Ensuring Affordable Access to Health Coverage

Today is the deadline to comment on a number of proposed rules implementing the Affordable Care Act. One that the CBP finds particularly noteworthy is a set of proposed regulations written by the Treasury Department that serve to determine whether job-based coverage is affordable.

How affordability is defined is crucial for determining whether families will have access to subsidized health coverage through state health insurance exchanges. As written, the Treasury Department’s proposed rule penalizes families who have access to job-based coverage through a working family member.

In an effort to preserve job-based health coverage, the ACA generally does not allow individuals to purchase coverage through state health insurance exchanges if they can get it through an employer. This applies whether an individual is the worker or a dependent of the worker. This means that workers and their dependents must accept job-based health coverage, even if that coverage is less comprehensive or more expensive than what is available through the exchange.

The ACA provides an exception if the job-based coverage is “unaffordable,” defined as costing 9.5 percent or more of household income. For a single employee, applying the rule is simple. The complication is for workers with dependents. Premium costs are higher for a family than for a single individual. Yet, the proposed rule assesses the affordability of the premium based on the cost for the worker, not the family. Therefore, if premium costs for a worker alone are less than 9.5 percent of income – even if the cost of family coverage is much higher – then the dependents of this worker would be barred from purchasing subsidized health coverage in the exchange because they would be considered to have access to affordable job-based coverage.

If the proposed rule is adopted as written, then millions of families would either have to pay large portions of their incomes toward premium costs for job-based coverage, or go without coverage altogether, contrary to the intent of the ACA. Treasury should modify the proposed rule to allow affordability of family coverage to take into account premium costs for a family – rather than a single individual. A number of organizations, including the Kaiser Family Foundation, have weighed in on the issue. Find the CBP’s comments on the issue here.

— Hanh Kim Quach