A Potential Policy Solution for People Who Can’t Afford Job-Based Coverage

By Zachary Baron

While millions of consumers have already gained access to affordable and comprehensive coverage, millions of others across the country still stand to benefit from new coverage options under the Affordable Care Act (ACA). Yet many of the uninsured lack awareness about how they can qualify for financial help to reduce the cost of coverage, as some have been priced out of the private market for years.

New data and analysis by the Urban Institute suggest that the vast majority of the remaining uninsured adults may be receptive to continued outreach about signing up for coverage. While some consumers in states choosing not to expand Medicaid are not eligible for any form of financial help based on their income, the vast majority of uninsured adults (nearly 71 percent) are potentially eligible for financial assistance, either through Medicaid or the marketplace.

Yet, this analysis also highlights one group of consumers facing a particular challenge. Of those uninsured adults potentially eligible for financial help through the marketplace, nearly 27 percent report having access to job-based coverage (through their own or a family member’s employer). This is important, because the ACA was designed to maintain the stability of existing job-based coverage, while allowing people without access to “affordable” job-based coverage (currently 9.56 percent of household income, adjusted each year) that meets minimum standards to receive financial help to lower the cost of marketplace coverage.

Existing regulations by the Internal Revenue Service (IRS) specify that this affordability test for the employee or any family member is tied to the cost of job-based coverage just for the employee him or herself, even if the cost of family coverage is significantly higher (see the graphic we put together below). Commonly referred to as the “family glitch,” this results in situations where family members are not eligible for financial help through the marketplace, despite legitimate financial barriers to obtaining job-based coverage.

A $250/month contribution to cover self in employer's plan, and $1,000/month contribution to cover family in employer's plan.

A separate report by the Urban Institute discusses a solution to this issue. The authors suggest that the IRS revise current regulations to apply an affordability test that more accurately captures the direct cost consumers would have to pay for job-based coverage. So if job-based coverage would cost $250 a month for the employee alone, that would be the price considered. But for family members, the IRS would amend the affordability test to consider the actual cost of family coverage (for example, $1,000 a month instead of $250). And if the cost of family coverage exceeds the relevant percentage of household income, those family members would be eligible to receive financial help to enroll in a marketplace plan.

As part of our mission to help consumers get covered and stay covered, Enroll America has consistently aimed to highlight key strategies that policymakers and other enrollment stakeholders can adopt to make coverage more affordable. We intend to continue monitoring ways to help people who may be unable to afford job-based coverage. And we look forward to working with our partners so that consumers understand the facts when trying to determine if signing up for coverage through their employer or the marketplace best meets their needs and budget.

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