Wyden said that there is a “family glitch” because workers will be ineligible for federal tax credits to help them buy into the health insurance exchanges starting in 2014, unless the cost of their individual employer-based health coverage premium exceeds 9.5 percent of a worker’s household income. Wyden said that glitch ignores the fact that family coverage is much more expensive than individual coverage, and could leave some middle-class workers in a tough spot.
“Under employee choice, an employer picks a metal level of coverage (bronze, silver, gold or platinum) and defines a contribution towards its employees’ coverage; an employee then will apply that employer contribution toward the premium for the [Small Business Health Options Program], SHOP, plan of his/her choice,” CMS wrote in a letter to Wyden.
Wyden said more flexibility for the individual still wouldn’t solve the “family glitch.” He said as many as 3.9 million dependents could be negatively affected because an employer’s individual coverage choice is considered affordable, while the family plan is not.
“Even in the states that allow for employee choice, it will be limited to a small number of workers,” Wyden said. “SHOP exchanges will not solve the family glitch.”
During the healthcare law debate, Wyden proposed the Free Choice Vouchers system that would have allowed an employee to receive an employer contribution if the employee could not afford the premium offered by their work. The employee would have then been able to shop in the health exchange for insurance that met their family needs. But the Free Choice Voucher was removed from the law in 2011 when the continuing budget resolution passed.