Family Health Care Coverage May Be Too Costly For Many

Most Americans will be required to have health insurance starting in 2014 under the health care law.  Unfortunately, the new health care law may make coverage unaffordable for millions of Americans because of a narrow reading of the law by the administration and by the Internal Revenue Service.  There will be tax credits and other subsidies available to low- and middle-income people to help pay their premiums, unless they have access to affordable employer-sponsored coverage.  Some working-class families would be unable to afford employer-sponsored family coverage and also would not qualify for subsidies provided by the law.

At issue is how to define “affordable” under provisions of the law that are ambiguous.  The law specifies that employer-sponsored insurance is not affordable if the worker’s share of the premium is more than 9.5% of the worker’s household income.  The definition of the word in relation to the health care law could have huge practical consequences and dramatically affect who is able to receive help from the government for buying health insurance.

The I.R.S. says this calculation should be based solely on the cost of individual coverage for the employee.  Critics say the costs of covering a spouse and children should also be taken into account because family coverage typically costs much more than individual coverage.  A letter to the administration from Democrats who passed the bill through the House in 2009-10, including Representatives Henry A. Waxman of California and Sander M. Levin of Michigan, said, “The effect of this wrong interpretation of the law will be that many families remain or potentially become uninsured.”

An annual survey by the Kaiser Family Foundation found that premiums for employer-sponsored health insurance averaged $ 5,430 a year for single coverage and $ 15,070 for family coverage in 2011.  The share of the premium paid by the employee averaged $ 920 for individual coverage and more than four times higher, $ 4,130, for family coverage.  Such costs would be deemed affordable for a family making $ 35,000 a year, even though the family is spending 12% of its income for full coverage under the employer’s plan.

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