On April 5, 2022, the Internal Revenue Service (IRS) issued a proposed rule to revise the current interpretation on how eligibility for premium tax credits is determined for family members of employees offered employer-sponsored health coverage. If finalized, the rule – formally titled “Affordability of Employer Coverage for Family Members of Employees” – would fix what has become known as the Affordable Care Act’s (ACA) “family glitch” by extending premium tax credits to potentially millions of people who are currently ineligible for subsidies on the ACA marketplaces.

The proposed rule closing the “family glitch” would not impact the ACA employer shared responsibility requirements (i.e., employer mandate). Applicable large employers (with 50 or more full-time and full-time equivalent employees) must continue to offer minimum essential coverage (MEC) that is affordable and meets minimum value to full-time employees and their dependents. The proposed rule does not change the affordability and minimum value tests for full-time employees – nor their associated employer mandate penalties (under IRC Section 4980H(b)) – maintaining their basis on employee-only, not family, coverage. Business Group on Health summarized the proposed rule, including an overview of the employer implications, in a recent article.