“Family Glitch” Fix Eases Burden on Employees in 2023

Employers can now offer benefits to employees without having to worry about the so-called Affordable Care Act (ACA) family glitch.

Prior to a change late last year by the Biden administration, employee-only health coverage “affordability” could adversely affect other family members’ ability to get subsidized health coverage through the Covered California state exchange.

The old rule said if the lowest-cost “employee-only” premium (after the employer’s contribution) did not exceed 9.5% (as adjusted) of a person’s pay (or the Federal Poverty Level), and Minimum Essential Coverage (MEC) of any cost is offered to spouses and dependents, it is considered an affordable offer of coverage.

As such, under the old rule, neither the employee nor a spouse or children could obtain subsidized Individual and Family Plan (IFP) coverage using a Premium Tax Credit (PTC).

New “Fix” for 2023

Effective December 12, 2022, the definition of “affordability” changed. Now spouses and dependents may qualify for subsidized IFP premiums using PTCs on a state Exchange – if only the employee’s coverage is considered affordable (but the premium for family coverage is not).

The state Exchanges/Marketplaces now perform three affordability determinations:

  1. Determine if the applicant (employee) has been made an offer of affordable coverage by the employer (according to the “self-only” plan offered, if applicable).
  2. Evaluate the cost of the related individuals’ premiums (spouse + dependents’ premiums), based on the cost of family coverage offered by the employer.
  3. Evaluate the cost of related individuals’ premiums who have alternate offers of group coverage, made by another employer (if available).

The family glitch fix does not impact affordability tests or offers of coverage under the ACA’s employer mandate whatsoever.

Stay Up to Date

CHOICE Administrators Regional Sales Manager John Elizondo posts updates of interest to employers and brokers on TikTok and elsewhere. You can view John’s post on the ACA family glitch, and subscribe to his future posts.


Visit the MyCalChoice blog monthly for more tips, information on CaliforniaChoice advantages, and updates on the ACA and health reform.

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