America’s Health Insurance Plans Supports Rulemaking to Fix the ‘Family Glitch’ in Health Care Coverage – InsuranceNewsNet

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WASHINGTON, June 6 (TNStalk) — America’s Health Insurance Plans issued the next statement and letter:

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AHIP submitted comments in response to the Treasury Department and the Internal Revenue Service proposed rulemaking on Affordability of Employer Coverage for Family Members of Employees (“family glitch”). Listed here are the highlights:

“Everyone deserves inexpensive, high-quality coverage decisions, whether or not they obtain coverage through their employer or buy coverage on their very own through the Reasonably priced Care Act (ACA) medical health insurance marketplaces. …We support the Administration’s proposed approach to repair the family glitch so thousands and thousands of Americans can access premium tax credits (PTCs) to enroll in inexpensive coverage through the ACA marketplaces.”

“The proposed rule strikes an appropriate balance that can preserve the integrity of the employer market while expanding access to inexpensive coverage through the ACA marketplaces for those who need coverage. Specifically, by proposing a recent affordability test for related individuals, members of the family of the worker’s household could also be determined eligible for PTCs if an employer offer of family coverage is deemed unaffordable. We’re pleased to see the rule doesn’t propose changes to the affordability test for workers and thus preserves the employer firewall.”

“The approach proposed by Treasury and IRS would make inexpensive coverage options available to families without jeopardizing coverage through employer-sponsored group health plans.”

The letter recommends some additional guidance that can be obligatory to effectuate the rule change, including addressing minimum value calculations, and concludes that the rule needs to be finalized largely as proposed.

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June 3, 2022

To: Charles P. Rettig, Commissioner, Internal Revenue Service, 111 Structure Ave NW, Washington DC 20224, Submitted electronically via www.regulations.gov

RE: Affordability of Employer Coverage for Family Members of Employees – AHIP

Comments

Dear Commissioner Rettig:

On behalf of AHIP, thanks for the chance to supply comments in response to the Treasury Department and the Internal Revenue Service proposed rulemaking on Affordability of Employer Coverage for Family Members of Employees (“family glitch”), published within the Federal Register on April 7, 2022./1

Everyone deserves inexpensive, high-quality coverage decisions, whether or not they obtain coverage through their employer or buy coverage on their very own through the Reasonably priced Care Act (ACA) medical health insurance marketplaces. We share the Administration’s goal outlined in Executive Order 14009, “Strengthening Medicaid and the ACA,” to make high-quality health care accessible and inexpensive to all Americans, including ensuring access to inexpensive coverage and financial assistance for dependents. It’s estimated over five million Americans cannot access inexpensive, quality coverage on account of the ACA’s family glitch. We support the Administration’s proposed approach to repair the family glitch so thousands and thousands of Americans can access premium tax credits (PTCs) to enroll in inexpensive coverage through the ACA marketplaces.

The Recent Affordability Test Advances Vital Goals of the Reasonably priced Care Act The proposed rule strikes an appropriate balance that can preserve the integrity of the employer market while expanding access to inexpensive coverage through the ACA marketplaces for those who need coverage. Specifically, by proposing a recent affordability test for related individuals, members of the family of the worker’s household could also be determined eligible for PTCs if an employer offer of family coverage is deemed unaffordable. We’re pleased to see the rule doesn’t propose changes to the affordability test for workers and thus preserves the employer firewall. Under the approach, an worker can have an inexpensive offer of employer-sponsored coverage while the worker’s spouse and dependents may not have an inexpensive offer of family coverage through the employer. This important approach ensures employees cannot forego an inexpensive offer of employer sponsored coverage to enroll with their family in subsidized marketplace coverage. Consistent with Executive Order 14009, the rule appropriately focuses on ensuring access for dependents who’re locked out of inexpensive coverage without unnecessarily undermining stability of the employer market.

Adopting a recent affordability test for related individuals will provide significant relief for low- and middle-income families. Of the greater than 5 million Americans impacted by the family glitch, 4.4 million are currently enrolled in employer-sponsored coverage but are likely spending greater than 9.61 percent of annual income on premiums./2 One study estimated families who would change into eligible for PTCs if the affordability test took under consideration the price of premiums for family coverage currently spend a mean of 15.8 percent of their before-tax income on premiums./3 Nearly half of this population is estimated to have incomes between one hundred pc and 250 percent of the federal poverty level (FPL), meaning they might qualify for significant premium and cost-sharing subsidies through the marketplaces. A recent evaluation estimates limiting the worker contribution for family coverage could save low- to middle-income families hundreds of dollars annually. Specifically, a married couple with two children earning $53,000 or a single parent with two children earning $43,920 (each 200 percent FPL) would save over $4,000 annually./4 The identical study estimates those self same families with incomes thrice the poverty line would save as much as $1,000 annually. These are significant savings for low- and middle-income families.

