Pennsylvania Supports Proposed Minimum Essential Coverage Regs

May 5, 2022

Department of the Treasury
Room 5203
Internal Revenue Service
P.O. Box 7604 Ben Franklin Station
Washington, DC 20044

To Whom it May Concern:

Thank you for the opportunity to submit comments about the Proposed Rule on the Affordability of Employer Coverage for Family Members of Employees. Disqualification of an employee's spouse and dependents from financial assistance due to a calculation made solely on the cost of the employee's health care coverage, commonly referred to as the “family glitch”, has posed an affordability challenge for thousands of Pennsylvanians seeking comprehensive health care coverage. The Pennsylvania Insurance Department is pleased to submit the following comments in support of this Proposed Rule.

Thanks to subsidies made available by the American Rescue Plan (ARP), nearly 90% of the 375,000 Pennsylvanians enrolled in plans through our state-based exchange, Pennie®, have benefited from reduced premiums. While Pennsylvania has seen the lowest uninsured rate in history due to the availability of those subsidies, we recognize that there are still Pennsylvanians that are not eligible for these subsidies as a result of eligibility restrictions imposed by the current regulations in Section 36B of the Internal Revenue Code. With the ARP enhanced subsidies set to expire at the end of 2022, likely triggering an increase in those who will be uninsured, it's more important than ever that the family glitch barrier to affordable insurance be addressed.

The Proposed Rule will remove the “family glitch”, making family coverage more affordable than it is under the current regulations. Under the current regulatory interpretation, commonly called the “family glitch,” employer -based coverage is often unaffordable for an entire family because the premium contribution is calculated only on the employee's coverage, that is, that the employee's premium contribution for the employee's own coverage does not exceed 9.5 percent of household income, even if the premium contribution of the family as a whole far exceeds 9.5 percent of household income. Yet, because the employer-based coverage is available to the family, even if the premium for the spouse and dependent coverage is prohibitively expensive, the family is locked out of access to the ACA's premium tax credits. The Proposed Rule remedies this “glitch” by recognizing that family coverage is only affordable if the cost of that coverage is not more than 9.5 percent of household income. The Proposed Rule rightly will calculate affordability for family coverage based on the cost of family coverage, rather than the cost of the individual employee's coverage.

A May 2021 study by the Urban Institute estimates that as many as 111,000 Pennsylvanians would be newly eligible for the Premium Tax Credit (PTC) under regulations in this Proposed Rule. The additional financial assistance for these individuals could mean the difference between obtaining healthcare or forgoing it altogether. Some individuals, who recognize the importance of having coverage, may feel financially compelled to enroll in limited benefit plans which do not afford the same protections and minimum standards as Qualified Health Plans (QHPs) on the individual market. The employment rebound from the COVID-19 pandemic will mean many people will be eligible for employer-based coverage, which, without this proposed rule, would means their spouses and dependents would be priced out of the market for affordable coverage. In addition, because Medicaid redeterminations will be resumed at the end of the Public Health Emergency, those individuals at the lower end of the income spectrum will have a significant need for increased eligibility for subsidies.

The proposed fix to the family glitch will assist many Pennsylvanians in obtaining comprehensive coverage when it is most needed. COVID-19 has emphasized inequities in the health care system and reiterated the necessity of insurance coverage. The Proposed Rule furthers that goal, removing a barrier to affordable family coverage. The Department appreciates the opportunity to comment on how this Proposed Rule would benefit Pennsylvanians, and how it advances the goal of the ACA to provide affordable, quality health care for all Americans.

Sincerely,

Michael Humphreys
Acting Commissioner
Pennsylvania Insurance Department
Office of the Insurance Commissioner
Harrisburg, PA

CC: PA:LPD:PR (REG-114339-21)