Understanding the Family Glitch: Affordable Care Act

Last Edited July 10, 2024

What is the Family Glitch?

The Affordable Healthcare Act (ACA) aimed to expand health insurance coverage. However, a loophole known as the “family glitch” has prevented many families from accessing financial assistance to afford healthcare coverage.

Update for the 2025 Insurance Year

New federal regulations for 2025 have set the affordability threshold for both self-only and family coverage at 8.39% of household income. The rate for 2024 was 9.61%. If the cost of self-only coverage is affordable but the cost of family coverage is not, the worker will not qualify for Marketplace financial assistance, but their family members can apply for it. The lowest cost option with an actuarial value of at least 60% is used to evaluate affordability.​

How the Family Glitch Affects Families

The “family glitch” arises because affordability calculations are based on the employee’s self-only coverage, not the additional costs of covering family members. As a result, if the employee’s plan is deemed affordable, the family does not qualify for ACA subsidies, even if the total family coverage cost is unaffordable.

Disclamer: Graphics on this page are using the 2024 federal affordabily rate of 9.61%, use 8.39% for 2025 calculations.

Who is impacted by the family glitch?

“The Kaiser Family Foundation estimated 5.1 million people are impacted by the loophole – the majority being families with children.”

They found that nearly 2.8 million Americans impacted by the glitch are under the age of 18. While a portion of these uninsured children will qualify for the Children’s Health Insurance Program (CHIP) or Medicaid, more than half won’t.

The proposed fix to the family glitch

The Biden Administration addressed the family glitch through an executive order, leading to new IRS guidelines. These guidelines state that affordability determinations must consider the cost of covering both the employee and their family members, making many more families eligible for ACA subsidies if their employer-sponsored plan exceeds 8.39% of household income​ The IRS terms of fixing the rule.

Disclamer: Graphics on this page are using the 2024 federal affordabily rate of 9.61%, use 8.39% for 2025 calculations.

Market Impacts

When the ACA Marketplace launched, it faced challenges, but it has since stabilized. Fixing the family glitch could bring millions more to the ACA Marketplace. This influx is not expected to destabilize the market, as many of these families are in good health, which could help keep premiums stable or even lower them​.

What to Expect Next

The new regulation requires time for consumers to understand its impact. Navigating the ACA Marketplace can be complex, but this change aims to provide better access to affordable coverage for families.

How We Can Help

The new regulation requires time for consumers to understand its impact. Navigating the ACA Marketplace can be complex, but this change aims to provide better access to affordable coverage for families.

Understanding whether you are affected by the family glitch and exploring your options can be challenging. Our insurance agency offers personalized consultations at no cost to help you understand your eligibility and find the best health insurance options.

  • Eligibility Assessment: We determine if you or your family members qualify for ACA subsidies under the new rules.
  • Options Exploration: We review available health plans to ensure you find the best coverage for your needs.
  • Free Consultation: Our services are free, ensuring you receive the necessary assistance without financial burden.

Contact us today to schedule your consultation and let us help you navigate these changes with confidence.

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