Congress has deemed health insurance affordable under the Affordable Care Act (ACA) if an employee’s contribution toward the cost of coverage doesn’t exceed 9.5% of his or her income. The majority of people who receive coverage through work do not spend more than 9.5% of their income on insurance, with one very important caveat: the cost of covering family members.
While employers often cover most of the cost of employee health insurance, it is also common for employers to cover far less for family members. The ACA’s 9.5% rule applies only to employees, not their families. So, regardless of how much it costs to insure an employee’s family on an employer-sponsored plan, as long as the coverage for the employee alone doesn’t exceed 9.5% of income, family members won’t qualify for cost-sharing subsides through the health insurance marketplace.
This oversight makes family coverage all but unaffordable for millions of American families and has been dubbed “the family glitch.” Congress has not presented a solution to date. In a two-person household each spouse may be able get affordable coverage individually through their employers, but getting their children covered is often another story altogether.
What About Medicaid for Getting Kids Covered?
The federal government recently released its poverty guidelines for 2014. According to the newest figures, individuals earning up to $16,105, and families earning up to $32,913 in states (including California) that have agreed to expand their Medicaid programs, may qualify for Medicaid under the ACA. Those earning more than these figures will not qualify for Medicaid at all, even for their children. This puts middle class families who earn too much to qualify for Medicaid, but for whom employer-sponsored family health insurance is too expensive, in a predicament. Until the federal government resolves the family glitch dilemma, a family’s best bet for finding affordable California health insurance may be through a private plan.