The Proposed Rule Preserves Access to Employer-Provided Coverage

The approach proposed by Treasury and IRS would make inexpensive coverage options available to families without jeopardizing coverage through employer-sponsored group health plans. We agree with Treasury and IRS that the ACA requires a suggestion of employer coverage for an worker to be deemed inexpensive if the price of self-only coverage doesn’t exceed the required contribution percentage. An alternate interpretation during which the worker could be eligible for PTCs if the worker contribution to family coverage is deemed unaffordable wouldn’t be consistent with the statute and would risk eroding the employer market. In a 2015 study, RAND found such an approach would lead to roughly 3 million fewer enrollees in employee-sponsored coverage, in comparison with just one million fewer enrollees if the employer firewall was preserved./5 This study didn’t account for current policies, namely the expanded PTCs authorized within the American Rescue Plan Act. It’s critical that the employer firewall be preserved to align with statute and ensure continued stability and affordability of the employer-sponsored coverage marketplace for the greater than 177 million Americans who’ve employment-based coverage.

The Treasury Department and IRS Are Properly Exercising Authority to Interpret the Statute The revised affordability test is sound public policy squarely inside the authority of Treasury and IRS to execute. Executive Order 14009 directed agencies to review policies and practices that will reduce affordability of coverage or financial assistance for coverage, including for dependents. Treasury and IRS conducted a review of existing regulations governing eligibility for PTC and, based on those findings, determined the statute could possibly be interpreted in a distinct manner, siding with an alternate interpretation that more closely aligns with the intent of the ACA to expand access to inexpensive coverage. As a matter of administrative law, Treasury and IRS retain significant authority to adopt the regulations as proposed. Federal agencies are empowered to amend existing regulations, explaining their rationale for doing so, and courts are empowered to evaluate that rationale. See, e.g., Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117, 2125-26 (2016) (stating that agencies must “provide a reasoned explanation for [a] change.”). Importantly, the Supreme Court has recognized that “‘[a]n initial agency interpretation just isn’t immediately carved in stone. Quite the opposite, the agency … must consider various interpretations and the wisdom of its policy on a seamless basis,’ for instance, in response to modified factual circumstances, or a change in administrations.” Nat’l Cable & Telecommunications Ass’n v. Brand X Web Servs., 545 U.S. 967, 981 (2005) (emphasis added) (internal citations omitted). Here, Treasury and IRS have continued to judge the implementation of a statute under which they’ve significant interpretive discretion they usually have determined the prior interpretation of the statute doesn’t fulfill the intent of the statute and its underlying policy of expanding medical health insurance coverage.

Furthermore, because the preamble to the proposed regulations makes clear, section 36B(c)(2)(C)(i) doesn’t specify the style during which clause 36B(c)(2)(C)(i) should apply to spouses and dependents of employee-taxpayers. Because of this, the statute’s ambiguity is ripe for the variety of reasoned interpretation that the Treasury and IRS propose here to deal with the policy and regulatory inconsistencies that the present rule creates. Where “the statute is silent or ambiguous with respect to the particular issue, the query for the court is whether or not the agency’s answer is predicated on a permissible construction of the statute.” Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 843 (1984). Here, given the overwhelming evidence within the structure and language of the ACA, it is evident that Congress intended to facilitate the acquisition of medical health insurance for people who could otherwise not afford coverage in the person market or through their employers. Accordingly, a reviewing court should afford broad deference to the agencies’ reinterpretation of the statutory provision in section 36B.

Minimum Value Calculations Must be Addressed

It’s our experience that the majority plans offered by employers don’t feature different profit designs for workers and for related members of the family. Due to this fact, we recommend the minimum value calculator proceed to be based on an ordinary population that features each employees and dependents to calculate a single, composite minimum value for worker and dependents unless the plan’s profit design for workers is different from its design for related individuals. Separate standard populations shouldn’t be required. When the identical profit design is provided to each employees and related individuals, minimum value calculated individually for each populations can be very near the minimum value calculated across each. A separate calculation in all instances would, nevertheless, create substantial extra work on the a part of plan sponsors and issuers to trace this information. To effectuate any changes to the minimum value calculation rules, we reiterate as we’ve got up to now that the minimum value calculator maintained by CMS needs to be updated from its existing version.

