Biden admin plots to fix Obamacare’s ‘family glitch,’ expand coverage

The Biden administration is planning on Tuesday to propose a long-sought change to the Affordable Care Act aimed at lowering health insurance costs for millions of Americans, four people with knowledge of the matter told POLITICO.

The new policy is designed to close a loophole in the ACA known as the “family glitch” that’s prevented an estimated 5 million people from qualifying for subsidized health plans — even when they can’t find affordable coverage elsewhere.

Biden administration officials are expected to unveil the proposed regulation ahead of a celebration of the landmark 2010 health law that will also mark former President Barack Obama’s return to the White House for the first time since he left office.

Obama, alongside President Joe Biden and Vice President Kamala Harris, is slated to tout the ACA’s coverage gains and the administration’s broader efforts to slash health costs.

In its rollout on Tuesday, the administration will highlight its new bid to fix the family glitch as the largest administrative action to expand ACA coverage since the law’s enactment, one person with knowledge of the matter said. Still, the proposed regulation could take months to finalize.

Democrats last year also expanded ACA subsidy eligibility as part of the passage of the American Rescue Plan, and enrollment through the law’s insurance exchanges reached 14.5 million last year, a record high. Those expanded subsidies are due to expire later this year, raising concerns within the party about the potential for millions of people to get hit with higher health costs right around the midterm elections.

The White House declined to comment.

Democrats and health advocacy groups have long pushed for a fix to the family glitch, which locked certain Americans out of subsidized coverage due to the complex way the federal government determines eligibility for family members of workers who have access to employer-based health plans.

Under the ACA, people can qualify for subsidized health insurance if the cost of their employer-based coverage rises above a set percentage of their household income.

But the Obama administration originally interpreted that provision as applying to the premium charged to one individual — even if that person’s spouse and children would be covered under the plan, driving up its overall cost.

Health law experts have since argued that the statute could be reinterpreted to incorporate the added cost of additional family members. The administration began work last year on changes to the law, resulting in the proposed rule that cleared OMB’s regulatory review in late March.

The vast majority of people affected by the glitch would pay less for ACA coverage than their employer-based plan if the loophole were closed, the Kaiser Family Foundation estimates.

“Fixing the family glitch is the most consequential thing they can do without Congress to improve the affordability of ACA coverage,” said Larry Levitt, KFF’s executive vice president for health policy.