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For family trapped in the ACA’s glaring ‘family glitch,’ life gets harder

For family trapped in the ACA’s glaring ‘family glitch,’ life gets harder

Picture of Trudy  Lieberman

We always knew there would be Obamacare casualties. The Affordable Care Act was never meant to cover everyone, although the pols glibly used the term “universal” to imply every American would be helped. At its core the ACA is a means-tested welfare program offering subsidized coverage for those who are eligible. As with all welfare programs, there are always people too “wealthy” to qualify, and in the case of the ACA, those too poor to qualify in the 19 states that have not expanded Medicaid.

Perhaps, though, the cruelest omission affects as many as 4 million people caught in what has become known as the “family glitch.” That snag prohibits family members from receiving Obamacare subsidies if the family breadwinner has employer-provided insurance for which he or she pays less than 9.5 percent of the family income for the coverage. (That number is indexed and goes up slightly each year.) Under the law and its interpretation by the IRS, as long as that breadwinner’s coverage is considered “affordable” by that standard, it’s assumed the family can afford to buy its own insurance on the open market without the help of an Obamacare subsidy. The problem is that the IRS looks at the cost of individual coverage rather than family coverage in determining whether the costs exceed 9.5 percent of the family’s income. (Just because breadwinners can afford single coverage doesn’t mean they can afford a family plan). As long as the cost of the individual coverage from the employer falls under that threshold, the family is considered too “rich” for government help.

But are those families too rich, given that the price of family coverage from an employer averages $17,545 ($6,251 for a single person), and premiums for Obamacare policies on the exchanges can easily move into that territory? Well-paid policymakers who make the rules have no trouble paying those amounts, but people whose incomes hover around the U.S. median of about $52,000 and even higher, say in the $60,000 range, find it’s tough to buy insurance without government help.

Consider the family of Jeremy Devor, a technician with an associate degree in engineering whose struggles paying for health care I’ve followed for the Columbia Journalism Review since 2009 (see here, here, here and here). While the battle over Obamacare raged that year, Devor, who lives in Salem, Ill., a town of 7,350 some 250 miles south of Chicago, contacted me to ask if he was going to be helped by the new health care law. He had a wife, five kids, and health insurance for himself from his employer. It was good insurance with low deductibles and copays. Still, he couldn’t afford the premium for family coverage.

So he had accumulated stacks of medical bills resulting from small stuff that kids usually need — stitches to sew up a cut or two, stomach aches, high fevers, sprained ankles. Once he had declared medical bankruptcy, and in 2009 he owed the local hospital about $600 for new services the family had used. By the time I interviewed him, the outlines of the family glitch were in place. Unless his income, then around $44,000 and higher with overtime, dramatically increased, he would have a tough time paying for care. “The single biggest issue in my household is health care,” Devor said at the time.

The news from the Devors family was not good. Bambi, age 40, had been diagnosed with a rare brain tumor. She underwent surgery and had just begun radiation treatment, to be followed by six months of chemotherapy and frequent MRI follow-ups. She had gotten back on the state insurance program, but will lose that coverage again at the end of April because their family income had increased to $62,000 and the older children moved out, shrinking the family size on which her state-subsidized coverage was based. The Devors will have to pay out-of-pocket for the rest of her treatments.

Over the next few years, I kept tabs on the Devor family. His income went up but fluctuated widely depending on how much overtime pay he got. Occasionally his wife worked as a waitress. Jobs weren’t plentiful in small-town Illinois. His kids got coverage through Illinois All Kids, the state-federal subsidized children’s health program, and sometimes his wife was eligible too, depending on how much overtime Devor worked, how many of his older children lived at home, and the changing rules of the program itself. When I revisited the family in late 2012, Devor’s wife Bambi had lost that coverage. The state had sent a letter saying it had run out of money and had to tighten eligibility. Bambi was again uninsured.  

Each time I checked in with Devor over the next few years, paying for health care remained the biggest issue. We talked again in 2014, and he said the $587 a month he would have to pay for family coverage was too much for the budget. His income then was about $54,000. “We’re always on the razor’s edge financially,” he told me. He looked into buying an Obamacare policy on the Illinois exchange for his wife but decided against it. “The cheapest plans would cost $225 a month with a $6,000 deductible,” Devor said. “Who can afford to spend $6,000 a year before insurance pays?” This isn’t even insurance, he concluded. Devor now had his own health problems — arthritis and psoriasis — and the out-of-pocket expenses his insurance required him to pay for doctor visits and medications were becoming difficult to manage. The kids still got the illnesses kids always get. Plus, his employer was warning its employees it was going to change insurance policies, which would provide less generous coverage. Devor’s insurance was considered one of those Cadillac plans Obamacare aims to do away with in 2020.

