The ‘family glitch’ could lead to more seeking individual health coverage

Next year “is gonna be crazy” on the health insurance front given challenging economic and regulatory factors, a health care economist said during a webinar Tuesday.

Mike Bertaut is Blue Cross and Blue Shield of Louisiana’s senior health care economist and exchange coordinator. He discussed how economic and regulatory factors will impact the health insurance marketplace during a session sponsored by Health Agents for America.

Bertaut identified several individual health insurance market drivers for 2023:

1. The unwinding of the COVID-19 public health emergency and the potential move of 18 million Americans from Medicaid to private coverage.
2. The increased advanced tax credits provided on federal and state individual coverage marketplaces by the American Rescue Plan Act and the Inflation Reduction Act.
3. The repair of the “family glitch” and the triggering of special enrollment periods as dependents and spouses discover their employer-based coverage fits the new definition of “unaffordable.”
4. The increasing unwillingness of employers to fund dependent and spouse health insurance coverage at affordable levels.

“These will lead to educational opportunities and reasons why people should be beating down your door to get coverage and to learn more about what they bought,” Bertaut said.

Moving off Medicaid

Under the public health emergency declaration, an additional 18 million Americans became eligible for Medicaid. In addition, states were required to provide continuous coverage for those who were enrolled in Medicaid on or after March 18, 2020.

When the public health emergency ends, Bertaut said, “millions of people will be in the marketplace looking for coverage.

“It will be the largest batch of people who have ever been uninsured. They will need help getting coverage.”

At the end of the public health emergency, states will have 14 months at most to fix their Medicaid rolls and remove those who are no longer eligible for Medicaid, Bertaut said. Those who are newly ineligible for Medicaid will need help moving to private coverage, as many probably make too much money to be eligible for Medicaid or have moved to another state.

The good news for those moved off Medicaid, he said, is that they will find much richer public assistance to buy coverage on the marketplace. There are more zero-premium plans available on the marketplaces than ever before, he noted. This means employed people coming off Medicaid will have benchmark plans for 8.5% of their income or less in premiums no matter how much money they make. A family of four can still get tax credits with an annual household income in excess of $250,000, he said.

Putting a bandage on the family glitch

Fixing the family glitch “is really shaping up to be a game changer,” Bertaut said.

The “family glitch” refers to a 2013 Affordable Care Act rule that based eligibility for a family's premium subsidies on whether available employer-sponsored insurance is affordable for the employee only, even if it's not actually affordable for the whole family.

The IRS finalized a rule change earlier this month that instead of basing the affordability determination for a family’s employer-sponsored health insurance on just the cost to cover the employee, the determination will now be made based on the cost to cover the employee plus family members, if applicable. When families apply for 2023 coverage during the open enrollment period that begins in November 2022, the new rules will be used to determine whether anyone in the household qualifies for a premium subsidy.

Bertaut explained that the IRS rule fixing the family glitch recomputes affordability using the entire family as the basis. The rule allows non-employee family members above a certain income threshold (9.12% of household income for 2023) to pass on the coverage offered by the employer and access advanced premium tax credits to purchase individual coverage on the exchange.

In addition, he said, if it is determined that the employer-based coverage is unaffordable, that determination triggers a 60-day special enrollment period for the family members to find coverage elsewhere.

“Families are going to find they can get cheaper health insurance by walking away from the employer plan and letting the worker keep their own coverage and then going to Healthcare.gov to get coverage for everyone else,” he said.

Bertaut said he estimates that 2.3 million people will enroll in coverage through the exchanges in the first year following the family glitch fix. Employees most likely to take advantage of the new rule are those in service jobs, agricultural jobs, mining and construction.

No surprises

Bertaut summarized the No Surprises Act, which took effect Jan. 1. The No Surprises Act protects consumers from surprise billing if they have a group health plan or group or individual health insurance coverage. It bans surprise bills for emergency services from an out-of-network provider or facility and without prior authorization.

Under the act, he said, a provider is always prohibited from balance billing for these services at an in-network facility:

• Items and services related to emergency medicine, anesthesiology, pathology, radiology and neonatology.
• Items and services provided by assistant surgeons, hospitalists and intensivists.
• Diagnostic services, including radiology and laboratory services.
• Items and services provided by an out-of-network provider if there is no in-network provider who can provide the item or service at the facility.

The No Surprises Act also changed the definition of a medical emergency, Bertaut said.

“Emergency services” are defined as “whether a prudent layperson would think that immediate medical attention is needed.”

In addition, the act potentially expanded the duration of emergency care. Emergency services now include those needed to stabilize the patient as well as post-stabilization services.

“Now an emergency begins when a prudent person thinks immediate medical attention is needed,” Bertaut said. “The emergency ends when person is admitted or stabilized. It could easily last throughout an entire hospital stay if the patient comes through the emergency room. The emergency basically ends when the patient is back on their feet and the hospital sends them home.”

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.

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Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].