRblog throughout the open enrollment period, and check out the updated Navigator Guide for even more!