ACA and Employer Offer of Coverage

[FlaGator]

The new wife went back to work recently and is now eligible for employer-provided HI.

Have been on subsidized ACA so far this year. Employee cost is attractive, coverage essential identical to current plan, and would free me up to manage income/Roth conversions as needed and desired without ACA constraints.

Will check with my agent and directly with the Marketplace tomorrow and looking for info to make sure I ask the right questions. On my mind tonight:
1. Is she compelled to take the employer offer?
2. Is the family (Me and a 21 and 17 y.o. from prior DW) compelled to take the employer offer?
3. Anything else I should be considering?

The subsidies YTD will be reconciled next tax season, so no concern about the ultimate tax cost.

Would appreciate the wisdom of the forum.
Thanks!

 

[gauss]

From the instructions for IRS Form 8962 Premium Tax Credits

Minimum essential coverage (MEC). An individual in your tax family who is eligible for MEC (except coverage in the individual market) for a month is not in your coverage family for that month. Therefore, you cannot take the PTC for that individual’s coverage for the months that individual is eligible for MEC. In addition to qualified health plans and other coverage in the individual market,

MEC includes:
Most coverage through government-sponsored programs (including Medicaid coverage, Medicare Parts A or C, the Children’s Health Insurance Program (CHIP), certain benefits for veterans and their families, TRICARE, and health coverage for Peace Corps volunteers);

Most types of employer-sponsored coverage; and

Other health coverage the Department of Health and Human Services designates as MEC.

So you aren't compelled to take the employer offer of coverage, but you will likely no longer be eligible for the subsidy on an ACA plan.

The one major exception would be that if the offer of coverage is not considered "Affordable" by the ACA.

If the employer is a large employer, then they are likely required to offer "affordable" coverage.

If the employer offer of coverage does not extend to the spouse or the children, then subsidies may be eligible for these individuals.

Eligibility is determined on a monthly basis, so if DW went back to work mid year and employer coverage was offered at that time, then you would not be eligible for subsides going forward this year.

Additional details are available in IRS Form 8962.

-gauss

 

[FlaGator]

Thanks, Gauss.

The coverage offer extends to the family. One more question for the list when I call. Appreciate the IRS link as well.

 

[Sue J]

The problem with this ACA rule is that the employee cost might be reduced but the cost to add family members might be full price. So the cost to the family is enormous but because it's offered they don't get the subsidies.

 

[cathy63]

The problem with this ACA rule is that the employee cost might be reduced but the cost to add family members might be full price. So the cost to the family is enormous but because it's offered they don't get the subsidies.

I think the "family glitch" is fixed for 2023. There was a lot of news about it this week, but I didn't dig into the details.

 

[FlaGator]

Thanks for the responses, they helped my research this morning and developed my questions with the feds this afternoon.

Outcome is:
1. Eligibility under new wife's plan includes only her and me. Kids from my prior marriage aren't eligible for coverage under her company's plan.
2. The feds told me that she is essentially compelled to take the employer coverage, but I am not.
3. She signed up for the employer coverage (a reminder of the value of employer-subsidized coverage)
4. Made the "life change" adjustments to my application with the feds. Wasn't as easy as it could have been. Had to submit a new application, with some auto-pop from the last time through.

Best part was I didn't have to reset all of the 0-0-P/Deductibles for the rest of us as they have been higher than normal this year.

Again, I appreciate the responses, all were very helpful

 

[gauss]

Thanks for the responses, they helped my research this morning and developed my questions with the feds this afternoon.

Outcome is:
1. Eligibility under new wife's plan includes only her and me. Kids from my prior marriage aren't eligible for coverage under her company's plan.
2. The feds told me that she is essentially compelled to take the employer coverage, but I am not.
3. She signed up for the employer coverage (a reminder of the value of employer-subsidized coverage)
4. Made the "life change" adjustments to my application with the feds. Wasn't as easy as it could have been. Had to submit a new application, with some auto-pop from the last time through.

Best part was I didn't have to reset all of the 0-0-P/Deductibles for the rest of us as they have been higher than normal this year.

Again, I appreciate the responses, all were very helpful

I am glad it worked out for you, but a bit surprised about one of your comments above.

