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Proposed Change to Affordability for Family Coverage

Proposed Change to Affordability for Family Coverage

On April 5, 2022, the IRS issued a proposed rule that would change existing rules for premium tax credit (PTC) eligibility. The PTC is available to eligible individuals who purchase health coverage through the Exchange. Individuals who have access to affordable, minimum value employer coverage are not eligible for the PTC.

Overview of the Proposed Rule

Currently, the affordability of employer coverage for family members is determined based on the lowest-cost self-only coverage available to the employee. The cost of family coverage is not taken into account. These rules apply for determining eligibility for the PTC and for purposes of the employer shared responsibility rules.

The proposed rule would provide that an employer-sponsored plan is affordable for family members if the portion of the premium the employee must pay for family coverage does not exceed 9.5% (as adjusted) of their household income. Family coverage includes all employer plans that cover any individuals related to an employee. The proposal would also add a minimum value rule for family members.

Impact of the Proposed Rule

If this rule is finalized, the change would likely mean more individuals will be newly eligible for the PTC for coverage purchased through the Exchange. The proposal would not affect affordability for employees. Thus, an employee’s family member may have an offer of unaffordable employer coverage, even if the employee has an affordable offer of self-only coverage.

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