A Cruel Blow to American Families

From the New York Times

The Internal Revenue Service has issued a hugely disappointing ruling on how to calculate the affordability of health insurance offered by employers. Its needlessly strict interpretation of the Affordable Care Act could leave millions of Americans with modest incomes unable to afford family coverage under their employers’ health insurance but ineligible for subsidies to buy coverage elsewhere.

The problem arises from murky language in the law. It says a worker cannot get taxpayer-subsidized coverage on the new health insurance exchanges, starting in 2014, unless the cost of employer-based health coverage for that worker exceeds 9.5 percent of the worker’s household income.

Both the I.R.S. and the Congressional Joint Committee on Taxation have interpreted the law to consider only the cost of covering the individual employee in calculating the 9.5 percent, not the much higher cost for a family plan.

Although some analysts had offered persuasive legal and social arguments for adopting a more expansive and generous interpretation of what the law requires, the strict interpretation prevailed in a final rule issued by the I.R.S. last week.

There is no doubt that this pinched approach will put a significant number of workers and their dependents in a bind. A Kaiser Family Foundation survey found that in 2012, employees’ annual share of insurance premiums averaged $951 for individual coverage and $4,316 for family coverage. Under the I.R.S. rule, such costs would be considered affordable for an employee with a household income of $35,000 a year — making the employee’s spouse and children ineligible for a public subsidy on a health exchange, even though that family would have to spend 12 percent of its income for the employer’s family plan.

Estimates made in 2011 by respected research organizations suggested that some 2 million to 3.9 million non-working spouses and dependents would be harmed by the strict ruling. Looking only at children who were uninsured but supposed to gain coverage under health care reform, the Government Accountability Office estimated last June that 460,000 might remain uninsured because of the affordability definition, and that 1.9 million might stay uninsured if an existing children’s health insurance program is phased out as currently planned. This outcome is exactly the opposite of what health care reform is supposed to achieve.

It is hard to see what might be done to reverse this deplorable result. The ideal solution would be for Congress to clarify that the 9.5 percent calculation is based on a family plan, and that dependents can get subsidies on the exchanges if there is no affordable coverage at work. But House Republicans, who are bent on obstructing the health reform law, would never agree to helpful changes, especially one that would increase federal spending.

This problem increases the need to retain the children’s health insurance program, which is financed only through 2015. And it will be crucial to assess the impact that this misguided provision has on coverage, access to care, and the financial burdens on families of modest means.


  1. Don Hannah on February 8, 2013 at 3:15 pm

    The IRS is not an elected body. Considering their complete failure in recent years, to collect both individual and corporate taxes owed to the federal government surly we can find a way around their ruling.

    Middle class families and individuals cannot take much more bleeding before they are bled out.

  2. William Davis on February 8, 2013 at 3:58 pm

    Congress and the rich should be subjected to the same cruel treatment the so-called “health care” system metes out to the rest of the American people. Instead, Congress enjoys socialized medicine at the same time that they demonize it. Ultimately, the 99% must JAIL the criminal class of rich people and nationalize ALL of their corrupt and fascist corporations!!! The 99% must recover the estimated $32 TRILLION stolen by the criminal class of rich people and stashed in illegal tax havens. JAIL these thieves!!!! It is the ONLY way to fund vital social programs. Death to the corrupt and fascist American corporatocracy!!! JAIL the thieving suits!!!!

    • Marry Davis on February 10, 2013 at 10:39 pm

      Yep you got it brother. We need to jail the real criminals, and stop criminalizing the people struggle each and everyday to survive.

  3. Nancy larsen on February 8, 2013 at 4:13 pm

    If the people don’t speak out against the constant abuses of the Supreme Court (Citizens United Ruling) and to the Congress who have good health care but don’t protect the people and against the evil Insurance companies who are raking in unbelievable profits at the expense of their clients and against pharmaceutical giants who prefer to treat rather than cure disease (much more profitable)— then the people deserve what they get! It is time to speak up, write newspapers and Congressmen and sign real petitions or just shut up and take the abuse. I am an elderly woman and am not concerned for myself, but I see the handwriting on the wall, and I do not like what I am reading for the young people.

  4. Scott Plantier on February 8, 2013 at 6:17 pm

    It’s obvious-the IRS has been informed that the much higher costs to be borne by families under their ruling will be matched by the burden put on families w/o employer sponsored plans who purchase through the exchanges.

  5. carolyn on February 8, 2013 at 7:47 pm

    The IRS has interpreted much of Obamacare as it wishes and anyone who has the stomach to read the rules and procedures it has established for this despotic law will be blown out of the water.

    HHS and CMS are taking orders from Enroll America which has mounted a gigantic campaign of deception using Herndon Alliance spin and state Exchanges are following this agenda as well.

    The draft of the single, streamlined application for people to enroll in Exchange plans, Medicaid and CHIP doesn’t even disclose certain Medicaid regulations that applicants are supposed to be advised of during the application process as well as the retermination process. Omission of these items is most likely being done on purpose so people won’t know.


  6. Dr. Gita Elgin on February 8, 2013 at 8:09 pm

    Do whatever it takes to get a SINGLE PAYER FOR ALL and avoid these shenanigans of insurance companies, big Pharm., the IRS, and politicians playing with peoples’ health and lives. The healthcare that Congress gets, everyone should get under an IMPROVED Medicare for all. I emphasize IMPROVED, because it is a chaotic system, that healthcare professionals avoid, if they can. United Healthcare is not less chaotic. Just today I got 2 form-letters telling me how often I am supposed to see those 2 patients if I want to get paid. For some reason they targeted that family. It mentioned that they are stable enough– with their medication management — they don’t need psychotherapy every week. This curtails my helping this family effectively, and it shows me they didn’t even read the extensive report I sent about them, because there is no medication management at all! Yet my patient pays $500/mo. to the insurance. PEOPLE’S ILLNESS SHOULD NOT BE A COMMODITY FOR SALE. To keep it going you have to keep people sick, through drugs that don’t work; work only partially; or have have side-effects worse that the original illness; and through health insurance whose goal is PROFIT, NOT HEALTHCARE, so if you are insured the less you use them, the better for them, because you keep paying for nothing. And the doctors are not paid their regular fees either to be part of the panel. GET RID OF THE TOLL BOOTH!! The doctor-patient relationship should be sacred, a service, not a business, and transparent so that everyone can see behind the scenes if there are any other interests involved. Right now many doctors are just Pharma. sales people. Patients should know this. Visit an article I wrote about 5 years ago on Enlightened Healthcare at my website HolisticRenewal.com and tell me what you think. If nothing else works, OCCUPY CONGRESS! might get some attention.