Can you get Covered CA Subsidies if your
Employer offers “Affordable Health Coverage?”
If you are offered affordable health coverage (FREE Quotes) and it has “minimum value [Bronze 60%]” under an employer plan, that is less than 9.86% of income for employee ONLY (CFR 1.36 B 2 * ThomsonReuters * Revenue Procedure 2018-34 * Revenue Procedure 2014-62) neither you or your family qualifies for the APTC Advance Premium Tax Credit-subsidy from Covered CA, Health Care.Gov or any exchange. Covered CA FAQ
It doesn’t matter if covering your whole family coverage would go over the 9.86% limit. That just the way the law and rulings work. Some call this the “Family Glitch.” See below for details and explanations.
Any fix, for instance, would likely involve changing the eligibility calculation for marketplace subsidies — pegging the affordability standard to the coverage cost of the whole family rather than just an individual’s coverage. Doing so would increase federal spending by about $9 billion or $10 billion, since many more people would qualify for subsidies. CA Health Line *
Note that if rates increase or employer contribution lowers, that may trigger a special enrollment period, rather than wait for open enrollment.
What about adult children under 26?
Adult child up to age 26 are eligible for Coverage through their parents employers plan. However if they are paying their own taxes, they are not anyone’s tax dependent, they do not count towards household income, – MAGI. Then the adult children could qualify for their own coverage in Covered CA.
Learn More⇒ Kaiser Health News 11.8.2013
Citations & Details
Example 2. Basic determination of affordability for a related individual. The facts are the same as in Example 1, except that C is married to J and X’s plan requires C to contribute $5,300 for coverage for C and J for 2014 (11.3 percent of C’s household income). Because C’s required contribution for self-only coverage ($3,450) does not exceed 9.5 percent of household income, under paragraph (c)(3)(v)(A)( 2 ) of this section, X’s plan is affordable for C and J, and C and J are eligible for minimum essential coverage for all months in 2014 CFR §1.36 B 2 Eligibility for Premium Tax Credit
However, the cost of a family plan is often higher, but the ruling means that those higher costs will not be considered even if the extra premiums push the cost of coverage above the 9.5% income threshold. The New York Times said this could leave 2–4 million Americans unable to afford family coverage under their employers’ plans and ineligible for subsidies to buy coverage elsewhere. Wikipedia
Alternatives – Solutions?
One possible solution to the Family Issue would be to have the Employer get a program thru the SHOP exchange, exclude dependents, then they are NOT eligible and can then select “None of the Above” and get subsidies based on household income.
Under the law, those workers whose employers offer “affordable coverage” will not be eligible for subsidies in the exchanges. To be eligible, per the law’s definition, the cost of employer-based health insurance must exceed 9.5% of the worker’s household income. In January 2013 the Internal Revenue Service (CFR 1.36 B 2) ruled that only the cost of covering the individual employee would be considered in determining whether the cost of coverage exceeded 9.5% of income.
Metal Levels – Bronze 60% Actuarial Value –
Minimum Value Definition ==>An employer-sponsored plan provides minimum value if it covers at least 60 percent of the total allowed cost of benefits that are expected to be incurred under the plan. See Notice 2014-69 for additional guidance regarding whether an employer-sponsored plan provides minimum value coverage if the plan fails to substantially cover in-patient hospitalization services or physician services IRS.gov * Covered CA Bulletin page 2 * Our Ben E Lect Webpage * Employer is mandated to tell you 1095 C * IRS Notice 2012-31
9.5% calculation tool – Excel from SHRM.org
- 36 B Tax Credit Calculation Technical Stuff
- Affordable Health Coverage? 9.86% Employee ONLY
- Age 65 – Tax Credits?
- Estimated Income Change – Covered CA not paying enough subsidies?