One of ACA’s silliest glitches is finally being fixed. But for many families, the damage is done.

One of the cruelest flaws in the Affordable Care Act has been the so-called “family glitch” that has barred family members of millions of workers from obtaining more affordable health insurance in the Obamacare shopping exchanges. It’s no secret that insurance premiums — along with deductibles, coinsurance, and copays have — risen astronomically since the exchanges began selling policies in 2013, making those federal subsidies crucial for families deciding whether to buy health insurance. Given that the average premium for families with coverage from a large employer shot up 55% while average cost sharing rose 70% from 2008 to 2018, those subsidies often make or break a family’s decision to buy health insurance. 

President Biden recently announced a fix to the so-called family glitch, which will open the insurance exchanges to about one million more Americans who up to now have had a tough time affording coverage from those exchanges. That’s because coverage is shockingly expensive. New research from the Kaiser Family Foundation indicates that 12% of employees with health coverage work at firms where their contributions for a family plan is at least $10,000 annually. Twenty-nine percent of covered workers in small firms faced a contribution of at least $10,000 for family coverage, making them most likely to benefit from this fix. When the new rule is approved by the Biden Treasury Department in the coming months, it will allow more families to buy health insurance through the Obamacare marketplaces set up under the Affordable Care Act and receive help paying for premiums and other cost sharing those policies require. 

Since 2013, when the exchanges went into existence, the family glitch has prevented some families without affordable employer-provided insurance from getting that same family coverage from health exchange plans. They were barred from getting help under the ACA because the Obama administration’s Treasury department had ruled that if workers had access to employer coverage and if that plan cost them less than 9.5% of their gross income, they were considered to have “affordable” coverage under the law, and that made their family members ineligible for subsidies to help them pay for insurance. The problem was the rule’s affordability test was based on the cost of just covering the employee, not the broader family. The exact percentage for the cutoff changes each year with inflation. For 2022, it is 9.6%.

“This is one of the biggest effects they (the White House) can have administratively,” said Cynthia Cox, a vice president of the Kaiser Family Foundation. “A small number of people are affected, but they could save a significant amount of money. This will help people paying 20% or more of their income on health insurance but for those paying 10% or 12%, it will be a tougher call whether this will benefit them.” Cox added, “There’s been a lot of focus on the initial action but not necessarily on the details.”  

Since 2013, when the exchanges went into existence, the family glitch has prevented some families without affordable employer-provided insurance from getting that same family coverage from health exchange plans.

Over the years I have extensively covered those who had been left out of Affordable Care Act benefits because of the family glitch. An engineering assistant named Jeremy Devor in Salem, Illinois, called to ask me in 2009 if the new Obamacare law then being debated in Congress would help him. I told him it might not since there was talk that the new law might not provide genuinely universal coverage. However, he agreed to let me follow him as he tried to obtain health care for his wife, five kids who were then ages 12 to 18, and himself. A series of five stories in the Columbia Journalism Review (CJR) and on this site from 2009 through 2016 chronicled the struggles of the Devor family to get health insurance and pay for care even long after the Affordable Care Act became law. 

I called Devor “the man in the middle” because he had a middling income, then about $46,000, from a job as a technician at an engineering firm, lived in the middle of the country in central Illinois, and was pretty much an average American with average medical bills. He had health insurance from the firm he worked for but was being squeezed by medical bills for his wife and children. Blue Cross was rejecting his claims the first time around, he told me, noting his $1,000 family deductible and $500 deductible for each family member — low indeed by today’s standards, but still high enough at the time to throw the family finances in disarray. His share of the yearly premium in 2009 was $5,443. Although at that time his family had no serious illnesses, medical expenses were killing them. “The regular stuff kids get,” he told me. Although he could have lowered his premium by raising his deductible to $1,000 per person from $500, he said he couldn’t swing the higher out-of-pocket expenses that change would require. Employment options in his town of 8,000 were very limited. Sometimes he shoved manure for extra cash, and his wife worked as a part-time bartender earning about $4 an hour plus tips. 

I caught up with Devor again in 2011. His old engineering consulting firm had closed its doors, and he had a new job. His yearly income was now around $50,000, and he had moved from one Blue Cross plan to another. The deductible was smaller, $250 for each family member, but the coinsurance was 20%, meaning he had to pay one-fifth of the cost for many services covered by the plan. The coinsurance “was crushing” him, so he dropped family coverage, got his kids on a state program for low-income children (Medicaid/CHIP), and his wife became uninsured. “There are no more small copays,” Devor said. Larry Levitt, then senior vice president at the Kaiser Family Foundation, told me, “families who can’t afford employer coverage or the coverage is inadequate will not be helped by the new law. They will be people in the lower- to middle-income range (like Devor) who will be affected.” 

