2023 Brings New Opportunities for People
on Employer-Sponsored Health Insurance

Some Will Qualify for Financial Assistance to Buy Healthcare.gov Plans

“The IRS has fixed a long-standing issue with Healthcare.gov known as the ‘Family Glitch.’ This will help many more Louisiana families save money on their 2023 health insurance plans,” said Health Care Economist Mike Bertaut. Bertaut explained the Family Glitch fix in a recent Straight Talk post.

This year, thanks to recent federal changes, more Louisianians are now eligible to shop for individual health plans and use financial credits they qualify for to pay their premiums for plans on Healthcare.gov.

If an individual is employed and has insurance available through an employer, financial assistance is available if the employer’s insurance is considered unaffordable. There is no penalty for employers who do not offer affordable family coverage.

What Changed
The IRS has made changes for 2023 to address the Family Glitch. For all health plan coverage effective Jan. 1, 2023 and beyond, if an employer makes an offer of health insurance coverage to an employee’s spouse or dependents that is deemed unaffordable by the federal standard of costing 9.12% or more of total household income, they can shop for individual plans on Healthcare.gov. And, they can use any advanced premium tax credits they qualify for to help pay for that coverage.

This fix only affects the spouse and dependents able to be claimed on taxes. The employee’s coverage offer must still meet affordability standards on its own and there is a still a penalty for employers who do not offer their employees affordable coverage. There is no penalty for employers who do not offer affordable family coverage.

Why This Matters
“No matter how expensive it was for the family, the mere existence of that dependent coverage offer disqualified them getting advanced tax credits on Healthcare.gov to pay for an individual health plan – until now,” said Bertaut. 

Plus, the Inflation Reduction Act extended enhanced tax credits passed under the American Rescue Plan Act, and the financial aid on Healthcare.gov is richer than it’s ever been, with more people qualifying.

The fix to the family glitch means that spouses and dependents may be more likely to leave your employer plan to shop on Healthcare.gov, leaving you with a smaller group. Because affordability is calculated on HOUSEHOLD income, eligibility may vary from employee to employee.

Employees don't have to opt out employer coverage at annual enrollment. If an employee determines they have an unaffordable offer in the middle of the plan year, Healthcare.gov will open up a 60-day Special Enrollment Period for them at that time. They will have 60 days to shop, choose a plan and make a binder payment for a plan that starts on the first of the next month if purchased before the 15th of the current month or the first of the following month if purchased after the 15th of the current month.

How to calculate whether employer-based family plan is unaffordable:
Before employees shop for individual family plans, they may want to determine whether an offered employer-based family plan is affordable or not. Employees should go to Healthcare.gov to calculate. They will need to create an account first.

Note that the premium tested must be the lowest priced premium from any employer that offers health coverage (so if both spouses receive an offer, the lowest priced premium that covers the entire family is the one to be tested) and the test is based on household income, not just the income of the employee whose employer is offering coverage.

Family Glitch Fix Webinar

In this video (18:23), Blue Cross and Blue Shield of Louisiana Health Care Economist Mike Bertaut explains in detail the fix for the family glitch, who might benefit from it and what employers need to know about it.

Key Enrollment Dates

  • Enroll in a Healthcare.gov plan by Dec. 15, 2022 for coverage that starts Jan. 1, 2023
  • Healthcare.gov Open Enrollment Period ends Jan. 15, 2023 
  • Coverage on plans enrolled in between Dec. 16, 2022 and Jan. 15, 2023 will start Feb. 1, 2023