The present minimum value calculator is predicated on outdated data and assumptions; Because of this, permitted plan designs may not meet minimum value using the calculator or limit plan design options available to employers in the big group market. The minimum value calculator needs to be updated commonly, just like the actuarial value calculator used for the person market, to reflect updated maximum out-of-pocket maximums, medical trend, and model changes. We also recommend the minimum value calculator be updated to incorporate the family aggregate deductible within the calculation. If Treasury and IRS don’t update the usual population, we recommend a secure harbor for when the minimum value can be the identical for individual versus family coverage. For instance, plans where employees and dependents have the identical advantages available and deductible and out-of-pocket amounts are embedded, the minimum value for individual coverage and family coverage could be the identical. In coverage with a shared deductible and/or out-of-pocket maximum, amounts for family coverage needs to be used to find out if the plan meets minimum value. This might be consistent with the secure harbor provided for calculating actuarial value for plans with family cost-sharing features, where CMS considers the actuarial value with a deductible and/or out-of-pocket maximum that accumulates on the family level to be considered the identical actuarial value as calculated using the actuarial value calculator for the corresponding individual plan. Issuers should maintain flexibility to do out-of-calculator adjustments in the event that they feel the necessity to achieve this to more accurately calculate minimum value.

Guidance for Plan Sponsors and Administrators and Resources for Exchange Enrollees Are Vital to Operationalize the Rule

Additional guidance can be obligatory to effectuate this rule change. We recognize finalizing the rule as proposed would create recent requirements for plan sponsors and administrators to make sure compliance with the rule. After finalizing the rule, Treasury and IRS should issue a Request for Information to raised understand the recordkeeping and compliance needs of stakeholders who can be affected by the ultimate rule. It’ll be critical that Treasury and IRS issue guidance that clearly details how plan sponsors and administrators, in addition to individual taxpayers, are to satisfy requirements that ensure proper eligibility calculations for PTC.

Along with guidance for plan sponsors and administrators, individual consumers purchasing coverage via an Exchange would greatly profit from resources and guidance that help them make an informed purchasing decision. We urge the Treasury Department and IRS to work with HHS on how one can best communicate information to families considering whether to enroll in Exchange coverage with a PTC in lieu of enrolling in employer-provided coverage. While the shopping experience could be just like any consumer, there are unique considerations for families with other offers of coverage as explained by the Treasury Department and IRS: some families would experience “split coverage” (i.e., the worker enrolling in employer-provided coverage and the family enrolling within the Exchange) could lead on to lower premiums for the family, or could lead on to uninsured individuals becoming insured, for another families, the price of the 2 coverages could possibly be higher, and having two deductibles and two out-of-pocket limits could also increase costs for families. Clear information presented in an accessible fashion to consumers each generally and as a part of the Exchange application will help be certain that the families who decide to enroll in split coverage are those that will profit from doing so.

The Rule Must be Finalized Largely as Proposed

For years because the enactment of the ACA, the family glitch has been widely viewed as an unnecessary obstacle to totally achieving the intent of Congress in passing a law to extend the variety of Americans with medical health insurance coverage by making that coverage cheaper. Congress never intended this barrier and the interpretation by Treasury and IRS on this proposed rule finally corrects a previous interpretation, consistent with their regulatory authority and to the good thing about thousands and thousands of Americans. We recommend the rule be finalized as proposed, with the addition of addressing minimum value calculations.

Sincerely,

Jeanette Thornton, Senior Vice President,, Product, Employer & Industrial Policy, AHIP

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Footnote:

1/ AHIP is the national association whose members provide health care coverage, services, and solutions to a whole lot of thousands and thousands of Americans every day, including through employer-sponsored coverage and the Reasonably priced Care Act (ACA) medical health insurance marketplaces. We’re committed to creating health care higher and coverage more accessible to everyone. We consider when people get covered and stay healthy, all of us do higher. The very best strategy to do this is to expand on the market-based solutions and public-private partnerships which might be proven successes.

2/ The ACA Family Glitch and Affordability of Employer Coverage. Kaiser Family Foundation. April 7, 2021. https://www.kff.org/health-reform/issue-brief/the-aca-family-glitch-and-affordability-of-employer-coverage/

3/ Buttegens, M. Dubay, L., Kenney, Genevieve M. Marketplace Subsidies: Changing the ‘Family Glitch’ Reduces Family Health Spending But Increases Government Costs. Health Affairs. 2016. https://www.healthaffairs.org/doi/10.1377/hlthaff.2015.1491

4/ibid 5 Alternatives to the ACA’s Affordability Firewall. RAND Corporation. 2015. https://www.rand.org/pubs/research_reports/RR1296.html

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Original text here: https://www.ahip.org/news/press-releases/ahip-supports-rulemaking-to-fix-the-family-glitch-in-health-care-coverage

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