MMA Comments on Proposed Federal Rule to Fix the ACA “Family Glitch”
May 26, 2022
On May 20, the MMA submitted a formal comment in support of a proposed federal rule to fix the Affordable Care Act’s (ACA) “family glitch.”
The “family glitch” is the result of an IRS interpretation of the ACA, the effect of which prevents many family members of employees from accessing ACA premium subsidies. To be eligible for ACA premium subsidies, an individual cannot have access to “affordable” employer health coverage, or coverage with a premium that is less than 9.61% of one’s household income.
The Internal Revenue Service (IRS) determined via a 2012 regulation that the affordability standard for accessing tax subsidies should be linked to the premium for single coverage, not only for the employee, but for the employee’s entire family. Since premiums for single coverage are much lower than that for family coverage (2.58 times lower in Minnesota, on average), the regulation means that fewer people are eligible for ACA premium subsidies.
The MMA letter notes that under the current federal rule, the family of an employee who faces the average premium contribution is eligible for ACA premium subsidies if their household makes less than $15,598 per year. If the “family glitch” were corrected, that threshold would increase to $58,637 per year.
Family members of employees with household incomes between these thresholds face difficult choices: a) pay the marginal cost for employer-sponsored family coverage ($4,136, on average), b) pay the full cost premium for an individual plan (approximately $11,364-$15,828 for a benchmark plan for a family of four in 2021, p. 4), or c) go uninsured.
“While the ‘family glitch’ fix is not a panacea to healthcare unaffordability and underinsurance, it is a crucial step toward decreasing premium costs, increasing insured rates, and increasing disposable income for cost-sharing among family members of employees,” the comment concludes. Via the letter, the MMA urges the IRS to adopt the proposed rule to make health care more affordable for families both within Minnesota and across the country.”
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MMA Comments on Proposed Federal Rule to Fix the ACA “Family Glitch”
May 26, 2022
On May 20, the MMA submitted a formal comment in support of a proposed federal rule to fix the Affordable Care Act’s (ACA) “family glitch.”
The “family glitch” is the result of an IRS interpretation of the ACA, the effect of which prevents many family members of employees from accessing ACA premium subsidies. To be eligible for ACA premium subsidies, an individual cannot have access to “affordable” employer health coverage, or coverage with a premium that is less than 9.61% of one’s household income.
The Internal Revenue Service (IRS) determined via a 2012 regulation that the affordability standard for accessing tax subsidies should be linked to the premium for single coverage, not only for the employee, but for the employee’s entire family. Since premiums for single coverage are much lower than that for family coverage (2.58 times lower in Minnesota, on average), the regulation means that fewer people are eligible for ACA premium subsidies.
The MMA letter notes that under the current federal rule, the family of an employee who faces the average premium contribution is eligible for ACA premium subsidies if their household makes less than $15,598 per year. If the “family glitch” were corrected, that threshold would increase to $58,637 per year.
Family members of employees with household incomes between these thresholds face difficult choices: a) pay the marginal cost for employer-sponsored family coverage ($4,136, on average), b) pay the full cost premium for an individual plan (approximately $11,364-$15,828 for a benchmark plan for a family of four in 2021, p. 4), or c) go uninsured.
“While the ‘family glitch’ fix is not a panacea to healthcare unaffordability and underinsurance, it is a crucial step toward decreasing premium costs, increasing insured rates, and increasing disposable income for cost-sharing among family members of employees,” the comment concludes. Via the letter, the MMA urges the IRS to adopt the proposed rule to make health care more affordable for families both within Minnesota and across the country.”
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