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<H1 class=articleHeadline itemprop="headline"><NYT_HEADLINE type=" "
version="1.0">Federal Rule Limits Aid to Families Who Can’t Afford Employers’
Health Coverage</NYT_HEADLINE></H1><NYT_BYLINE>
<H6 class=byline><FONT size=4>By <SPAN itemprop="author"
itemid="http://topics.nytimes.com/top/reference/timestopics/people/p/robert_pear/index.html"
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title="More Articles by ROBERT PEAR"
href="http://topics.nytimes.com/top/reference/timestopics/people/p/robert_pear/index.html"
rel=author><SPAN itemprop="name">ROBERT
PEAR</SPAN></A></SPAN></FONT></H6></NYT_BYLINE>
<H6 class=dateline><FONT size=4>Published: January 30, 2013 </FONT></H6>
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<P itemprop="articleBody"><FONT size=4>WASHINGTON — The Obama administration
adopted a strict definition of affordable </FONT><A class=meta-classifier
title="Recent and archival health news about health insurance and managed care."
href="http://topics.nytimes.com/top/news/health/diseasesconditionsandhealthtopics/health_insurance_and_managed_care/index.html?inline=nyt-classifier"><FONT
size=4>health insurance</FONT></A><FONT size=4> on Wednesday that will deny
federal financial assistance to millions of Americans with modest incomes who
cannot afford family coverage offered by employers. </FONT></P>
<P itemprop="articleBody"><FONT size=4>In deciding whether an employer’s health
plan is affordable, the </FONT><A class=meta-org
title="More articles about the Internal Revenue Service."
href="http://topics.nytimes.com/top/reference/timestopics/organizations/i/internal_revenue_service/index.html?inline=nyt-org"><FONT
size=4>Internal Revenue Service</FONT></A><FONT size=4> said it would look at
the cost of coverage only for an individual employee, not for a family. Family
coverage might be prohibitively expensive, but federal subsidies would not be
available to help buy insurance for children in the family. </FONT></P>
<P itemprop="articleBody"><FONT size=4>The policy decision came in a final
regulation interpreting ambiguous language in the 2010 </FONT><A
class=meta-classifier title="Recent and archival news about healthcare reform."
href="http://topics.nytimes.com/top/news/health/diseasesconditionsandhealthtopics/health_insurance_and_managed_care/health_care_reform/index.html?inline=nyt-classifier"><FONT
size=4>health care law</FONT></A><FONT size=4>. </FONT></P>
<P itemprop="articleBody"><FONT size=4>Under the law, most Americans will be
required to have health insurance starting next year. Low- and middle-income
people can get tax credits to help them pay premiums, unless they have access to
affordable coverage from an employer. </FONT></P>
<P itemprop="articleBody"><FONT size=4>The law 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. said this calculation
should be based solely on the cost of individual coverage, what the worker would
pay for “self-only coverage.” </FONT></P>
<P itemprop="articleBody"><FONT size=4>“This is bad news for kids,” said Jocelyn
A. Guyer, an executive director of the Center for Children and Families at
Georgetown University. “We can see kids falling through the cracks. They will
lack access to affordable employer-based family coverage and still be locked out
of tax credits to help them buy coverage for their kids in the marketplaces, or
exchanges, being established in every state.” </FONT></P>
<P itemprop="articleBody"><FONT size=4>In 2012, according to an annual survey by
the Kaiser Family Foundation, total premiums for employer-sponsored health
insurance averaged $5,615 a year for single coverage and $15,745 for family
coverage. The employee’s share of the premium averaged $951 for individual
coverage and more than four times as much, $4,316, for family coverage.
</FONT></P>
<P itemprop="articleBody"><FONT size=4>Under the I.R.S. rule, such costs would
be considered affordable for a family making $35,000 a year, even though the
family would have to spend 12 percent of its income for full coverage under the
employer’s plan. </FONT></P>
<P itemprop="articleBody"><FONT size=4>The tax agency proposed this approach in
August 2011 and made no change in the definition of “affordable coverage”
despite protests from advocates for children and low-income people and many
employers. Employers did not want to be required to pay for coverage of
employees’ dependents. But they said that family members should have access to
subsidies so they could buy insurance on their own. </FONT></P>
<P itemprop="articleBody"><FONT size=4>However, that would have increased costs
to the government, which would have been required to spend more on subsidies.
</FONT></P>
<P itemprop="articleBody"><FONT size=4>Paul W. Dennett, senior vice president of
the American Benefits Council, which represents many Fortune 500 companies,
said: “Individuals who do not have affordable family coverage should be eligible
for premium tax credits in the exchange. The final rule does not provide that.”
</FONT></P>
<P itemprop="articleBody"><FONT size=4>Under the law, people who go without
insurance will generally be subject to tax penalties. In a separate proposed
regulation issued on Wednesday, the Internal Revenue Service said that the
uninsured children and spouse of an employee would be exempt from the penalties
if the cost of coverage for the entire family under an employer’s plan was more
than 8 percent of household income. </FONT></P>
<P itemprop="articleBody"><FONT size=4>Bruce Lesley, the president of First
Focus, a child advocacy group, said: “The administration recognizes that the
cost of family coverage will be unaffordable for many families. They will not
have to pay the penalty. But that will not be much of a consolation to families
who cannot get health insurance for their kids.” </FONT></P>
<P itemprop="articleBody"><FONT size=4>The 2010 health care law extended
</FONT><A class=meta-classifier
title="Recent and archival health news about Medicaid."
href="http://topics.nytimes.com/top/news/health/diseasesconditionsandhealthtopics/medicaid/index.html?inline=nyt-classifier"><FONT
size=4>Medicaid</FONT></A><FONT size=4> to many childless adults and others who
were previously ineligible. The Supreme Court said the expansion of Medicaid was
an option for states, not a requirement as Congress had intended. </FONT></P>
<P itemprop="articleBody"><A class=meta-per
title="More articles about Kathleen Sebelius."
href="http://topics.nytimes.com/top/reference/timestopics/people/s/kathleen_sebelius/index.html?inline=nyt-per"><FONT
size=4>Kathleen Sebelius</FONT></A><FONT size=4>, the secretary of health and
human services, said Wednesday that she wanted to use her discretion to prevent
the imposition of tax penalties on certain uninsured low-income people in states
that choose not to expand Medicaid. </FONT></P>
<P itemprop="articleBody"><FONT size=4>A rule proposed by her department would
guarantee an exemption from the penalties for anyone found ineligible for
Medicaid solely because of a state’s decision not to expand the program. The
administration said this was “an appropriate use of the hardship exemption.”
</FONT></P>
<P itemprop="articleBody"><FONT size=4>About 20 states are expected to expand
Medicaid; governors in other states are opposed or uncommitted. Many illegal
immigrants, prisoners and members of certain religious groups opposed to the
acceptance of insurance benefits will also be exempt from penalties if they
forgo coverage, the administration said. </FONT></P>
<P itemprop="articleBody"><FONT size=4>The Congressional Budget Office predicts
that 30 million people will be uninsured in 2016 and that 6 million of them will
pay penalties. </FONT></P></NYT_TEXT></DIV></FONT></DIV></BODY></HTML>