New House ACA Fix Bill Could Require Employers to Inquire About Family Income

March 29, 2019

In a bid to strengthen the Affordable Care Act (ACA), House Democrats introduced a new bill that would eliminate what is known as the “family glitch” for ACA exchange plans, a move which could require employers to collect family income data from employees in order to avoid significant ACA penalties.

The “family glitch” is the ACA rule that bases eligibility for a family’s premium subsidies on whether available employer-sponsored health benefits for individual coverage is affordable for the employee (9.86 percent of their W-2 pay), even if the employer's offer of family coverage is not actually affordable.  It is estimated that between two and four million employees are affected by the family glitch.

The ACA fix bill would eliminate this glitch, but employers would likely have to collect family income data from employees to ensure their family coverage is affordable and thus avoid significant ACA penalties.

The bill would also:

  • Expand health insurance subsidies to all people purchasing plans on the ACA market (Individuals are currently ineligible for subsidies if they earn $48,560 or more);

  • Create a national $10 billion per year reinsurance program to subsidize insurance companies that incur high costs; and

  • Reverse the Trump administration’s association health plan rule and other regulations that make it easier to obtain non-comprehensive, limited-benefit coverage.

Notably, the reinsurance program would not be funded by self-insured employers, but would be paid out of general Treasury funds.

Outlook:  The bill is expected to be brought to a vote in the House but has no chance of passing the Republican-controlled Senate.  However, some elements of the bill have bipartisan support and could make it into law.