Washington, D.C. – U.S. Senator Catherine Cortez Masto (D-Nev.) joined Senators Sherrod Brown (D-Ohio), Bob Casey (D-Pa.), and Tina Smith (D-Minn.) in introducing the Family Coverage Act, which would fix a glitch in the health care system and ensure all spouses and children are able to get covered. Due to a glitch in current law, if a mother or father has health insurance through their employer, but their employer does not offer affordable coverage for the spouse and/or kids, these family members can be prevented from getting the tax credits needed to purchase affordable insurance on the exchanges. This legislation specifies that affordability must be determined using the cost of family coverage rather than individual coverage, which would expand the eligibility of families for premium assistance tax credits.
“Every Nevadan deserves access to affordable, quality health care,” said Senator Cortez Masto. “I’m working hard to make that a reality for hardworking families in Nevada, which is why I’m cosponsoring legislation to fix a glitch in federal law that prevents low-income families from accessing tax credits to afford their health insurance, and expand eligibility for premium subsidies.”
Under the ACA, large employers are required to offer comprehensive, affordable health coverage to their employees. If the employee is able to access affordable coverage through their employer, they become ineligible to receive the tax credits that can help purchase health insurance coverage through the ACA’s exchanges.
In interpreting this part of the ACA, the Internal Revenue Service (IRS) considers health insurance coverage to be “affordable” if the employee’s share of premiums for individual coverage – not the family’s share – is less than 9.86 percent of family income. This means that if an employee is able to access affordable health insurance coverage through his or her employer, but their family is not, the family is also barred from receiving the tax credits that can help them purchase other insurance for the family on the ACA’s exchanges. As a result of the IRS interpretation, many middle class families are prohibited from receiving premium tax credits, even when the cost of family coverage is simply unaffordable.
The Family Coverage Act would fix the “family glitch” by allowing an employee’s dependents to access tax credits if the cost of family coverage offered by an employer is greater than 9.86 percent of household income (as adjusted by the IRS). This change not only helps families but also brings the definition of “affordable” into alignment with what Congress intended and is reflected in the rest of the ACA. Making this improvement to the law would strengthen the ACA and help millions of Americans gain access to meaningful, affordable health insurance coverage.