Community Catalyst Executive Director Emily Stewart’s testimony as prepared for delivery before the Internal Revenue Service (IRS) on June 27, 2022.

Thank you for the opportunity to speak about the proposed rule, “Affordability of Employer Coverage for Family Members of Employees.”

My name is Emily Stewart. I am the Executive Director of Community Catalyst, a national non-profit organization with a mission to build the power of people to create a health system rooted in race equity and health justice and a society where health care is a right for all. We are just one of more than 30 state and national organizations urging the IRS to “move expeditiously” to adopt the proposed rule, which would correct the “family glitch” that was created by a 2013 misreading of the Affordable Care Act (ACA). That misreading erected a barrier to affordable coverage for more than five million people by barring them from eligibility for premium tax credits, despite having an offer of employer coverage that is unaffordable for a family.

Community Catalyst and our coalition partners have long supported the interpretation applied in this proposed rule as the best reading of the statute and consistent with the goals of the ACA to expand access to affordable coverage. And we’re not alone. Over 3,800 people submitted comments in support of the Administration’s proposed fix that will help low-wage workers and their families save up to $400/month on health insurance.

The “family glitch” is, unfortunately, more than a mere glitch. It puts affordable coverage out of reach for families who have access to employer-sponsored insurance that is deemed affordable for an individual employee, but not for the employee’s family.

Many of these families are forced to make the impossible choice of leaving some of their loved ones — most of whom are children — uninsured, or struggling to pay for high premiums and out of pocket costs, sometimes leading to medical debt. These families often end up forgoing preventive care, pre-natal care, mental health treatment, cancer care, and other necessary medical services because they simply can’t afford it.

The people most impacted by the “family glitch” are working families, many at the lower end of the income spectrum, who, despite full time employment, are struggling to meet their essential needs. About half of the estimated five million people affected are children. Half are in families earning less than 250 percent of the Federal Poverty Level. For a family of four, that means an income below $70,000 per year.

A smiling adult and child are cheek to cheek, within the frame of an instant film photo. Beneath the image on the white frame is printed “Help save $400 per person on health insurance.”

We all know health insurance is expensive. In 2021, one out of every eight families was enrolled in a “family coverage” plan where the family’s contribution to the premium was at least $10,000. That’s about 14 percent of that family of four’s income, far exceeding the ACA’s affordability standard. And this figure does not include deductibles, copayments, and other out-of-pocket costs.

Employees of companies with higher percentages of low-wage workers contribute 35 percent of the premium for family coverage on average, compared to the 27 percent employees contribute in companies with fewer low-wage workers.

And it isn’t just employees in the private sector.

Felicia is an educator in Tennessee. She has insurance through the state for her family of four which includes herself, her husband, and their two young daughters. Felicia pays almost $1200 per month to cover the employer sponsored plan’s premiums for her family, which is almost 25% of her gross income. Felicia’s husband and children don’t qualify for tax credits through the marketplace because the “family glitch” rules have designated her employer coverage “affordable.” And that’s just for premiums. Despite paying nearly a quarter of her gross income for health insurance coverage, she has also found that her plan often doesn’t cover the costs of her family’s prescribed medications and she ends up paying hundreds of dollars a month in additional out-of-pocket costs. She told us, “something needs to be done.”

In providing an improved reading of the statute that is more closely aligned with the intent of the ACA to make health care actually affordable — the new proposed rule is a critical step toward helping families like Felicia’s stay healthy and make ends meet.

By providing an affordability test that takes the cost of family coverage into account, millions of families will no longer be forced to choose between unaffordable employer coverage and going without coverage for their dependents.

Families will be able to choose the coverage option that works best for them, whether that be to remain as a family in the employer plan or to obtain marketplace coverage, with financial assistance, for dependent family members.

And the impacts of this proposed rule aren’t limited to health care alone. Sarah is a married mother of one son, living in small city in Ohio. Her husband works full-time and is the primary earner in their household, while she works very limited part-time hours outside the home and provides full-time care for their son. Their annual household income is below the median for their area. The cost to insure Sarah and her son through her husband’s employer is prohibitively expensive and she has been forced to pay the exorbitant costs of a private individual plan with a dependent, bringing the family’s gross earnings down significantly. She can only afford the monthly premiums for high deductible plans, which means that she is also paying out-of-pocket for a large percentage of her medical care. Because of these costs, she is forgoing medical treatment for her conditions at this time.

Sarah said, “it breaks my heart that I have to choose between my family and my finances. I left a well-paying full-time job so that I would be able to raise our children myself instead of using day care. I was worried about losing my health coverage through my employer. However, I knew a number of single, young professionals (who have a higher salary than my current combined household income) who qualified for tax credits on their health insurance. So, I thought I would be able to find more affordable coverage for myself when I left my job. When I found out I wasn’t eligible, it felt like I was being punished for choosing to have a family.”

The cost of health insurance shouldn’t prevent people from accessing care, and it certainly shouldn’t prevent them from having a family.

Allowing families, like Sarah’s, to access premium support would go a long way to improving not just their health, but their overall quality of life.

That’s why it’s so important that this proposed rule be approved and implemented before the next open enrollment period in November. Swift action would then allow families newly eligible for tax credits to enter ACA marketplaces beginning in 2023.

Additionally, this new proposed rule makes an important clarification that employer-sponsored family coverage is, itself, subject to the minimum value standard and must be independently assessed for compliance. This approach is wholly consistent with the ACA’s text and purpose, ensuring that a family offered low — or below minimum — value coverage is not prevented from accessing premium tax credits simply because this low value coverage is also cheap.

Families need affordable coverage, of course. But they also need quality coverage that will meet their needs. No one likes paying for nothing, and no one should have to pay large percentages of their income for health insurance coverage that simply doesn’t cut it when a family needs care.

Quick and decisive final adoption of this proposed rule will give over five million people an opportunity their families have likely never had: a chance to enroll in affordable, subsidized marketplace health coverage that meets the needs of their families.

For that reason, Community Catalyst strongly supports this proposed rule and its goal of reducing the costs of care that families in every community face. We look forward to its swift adoption and to continuing our shared work to help all families access the resources and support they need to thrive.

Thank you.