“Affordable” coverage for employees, but not their families

Measuring the Affordability of Employer Health Coverage

By Larry Levitt and Gary Claxton
Kaiser Family Foundation, August 24, 2011

What would this mean for families? We estimated the effect based on coverage in 2008 using demographic and insurance data from the Medical Expenditure Panel Survey and employee premium contribution information from the Kaiser/HRET Employer Health Benefits Survey. The analysis – which assumes no behavior changes by employers in response to the health reform law – suggests that there are about 3.9 million non-working dependents in families (technically, “health insurance units”) in which the worker has access to affordable employer-sponsored coverage but the family does not. Under the draft regulation, these family members would be excluded from getting federal tax credits to help them buy coverage in health insurance exchanges. On average they’d have to pay 14% of their income to opt into the employer coverage, substantially more than what they would pay in an exchange.

This is not a Catch 22, but rather a Catch 4,000,000 since it is estimated that close to four million dependents will fall into this trap in which the worker has access to “affordable” employer-sponsored coverage but the family members do not. This will impact most heavily middle-income families since those with low incomes may be eligible for Medicaid, and those with very high incomes will likely be able to afford family coverage.

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