Changes to the health insurance Arkansas provides to its educators and state employees are being debated by the legislature. The state is considering stopping contributions to part-time employees’ health coverage and “transferring” them to the Affordable Care Act’s Marketplace or Private Option coverage. However, many children – mostly those in married-family households – would lose quality, affordable health coverage because of a glitch in the federal law. Often referred to as the “family glitch,” the issue could leave the children of part-time employees without an affordable option for health care coverage. Health coverage is an important part of family economic security, and it helps ensure that children stay healthy and in school so they can succeed.
This New York Times piece covers the “family glitch” issue well: The Affordable Care Act “specifies that employer-sponsored insurance is not affordable if a worker’s share of the premium is more than 9.5 percent of the worker’s household income. The I.R.S. says this calculation should be based solely on the cost of individual coverage for the employee, which is what the worker would pay for “self-only coverage.” This leaves employees who have “affordable” coverage options for themselves, but very expensive spouse or dependent coverage offers, in a tough situation. The family members will NOT be eligible for the subsidies that help make Marketplace plans affordable. They can either pay FULL Marketplace prices or buy coverage elsewhere for full price. On average, family plans can cost an employee three to four times the cost of individual plans.
What does this mean for part-time teachers and state employees?
Here’s a scenario for a family of 4 (mom, dad, and two kids) earning $50,000 per year.
Let’s say mom is a part time (28-hour) classroom aide earning $20,000, and dad works at the local mechanic shop earning $30,000. Dad can afford his own coverage at $2,000 per year – it costs less than 9.5% of the family’s income. However, his employer’s family plan costs $7,500/year, or 15% of their family income. In this scenario, since the mechanic OFFERS a family plan, mom and the kids cannot get a subsidy in the Marketplace. Currently, the mom and kids have affordable coverage through the state’s coverage offer for part-time workers. If Arkansas ends coverage for part-time teachers, the family will lose access to quality, affordable care. The family members must pay full price for either the dad’s employer plan or a Marketplace plan rather than access the heavily subsidized plans that would have been available to other families at their income level.
What are our concerns?
Thorough analysis should be conducted to identify how many people will not have access to “affordable” coverage in the Marketplace because of the family glitch if the state plan for part-time workers is dropped. The state needs to know how many people could remain uninsured if the part-time plan ends. At minimum, the issue must be raised as a concern during discussion of this issue and communicated very clearly to families who could be affected.
- How many people would be affected? Obtaining the number of children or adults who’d lose coverage completely is difficult. Researchers would have to determine how many state employees/teachers have “affordable” offers of coverage through a spouse’s plan, and they would need to know the full family income (not just income for the state employee, but also other sources of income), which is hard to obtain for such an analysis.
- Can this be fixed at the federal level? We would love to see this family glitch issue resolved at the federal level and have advocated doing so with the help of our national partners. Though the Treasury Department, the federal agency responsible for enforcing this part of the law, could change this, it has not done so. First Focus and the Georgetown Center for Children and Families have blogged recently about a possible solution proposed by Senator Al Franken (MN) that Congress could adopt.
- There is a safety net, but only for lower-income families. Children in families earning less than 216% FPL would have a safety net in ARKids First. Adults in families earning less than 138% FPL would have a safety net in the Private Option because the adults could enroll in a private plan paid for by Arkansas Medicaid. The hard-working, middle income families who earn just above these limits, like the family described above, would be the ones affected if part-time employees were dropped from the state coverage.
This could impact children in another way. Health coverage is an important benefit employers use to attract and retain talented employees. If the state stops offering affordable coverage to part-time educators, it could lose some of those talented employees it needs to help kids succeed. In addition, educators who lose employer coverage and can’t find affordable coverage for their children might miss work more often as their children are unable to get the health care they need to stay healthy. Arkansas’ policymakers need to keep their eyes on our state’s future and not take away quality, affordable coverage from hard-working families. Our children need quality, affordable health coverage to reach their full potential.