Millions Could Be Priced out of Health Overhaul

March 29, 2013

Millions of Americans will be priced out of health insurance under President Barack Obama's health care overhaul because of a glitch in the law that adversely affects people with modest incomes who cannot afford family coverage offered by their employers, says Reuters.

Tax credits are a key component of the law and the White House has said the credits, averaging about $4,000 apiece, will help about 18 million individuals and families pay for health insurance once the Affordable Care Act takes full effect, beginning in January 2014.

  • The tax credits are geared toward low- and middle-income Americans who do not have access to affordable health insurance coverage through an employer.
  • The law specifies that employer-sponsored insurance is affordable so long as a worker's share of the premium does not exceed 9.5 percent of the worker's household income.
  • In its rule making, or final interpretation of the law, the IRS said affordability should be based strictly on individual coverage costs, however.
  • That means that, even if family coverage through an employer-based plan far exceeds the 9.5 percent cutoff, workers would not be eligible for the tax credits to help buy insurance for children or non-working dependents.

Families USA health policy director Kathleen Stoll told Reuters recent studies showed that anywhere between 2 million and 4 million people across the United States could be adversely affected by the federal rule limiting aid and the IRS interpretation of whether an employer's health plan is affordable.

Source: "Little Hope Seen for Millions Priced out of Health Overhaul," Reuters, March 26, 2013.

 

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