Women make up a large majority of the low wage workforce — many without access to affordable health insurance . The Affordable Care Act was supposed to change that. However, for millions of women and their families, something called the “family glitch” puts help with insurance premiums out of reach. But it really isn’t a glitch  because the IRS could have interpreted the law differently.

If you have access to health insurance coverage outside the health insurance marketplace (if you have coverage through your employer or a public insurance program such as Medicaid), then you are not eligible for the health insurance tax credits. But there is a special rule for employment based coverage – if your employer offers coverage that is unaffordable or doesn’t provide enough coverage, then you can say no to your employer coverage and enroll in the marketplace with a health insurance tax credit (if you’re otherwise eligible for the tax credit).

What does unaffordable mean?

The ACA defines unaffordable as coverage that costs you, as the employee, more than 9.5 percent of your household income. Pretty straight forward. But what if your spouse is eligible for coverage through your employer?

Aye, there’s the “glitch.”

The IRS uses an affordability test for the entire family that is always based on the cost to the family of covering the employee alone. They don’t look at how much you have to pay to add your spouse or your kid to your coverage. Whether the cost of covering your family is considered affordable is based on the cost of covering just you.

Let’s work through an example.

Imagine you and your spouse have an annual income of $47,700. It costs $100 a month, or $1,200 a year, for you to buy health insurance through your employer. That’s about 2.5% of your income.  It costs another $500 a month to add your spouse –— over 12.5% of your income. According to the IRS test, you and your spouse have affordable coverage because your coverage is only 2.5% of your income. It doesn’t matter how expensive your spouse’s coverage is – it could cost $2,000 a month and your family coverage would still be considered affordable.

Right now, that’s the test being used for millions of families. Women like Bambi Devor are left without access to affordable health insurance because they are eligible for insurance through a spouse’s employer. That can change. The IRS can update their regulations on the premium tax credit and change the family affordability test to be based on the actual cost of family coverage. Senator Franken recently introduced The Family Coverage Act [PDF] that would get rid of the “family glitch.” Perhaps by the time open enrollment comes around in November, the “family glitch” will be a thing of the past.

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