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The “kid glitch”: Could your family fall into Obamacare’s affordability gap?

In my last column, I tackled your questions about choice. Specifically, I wrote about your options under Obamacare if your employer-sponsored health insurance is too expensive or doesn’t provide access to the doctors or hospitals you prefer.

Still, my inbox is overflowing, so I’ll devote this column to variations on the choice matter. If you’re among the Californians who are unhappy with your current health plans, the news is mixed: Some of you will have better options. Others won’t.

Q: Previously, Carrie from the Sacramento area wanted to know whether her family could find a more affordable option other than her husband’s employer-sponsored health plan.

I have since followed up with her and learned that for the couple and their 14-year old daughter, employer coverage options run from $677 to $924 each month.

Then Carrie mentioned this: “In fairness, the company DOES cover the employee alone much more generously.”

A: Gulp.

That last sentence may put Carrie and her family in a category of people – specifically spouses, children and dependents – who will have fewer affordable choices under Obamacare.

When the major provisions of the Affordable Care Act debut in January, you can drop your employer’s coverage and shop for plans on your own, either through a new state-run health insurance marketplace called Covered California or on the open insurance market.

The federal government will offer sliding-scale tax credits to individuals and families who earn between 138 percent and 400 percent of the federal poverty level, which will help lower the cost of premiums.

But if you already have insurance through your employer or a loved one’s employer, you have to pass another test to qualify for tax credits: Your employer’s insurance needs to be considered “unaffordable.”

That happens in one of two ways: When the employee’s share of the premium to cover him- or herself only is more than 9.5 percent of annual household income; or when the employer’s insurance covers, on average, less than 60 percent of medical expenses, leaving you with expenses of 40 percent or more.

This is where it gets tricky. There’s something that UCLA’s Dylan Roby calls the “kid glitch” that may make some families ineligible for tax subsidies. (Insurance broker Dave Morgan of San Luis Obispo, who first alerted me to this matter, says it’s also called the “affordability glitch.”)

Here’s the glitch: If coverage for the employee alone is less than 9.5 percent of household income, then that employee AND his or her family members are ineligible for tax subsidies. Not even if the cost of family coverage exceeds 9.5 percent of household income.

“You’ll end up with some kids who would have gotten subsidized coverage from the exchange on a family plan who won’t because the employer is offering single coverage that’s affordable, but family coverage that is not,” Roby explains.

So, where does that leave Carrie and others in her situation? They need to do the math – carefully – and cross their fingers that they’re not victims of the kid glitch. 

Q: If your company offers a health policy but your personal doctor is outside of that network, can you buy a different policy through the Affordable Care Act? My son is in remission with leukemia and has been seeing a specialist at UCSF. He is now working again and the only coverage available at work is Kaiser. He wants to stay with his doctor. Can he? He is 29 and makes about $24,000 a year. 

A: Suzi’s question raises a different aspect of choice because this isn’t just about finances. It’s about access to the doctor or hospital you prefer.

The short answer is that it depends on how much her son is willing to pay.

He can leave his employer’s coverage and try to find a plan that covers his specialist. But in order for him to be eligible for tax credits from Covered California, his employer’s plan has to fail the “affordability” test I refer to above and he has to meet the income guidelines.

Given that he’s covered by Kaiser, that’s not likely. He should check out this page, which will give him a sense of the plans available from Covered California and how much they might charge, even if he has to pay full cost.

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Emily Bazar

Senior writer Emily Bazar is based in our Sacramento office, where she covers stories about the federal health care overhaul, Medi-Cal budget cuts, children's dental care and variation in the use of medical treatments.  Prior to joining the Center for Health Reporting, Bazar was a national reporter for USA Today, where she covered immigration, the effects of the current economic recession and other topics. Her first journalism job was at The Sacramento Bee. Over nine years, her beats included transportation, higher education, California politics, the energy crisis and immigration. In 2003, she was one of two reporters who produced an award-winning special project, “Liberty in the Balance,” which explored civil liberties after Sept. 11, 2001. She appears regularly on KQED’s Forum,Capital Public Radio’s Insight and other radio shows to discuss health policy. Bazar graduated from Stanford University.

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