A New Biden Administration Plan Would Close ACA “Family Glitch” Loophole

Biden has proposed a solution to an Affordable Care Act loophole, which could insure five million people.

A nurse uses a stethoscope on a child that's sitting in their mother's lap.
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Last week, the Biden Administration announced that it will address a loophole in the Affordable Care Act (ACA) that could mean as many as 200,000 uninsured Americans would have access to health insurance for themselves and their families, and one million people would have more affordable insurance.

Called the “family glitch,” the loophole is an Obama-era definition of what qualifies as “affordable” insurance. The ACA mandates that workers qualify for the ACA Marketplace, through which Americans can access a health insurance plan, if their employer-sponsored insurance costs more than 9.83% of their household income.

However, the so-called affordability threshold only accounts for the employee’s self-coverage, not coverage for a spouse or children. Therefore, if employee-only coverage falls beneath the threshold, insurance is considered affordable, even if the cost of insuring dependents drives the cost well beyond the threshold. In this situation, the employee would not qualify for insurance through the marketplace.

This “family glitch” is estimated to have prevented as many as five million people from obtaining affordable insurance from the ACA Marketplace, the majority of whom are women and children.

Millions of American Children Are Uninsured

Recent research from the Centers for Disease Control and Prevention, published in February, found that in 2020 there were 3.7 million uninsured children in the U.S. — 5% of all U.S. kids. Experts believe that number has only increased as a result of the COVID-19 pandemic.

Biden’s new proposal would extend the affordability threshold to include the employee’s spouse and dependents. The family would be eligible for coverage from the ACA Marketplace if employer-sponsored health insurance costs for the employee and dependents were more than 9.83% of the household income.

“Should the proposed change be made, it’s estimated that 200,000 uninsured people would gain coverage, and nearly 1 million Americans would see their coverage become more affordable. Many families would be able to save hundreds of dollars a month thanks to lower premiums,” White House representatives said in a statement. “This proposed rule would amount to the most significant administrative action to improve implementation of the ACA since its enactment.”

How Biden Would Close the “Family Glitch” Loophole

Closing this loophole is something the executive branch can accomplish on its own; it does not have to rely on the questionable Democratic Congressional majority or the plodding pace of the Senate. If enacted, the changes should take effect on January 1, 2023. The White House estimates that, of the five million people affected by the family glitch, close to 1.2 million would see immediate benefits, while the remainder may choose to stay with their current insurance plans.

President Biden announced the proposal at an event he attended with former President Barack Obama, whose landmark Affordable Care Act has provided insurance for countless uninsured and underinsured Americans since its inception in 2010.

“I know how discouraged people can get with Washington,” Obama said during the event. “But what the Affordable Care Act shows is that if you are driven by the core idea that together we can improve the lives of this generation and the next, and if you’re persistent, if you stay with it, you’re willing to work through the obstacles and the criticism, and continually improve where you fall short, you can make America better.”