Did they leave you with the impression that you could continue to receive the subsidies on your coverage?

Maybe the law has changed, but I thought you would not be eligible for the monthly subsidy if you were offered employer sponsored coverage.

Even if the exchange continues to pay the subsidy, you will be required to file form 8962 with your taxes next year that, at least in the past, would claw back and subsidies paid in excess of what is legally allowed.


-gauss

 

[ivinsfan]

Not be compelled to take it and still getting the subsidized rate might not be the same thing. I'd be really paranoid about an unpleasant surprise at tax time in 23.



It's early in the calendar year so I might do a little more digging for that one....now having said that, since your bio kids don't get the employer insurance it's complicated..you might be fine.

 

[ivinsfan]

I think the "family glitch" is fixed for 2023. There was a lot of news about it this week, but I didn't dig into the details.

Right but it's still 22...

 

[FlaGator]

I am glad it worked out for you, but a bit surprised about one of your comments above.

Did they leave you with the impression that you could continue to receive the subsidies on your coverage?

Maybe the law has changed, but I thought you would not be eligible for the monthly subsidy if you were offered employer sponsored coverage.

Even if the exchange continues to pay the subsidy, you will be required to file form 8962 with your taxes next year that, at least in the past, would claw back and subsidies paid in excess of what is legally allowed.


-gauss

Thanks for the responses, they helped my research this morning and developed my questions with the feds this afternoon.

Outcome is:
......
2. The feds told me that she is essentially compelled to take the employer coverage, but I am not.
......

To expand on that point:
I asked these specific questions (answers paraphrased):
-Is she (the new wife) required to take the employer offer of coverage? - "As long as her plan meets the requirements for minimum essential coverage, she is longer eligible for subsidies." It meets those requirements, so, yes, makes sense for her to take the employer plan (But not really "compelled").

-Am I, as the eligible-for-coverage-spouse, required to accept the employer coverage? - "No. The requirement for coverage extends only to the employee, and you can remain on your marketplace plan with your kids."

Talked with my local agent today. Reviewed the situation, my questions, and the fed's response. He said that dropping the wife and keeping me and the kids on the marketplace plan was the right outcome. I figure if two people paid to be in the game are saying the same thing, it's probably correct. 2023 tax season may show differently

The subsidy amount decreased after updating with her projected income, but removing a 55+ y.o. female dropped the premium substantially. My monthly premium bill is still manageable.

Like you, Gauss, I assumed that any employer coverage had to be accepted. Was surprised to be told otherwise. Final reconciliation comes in a year, so there may a number to pay I would rather not. Won't be surprised if that
happens. I'll just suck it up and pony up.

 

[gauss]

To expand on that point:
I asked these specific questions (answers paraphrased):
-Is she (the new wife) required to take the employer offer of coverage? - "As long as her plan meets the requirements for minimum essential coverage, she is longer eligible for subsidies." It meets those requirements, so, yes, makes sense for her to take the employer plan (But not really "compelled").

-Am I, as the eligible-for-coverage-spouse, required to accept the employer coverage? - "No. The requirement for coverage extends only to the employee, and you can remain on your marketplace plan with your kids."

Talked with my local agent today. Reviewed the situation, my questions, and the fed's response. He said that dropping the wife and keeping me and the kids on the marketplace plan was the right outcome. I figure if two people paid to be in the game are saying the same thing, it's probably correct. 2023 tax season may show differently

The subsidy amount decreased after updating with her projected income, but removing a 55+ y.o. female dropped the premium substantially. My monthly premium bill is still manageable.

Like you, Gauss, I assumed that any employer coverage had to be accepted. Was surprised to be told otherwise. Final reconciliation comes in a year, so there may a number to pay I would rather not. Won't be surprised if that
happens. I'll just suck it up and pony up.

Thanks for the clarification. It sounds like you are on top of this.

Since the Healthcare Marketplace that applies to your state (the Feds you spoke to- hopefully) will issue the 1095-A form that determines eligibility.

Also this 'family glitch' has been a known problem with relief likely on the way this year.
https://www.healthinsurance.org/obamacare/no-family-left-behind-by-obamacare/#Dems
https://public-inspection.federalregister.gov/2022-07158.pdf

-gauss