It may have been on my first day as an insurance agent. It could have been the second. Regardless, this was one of the first and most important lessons I learned about employer-sponsored group health insurance:
The purpose of group insurance is to attract and retain good employees.
Our job as agents was to help the employer find the sweet spot, the package of benefits that was both cost effective and yet appropriate for both the particular industry and job market. Highly competitive industries offered more comprehensive health insurance coverage. Some employers felt that even though their competitors offered little or no benefits, they had a moral responsibility to provide health insurance coverage. Sometimes though, the system prevents this.
November 24, 2014 was The Day We All Lost. My blog post told the story of Thomas Roberts (name changed) who was forced to cancel his company’s group health insurance policy. I noted that some of his employees migrated to individual policies and wondered how many would still have coverage four or five months later. Both Thomas and I were concerned.
It is now seven and a half years later. Some of Mr. Roberts’ employees retained the individual policies. Some left his company in search of a job with benefits. He and I still talk on a regular basis. He wants to provide group health insurance to his current employees and, of equal importance, he is having difficulty hiring new employees. Group insurance would help. I may have some good news for Mr. Roberts, his employees, and millions of other Americans.
The Biden Administration has proposed new rules to fix the Family Glitch. This is a quick definition of the Family Glitch from an April 2021 Kaiser Family Foundation article:
“Financial assistance to buy health insurance on the Affordable Care Act (ACA) Marketplaces is primarily available for people who cannot get coverage through a public program or their employer. Some exceptions are made, however, including for people whose employer coverage offer is deemed unaffordable or of insufficient value. For example, people can qualify for ACA Marketplace subsidies if their employer requires them to spend more than 9.83% of his household income on the company’s health plan premium.
Currently, this affordability threshold of household income is based on the cost of the employee’s self-only coverage, not the premium required to cover any dependents. In other words, an employee whose contribution for self-only coverage is less than 9.83% of household income is deemed to have an affordable offer, which means that the employee and his or her family members are ineligible for financial assistance on the Marketplace, even if the cost of adding dependents to the employer-sponsored plan would far exceed 9.83% of the family’s income. This definition of “affordable” employer coverage has come to be known as the “family glitch.”
The link in the quote takes you to a KFF August 2011 article. This is not a new problem. Members of the National Association of Health Underwriters (NAHU) go to Washington every year to fight FOR our clients. We have asked Congressmen and Senators to address this issue for over 10 years. Too many of our elected representatives have been too busy trying to repeal the Patient Protection and Affordable Care Act (Obamacare) to have any time to try to make it work. The Biden Administration has put forth real effort to make health care more accessible and affordable. This is just one more step.
What might change? Let’s go back to Thomas Roberts and his business. Mr. Roberts’s business is in a highly competitive industry. Most, but not all, of his employees are unskilled or semi-skilled workers. He can afford to pay most of his employees’ health insurance premium, perhaps as much as 90%. He can not afford to pay the premium for their dependents. Under the current interpretation of the law, the spouses and children would be ineligible for a tax credit subsidy to help to pay their premiums. Forced to pay the full cost, they are more likely to be uninsured. Instead, Mr. Roberts will be able to put in to place a group health policy for his current and future employees. The families will be able to apply for health policies through the Marketplace and if their incomes warrant it, get a tax credit subsidy to help pay the premiums.
The net gain will be more insured Americans. And we again have confirmation that a glitch can be fixed. All it takes is someone to care.
Picture – Glitch – David L Cunix
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