I didn’t hear from Devor again until a month ago. The news from the family was not good. Bambi, age 40, had been diagnosed with a rare brain tumor. She underwent surgery and had just begun radiation treatment, to be followed by six months of chemotherapy and frequent MRI follow-ups. She had gotten back on the state insurance program, but will lose that coverage again at the end of April because their family income had increased to $62,000 and the older children moved out, shrinking the family size on which her state-subsidized coverage was based. The Devors will have to pay out-of-pocket for the rest of her treatments.

Devor said his psoriatic arthritis is “very bad now,” but he often doesn’t have the money to pay for medicine because of the extra costs of driving every day to St. Louis where his wife is undergoing treatment.

His employer did junk its Cadillac plan, requiring the Devors to pay for more care themselves. One of the ACA’s goals was to make Americans think hard before seeking medical care, thereby giving them “more skin in the game,” as the cliché has it. The new coverage comes with a $4,000 out-of-pocket maximum for Jeremy and $8,000 for the family should he add them to the policy. He says he might do so if he can figure out how to pay for the monthly family premium of around $1300.

In the meantime, the financial prognosis for the Devors is not good. Health care is still the single biggest issue in the household and the family has resorted to a Go Fund Me campaign and money raised in the community from spaghetti suppers.

A recent NPR and the Robert Wood Johnson Foundation poll found that only 15 percent of people say they have personally benefitted from the ACA. Among those affected by the law 25 percent reported they had been personally harmed by the law’s passage. It seems Devor is in the latter group.

Whether the family glitch resulted from sloppy bill drafting or was added deliberately is hard to say. But the IRS interpretation basing family subsidy on the affordability of the breadwinner’s single-coverage eligibility hurts families like the Devors. “This is something that makes no sense at all,” Washington and Lee law professor Timothy Jost told me.

Can the glitch be fixed? Of course, if politicians and policymakers want to do that, but until there’s a new Congress and a new administration, that’s not likely to happen. Even those who think the glitch is unfair are wary of opening up the law for changes, fearing that Republican opponents might have a chance to gut the whole thing. Then there’s the money. “Since the amount of the subsidies can be several thousand dollars a year, one could imagine it amounting to tens of billions of dollars a year,” says health care expert Henry Aaron, a senior fellow at the Brookings Institution. Last year a report from the RAND Corp. estimates the cost could vary between $4 and $9 billion in 2017 to fix the glitch.

So it remains for now the Devors will continue to struggle in our very unequal system of health care.

Veteran health care journalist Trudy Lieberman is Contributing Editor of the Center for Health Journalism Digital and a regular contributor to the Remaking Health Care blog.

[Photo by Jorge Gonzalez via Flickr.]

Comments

Picture of <span class="username">Guest (not verified)</span>

It's like you're telling my story. My husband and I just agonized for days over this glitch. He lost his job almost 2 years ago and we got on Medicaid, which was great since we have a 6 and 8 year old. After he found a job, we were offered transitional Medicaid. Again great. But it expires at the end of October. My husband's company offers a plan with a $5K deductible. Imagine covering that with a family of 4 on $53K a year. For my husband alone, the deductible is $2.5K and costs just $93 per month. Well under the threshold, right? For this wonderful coverage to be extended to me and the kids, we get the privilege of paying $900 a month. This does not include dental or vision, that's another $102.00 per month. I go to the marketplace and get told we're not eligible for the subsidy because my husband's plan is "affordable"! What?!!! That's nearly 1/4 of our income each month. In what universe is that affordable? It gets worse. I check out the plans in the market place, they are all the same price or higher for "comparable" coverage. My husband's is PPO, the ones I found with similar premiums and deductibles are all HMOs. Get this...they don't cover our doctors, our local hospital, or the nearest children's hospital! Again, what?! I just cry. What else is there to do? This all makes me physically and mentally sick. Too bad my new insurance plan won't cover that!

