IRS regulators have created, or been unable to avoid, another one of those Obamacare “glitches” that President Obama predicted, this time effectively locking about 2 million people who may lack health insurance out of eligibility for the health-care law’s subsidies.
“The ‘Family Glitch,’ as it has become known, is an odd and particularly problematic side-effect of the Affordable Care Act,” a new study from the American Action Forum says. According to the group, the IRS interpreted an ambiguous part of Obamacare, about what kind of affordable coverage employers must offer, so that employers are only required to offer affordable individual coverage, and not an affordable family plan, too. If someone gets an affordable insurance offer, it renders them ineligible for subsidies on the exchanges — but because of the glitch, an employee’s spouse or children may not have access to affordable coverage or the subsidies.
“Spouses and children of an employee offered ESI could be unable to afford the employer plan, but because it is offered to one family member, the rest are made ineligible for subsidies in the Exchanges,” the study says.
This issue, which might affect up to 1.93 million people, could also have perverse and harmful economic consequences. ”Another effect of the glitch will be the creation of a disincentive for unemployed or underemployed people to accept better jobs with benefits packages,” according to the study. “For example, someone who works only 29 hours a week could completely lose insurance for their entire family by accepting a full time job that offers benefits only to the employee because they would lose subsidy eligibility—if the job offers insurance they could be ineligible for subsidies and may even be worse off financially than they were without the job.”