The ACA Family Glitch and Affordability of Employer Coverage

We used data from the 2019 Current Population Survey (CPS) Annual Social and Economic Supplement (ASEC) to estimate the number of people who might fall in the ACA “family glitch.” Premium tax credit eligibility is based on the affordability of self-only coverage offer rather than affordability for the family. To estimate the number of people who would fall in the family glitch, income data were aggregated at the tax unit level.

First, we look at households with employer-sponsored health insurance and the contributions toward family coverage. If the family’s contribution toward health insurance as a share of the family’s income exceeds the affordability threshold, then family members are considered to fall in the family glitch. Second, we include dependents who have individual market insurance. In this group, we look at whether the dependent has a family member with self-only employer coverage or an offer of employer coverage. Family members with individual market insurance are included as falling in the family glitch if the potential contribution toward employer-based family coverage exceeds the affordability threshold. In the third group, we include uninsured people who have a family member with affordable self-only employer coverage or an offer of affordable self-only coverage through their employer.

In tax units with one employer-sponsored insurance (ESI) family policy and total ESI contributions as a share of total tax income exceeding the affordability threshold, dependents without independent coverage (including through eligibility in Medicare, Medicaid, or Basic Health Program (BHP)) or independent ESI offers were counted as falling into the family glitch.

In tax units without any ESI policies but at least one worker with an ESI offer or only one person with ESI self-only coverage and no other ESI policy holder, we imputed a family coverage contribution. Family contribution and ESI offer were imputed based on groups with family employer coverage by their poverty category (under 250, 250 to 400, 400 to 600, or 600+ percent FPL) and tax unit size. These tax units were limited to those with at least one other person who is uninsured or has individual market coverage but does not have other coverage or eligibility through Medicare, Medicaid, or a BHP. Then, if the imputed contribution as a share of tax income exceeded the affordability threshold, the persons with non-group coverage or who are uninsured but not eligible for Medicare, Medicaid, or a BHP were counted as falling into the family glitch. Households where a family member had self-only employer coverage or offer and that self-only coverage or offer was unaffordable were excluded since those people would not fall in the family glitch.

People with social security income and their premium contributions were excluded from the tax units. For tax units where a person without a tax id (unauthorized people) is the source of an employer offer, the whole tax unit was excluded because there is no eligible person in the tax unit identified as having an offer of ESI. Tax units with multiple ESI family policies were also excluded. Tax units with zero or less tax income and premium contribution of $500 or less were excluded.

To reflect 2021 values, we adjusted tax unit income for inflation and adjusted tax unit premium payments using the average growth in employer sponsored premiums. We used this adjusted premium value to calculate the share of the unit’s income that was going toward premiums and compared that percentage to the affordability threshold for 2021. The affordability threshold for 2021 (9.83%) was used for this analysis.

There are limitations to this analysis. The CPS data imputes employer-based premium contributions for the entire family. We also are unable to estimate how many families would pay less in total premiums with a fix to the family glitch after accounting for contributions toward employer-based coverage (for the worker) and Marketplace coverage (for dependent family members).

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