Picture of <span class="username">Guest (not verified)</span>

I am in this very situation. I work for a school district that pays my individual coverage entirely but "offers" family coverage for over $1,000 per month. Given that I make 35,000 (with 6 years experience and a Master's degree in mathematics) that family option is nearly impossible to afford. I have friends who make more than me getting subsidies on the exchanges but I can't because my plan is "affordable" they say. Who is the genius who decided to base everything on the amount of the individual policy covered by the employer? Do the politicians who propose and sign-off on these plans even think them through? I get a great big warm and fuzzy feeling everytime our political leaders proudly explain how many more million Americans now have access to coverage - especially while a young, healthy family like mine can't just get the same deal everyone else can because some moron didn't see this coming. Thanks ACA! Now my premiums go up and everyone gets subsidies but me!

Picture of <span class="username">Guest (not verified)</span>

Want to feel even warmer and fuzzier? Contact your state senate and house reps. That's the real joke. I guarantee one of three things will happen. All three happened to me. One: the person you contact will never respond. Two: the person you contact will respond by saying they "have no control". And, they will pass the buck by giving you someone else's name. That person will do the same until you finally run into number One again and just don't get a response. Or, Three: because they are up for reelection and want your vote, they will promise to "look into it" and spout fake empathy, but never contact you again despite their promise to do so. It's sick. Parties don't matter. Politicians from all parties only care about gauranteeing their own futures. I believe that if our elected officials were forced into the marketplace, the glaring problems with the ACA would be fixed in record time. But, we know they would never agree to subject their own families to the hardships the rest of who do most of the working and paying in this country are subjected to.

Picture of <span class="username">Guest (not verified)</span>

My gross income is less than $27,000 a year. My family coverage insurance through my employer is about $600 a month with a $5000 deductible (per person). This is killing me financially and I will never recover. I am going in debt about $3000 a year just for my family to survive. IF the Family Glitch was fixed, I would be able to cover my entire family for less than $1000 a YEAR based on my income. But, since my employer offers family coverage and the INDIVIDUAL premium is less than 9.5% of my income, nobody in my family is eligible for the subsidies. Why can't the politicians see how this is killing us financially. I don't want them to 'repeal Obamacare' (which they have spent tons and tons of money trying to do over 50 times). I want them to FIX the Family Glitch!

Picture of <span class="username">Guest (not verified)</span>

It is really sad Michelle. God willing we'll all find a way to make it, but this situation makes it easy to understand why some people "take advantage" of the welfare system. It feels like our lawmakers are telling us to stop working so hard and stop paying taxes. But, the problem isn't just the lawmakers, it's the employers that take advantage of the system. There is very little employer/employee loyalty these days. Employers don't have to give anything anymore. They know there are 10 other people standing behind us begging for a job. We could look for something "better", but its the same everywhere. Companies today work you 30 hours a week so they don't have to offer medical or they do what our employers have done and offer sub-par medical at a low price to the employee and then ratchet up the family coverage so they don't get penalized. Either way makes it near impossible to take care of your family. And, our government just sits back and tells the masses how many people ACA helps. It hasn't helped us. Instead, its just caused a greater divide between the haves and have nots. With "glitches" like this in our system, the middle class will disappear in no time.

Picture of <span class="username">Guest (not verified)</span>

Same situation. I earn 38k a year, my employer covers my individual premium at 100% and to get the lowest deductible I have to pay $1000+/month in premiums for my family to be insured. Imagine if the GOP had instead tried to improve Obamacare with amendments instead of trying to sabotage it and make endless shows of repealing it. Anyone in this situation should have voted for Hillary Clinton who made fixing the glitch part of her proposals for improving Obamacare, not the Orange One who has vowed to repeal it and replace it with something once he comes up with it I promise it will be amazing, the best, beautiful, bigly. This all just makes me sick with frustration and worry. Not sure how we're going to pull it off.

Picture of <span class="username">Guest (not verified)</span>

Patrick,
It was the Democrats that created this situation in the first place. They knew about the Family Glitch and still went ahead with it, screwing thousands of lower-income Americans like me.

If Clinton had won, it would have got worse, not better.
She only said stuff like that to win, not because she cares about us peasants.

Whatever Trump and the Republicans come up with, it will be better than Obamacare by default - it can't be any worse.

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