Under longstanding ACA policy, people who seek to purchase their medical coverage on the Marketplace are provided tax subsidies to help with the cost if they meet certain criteria. Eligibility for those tax subsidies has been expanded with the release of Internal Revenue Service (IRS) Document Number 2022-22184.
One of the criteria of the previous regulations is that individuals did not have access to affordable minimum essential coverage elsewhere – usually employer sponsored coverage. When you offered your employees coverage deemed “affordable” based on the individual rate, members of your employee’s household were barred from receiving a tax credit to purchase Marketplace coverage. As a result, family members of workers — usually low-income workers — were ineligible to receive premium tax credits through the Marketplace even when family coverage was unaffordable.
The new rules allow for subsidies for those family members if the family coverage you offer costs more than 9.61% of household income. Here are some of the notable elements of these new rules:
- You will still only be required to make employee-only coverage “affordable” per the employer mandate provision.
- Adult children who are still covered under a parent’s plan but are no longer tax dependents will be left out of the ACA subsidies for the household members.
- Marketplace applications currently only ask for the cost of employee-only coverage – this requirement will have to be updated to reflect the lowest cost for the family member seeking a subsidy. Spouses and children of the employee may have to report different costs if you offer coverage with multi-tiered rates.
- You may face a yet unknown change to your risk pool if your employees’ family members elect to take a premium tax credit to purchase coverage from the Marketplace.
- Families may end up purchasing two policies – one for the employee and another for the family members – resulting in having to meet two deductibles, two different out of pocket limits and potentially two different provider networks.
