Millions of Americans will be priced out of health insurance under President Barack Obama's healthcare overhaul because of a glitch in the law that adversely affects people with modest incomes who cannot afford family coverage offered by their employers, a leading healthcare advocacy group said on Tuesday.
Tax credits are a key component of the law and the White House has said the credits, averaging about $4,000 apiece, will help about 18 million individuals and families pay for health insurance once the Affordable Care Act takes full effect, beginning in January 2014.
The tax credits are geared toward low and middle-income Americans who do not have access to affordable health insurance coverage through an employer. The law specifies that employer-sponsored insurance is affordable so long as a worker's share of the premium does not exceed 9.5 percent of the worker's household income.
In its rule making, or final interpretation of the law, the IRS said affordability should be based strictly on individual coverage costs, however.
That means that, even if family coverage through an employer-based plan far exceeds the 9.5 percent cutoff, workers would not be eligible for the tax credits to help buy insurance for children or non-working dependents.