Hi, Katie Keith had a good post on the Health Affairs blog talking about how this will work. Scroll down to the section titled "Affordability Test For Family Coverage":
https://www.healthaffairs.org/do/10.1377/forefront.20220405.571745Here's the excerpt below. Hope this helps!
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Affordability Test For Family Coverage
Citing President Biden’s executive order, the IRS reexamined and has preliminary determined that there should be a separate affordability test for employees and family members. Under the current interpretation, the test is the same: employees and family members are equally barred based on whether the employee has an offer of affordable employee-only coverage. The proposed rule would adopt a separate test for family members such that affordability would be based on the employee’s contribution towards family coverage.
Specifically, an offer of job-based coverage would be affordable for family members if the portion of the annual premium that an employee had to pay for family coverage—i.e., the employee’s required contribution towards family coverage—were less than 9.5 percent of household income. The marketplace would assess 1) whether the employee has an offer of affordable employee-only coverage; 2) whether the family members have an offer of affordable family coverage; and 3) whether any of those family members have an offer of affordable coverage from another employer.
For these calculations, the relevant family members would be those in the employee’s tax family, meaning a spouse filing jointly or a dependent. Other family members—such as adult children up to age 26—might be offered job-based coverage. But, if they were no longer on the employee’s tax return, they would not be considered in the affordability test for family coverage. This is true regardless of whether that person enrolls in the coverage or not. So, enrollment of other individuals, even if it made the family coverage more expensive, would not be considered under the affordability test for family members. This issue is illustrated in example 4 under the proposed rule.
Family coverage would be defined as “all employer plans that cover any related individual other than the employee.” If an individual were offered coverage from multiple employers (whether as an employee or dependent), only one of those offers would need to be affordable to bar access to premium tax credits. An offer of affordable family coverage from any employer would make family members ineligible for premium tax credits. This is illustrated in examples 5 and 6.
The proposed rule would not affect the affordability test for employees, which remains unchanged. Employees would still be barred from accessing marketplace subsidies if their job offers affordable employee-only coverage, but their family members would no longer be.
The IRS would also make a conforming change regarding the “part-year period rule” which governs when an employee has a job for less than the full calendar year. This would extend the separate affordability test for employees and family members to those with only partial-year coverage.