The Devor family’s insurance predicament didn’t get better in 2012. His wife and children had been on the state Medicaid/CHIP health program for low-income families, but she had lost her coverage when the state ran out of money and tightened eligibility. Few doctors accepted the state’s insurance for the children, so the kids didn’t get regular check-ups anymore. When the ACA took effect in 2013, children could stay on their parent’s insurance until they were 26. But that would help only if they had family coverage. At $706 a month in premiums, the Devors couldn’t afford family coverage with the other bills they had to pay, but he continued to have coverage for himself through his employer. 

In 2014 the ACA was in effect, so Devor investigated an Obamacare policy for his wife who was still uninsured. He was exploring the exchange plans because insuring the entire family through his employer plan would cost $587 a month in premiums, which he said he couldn’t swing on his income of around $54,000.  By comparison,  Devor was then paying only $71 a month for his own coverage. But because of the family glitch and how it calculated whether a family’s employer plan was affordable or not, Devor’s wife was ineligible for government subsidies. For the cheapest ACA plans, he would pay some $2,000 a year in premiums plus a $6,000 deductible for a plan for her, which he called “not doable.” “Who can afford to spend $6,000 a year before insurance pays?” he asked. His oldest child had aged out of the state program and was uninsured.

The last time I visited Devor was in 2016. The news was not good. His 40-year-old wife had been diagnosed with a rare brain tumor, and had just begun radiation treatments and later would undergo chemotherapy. She had returned to the state insurance program but was about to lose coverage again, since the family’s income had increased to $62,000 and the older kids moved out, shrinking the family size on which her subsidized coverage was based. The Devors had to pay out-of-pocket for the rest of her treatments, and resorted to a GoFundMe campaign to help. Devor developed psoriatic arthritis but he said he often had no money for medicine after the extra costs for driving every day to St. Louis for his wife’s treatment ate up his budget. His employer had junked the Cadillac insurance plan for its workers to give them more “skin in the game,” as the saying went at the time. His coverage now carried a $4,000 out-of-pocket maximum for him and an $8,000 maximum if he had purchased coverage for family members. For that coverage, his monthly premium would be $1,300.

The family’s financial situation might have been different if the family glitch hadn’t prevented him from buying good insurance for his family years ago. 

With the recent change in the family glitch rule, I again contacted Devor who was still struggling with health insurance in Illinois, where the major changes transforming U.S. health insurance were also affecting him. I realized his family’s troubles ultimately reflected that major shift in the country’s health insurance arrangements — the disappearance of good, comprehensive employer policies in favor of skimpy, catastrophic coverage, with much of the cost burden shifted to workers themselves. It’s a change Yale political scientist Jacob Hacker has called the “great risk shift.” Right now, because of the hot job market, Devor says he is in a bidding war between firms for his services. However, the insurance from potential employers is based on health savings accounts, just like his current coverage. For wellness visits his current coverage pays 100%, but for everything else the Devors must pay the entire cost until the deductible — $5,000 per person — is met. The company puts $1,400 into a health savings account at the beginning of the year and Devor adds $250 each month through payroll deductions. 

“We haven’t used the insurance at all,” he told me. “We are using the health savings account portion.” But the $2,500 his wife needs every six months for an MRI quickly depletes the fund, which he said currently had $2,800 in it. “I feel my kids were sacrificed on the altar of the hospitals,” he said. So much of the family income went to pay them.

The family’s financial situation might have been different if the family glitch hadn’t prevented him from buying good insurance for his family years ago. Right now, Devor, his wife and two sons in their early 20s are on a family policy whose premium is $382 a month, much lower than in the old days because the cost of care has largely been shifted to the Devors through the health savings account. With the coming fix to the family glitch, they might be able to buy a plan from Get Covered Illinois, the state’s ACA marketplace, and perhaps receive subsidies to make the cost burden a bit lighter. At least they have options now, if not the good coverage they might have had in the old days.

Veteran health care journalist Trudy Lieberman is a contributing editor at the Center for Health Journalism Digital and a regular contributor to the Remaking Health Care column.