Column: New federal rule fixes family health insurance 'glitch'

The change, which takes into account the extra amount paid for adding a spouse and dependents to a health insurance plan, could provide options to hundreds of people in the Twin Ports, writes Tim

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Recently the IRS released a final rule changing the method for determining if health insurance, provided by employers to their employees, is considered affordable when the coverage is extended to additional family members.

The impact of this change will be far reaching in the Twin Ports area and beyond. Many employers do not contribute to the cost of covering additional family members, so these people are going uninsured and risking severe financial implications. As an agent in the health insurance marketplace, I have had to turn away hundreds of people who fall into this glitch. Now they will have an alternative.

Prior to this change, an insurance plan was considered affordable if the amount an employee had to contribute to their single coverage was under 9.5% of their household income. This was an easy calculation if the employee was a single individual. For instance, if a single person earned $2,000 per month and their employer did not require them to pay more than $190 per month ($2,000 x .095) for their share of the health insurance premium, the coverage was deemed affordable.

However, if the employee had a spouse and/or other dependents, many employers required the employee to pay the entire difference (or a very large portion of the premium) to provide them with coverage. In many cases, this created a financial hardship and caused the spouse and/or dependents to try to get coverage through the federal Health Insurance Marketplace.

When they sought coverage there, they found out that because they were eligible for affordable coverage, they did not qualify for the Premium Tax Credit from the federal government that could be used to lower the cost of their coverage. This led many people in this situation to forgo taking the coverage and going uninsured because the government’s definition of affordable certainly was not!


After years of studies and input from many consumer groups, this glitch was corrected on Oct. 11. The result is that affordable coverage is now defined differently when coverage for spouses and/or dependents is involved. Effective Jan. 1, 2023, the definition allows employees to include the entire amount they contribute for the entire family premium to determine if coverage falls into that affordable 9.5%.

Expanding on the previous example and assuming the employee earns $2,000 per month, had a spouse also earning $2,000 per month and two dependent children, here would be the results: If the employee was required to pay more than $380/month ($4,000 x .095) to cover the entire family then the coverage for the spouse and dependents would not be considered affordable and they could apply for the Premium Tax Credit and likely receive a comprehensive insurance plan that they actually could afford. However, the employee would still need to remain covered through their employer.

Tim Sauter has been an insurance agent for 51 years and is the president of Mediqwest Insurance Services, Inc. headquartered in Superior with offices in Superior, Hayward, Eau Claire, Menomonie, Hudson and Long Prairie, Minnesota. Mediqwest specializes in Health Insurance for individuals under 65 and plans for individuals covered under Medicare.

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