What's in a Contribution?: How the IRS's Misinterpretation of the ACA Precludes Millions of Families from Accessing Affordable Health Coverage

• Author: Patrick D. O'Neil
• Position: Georgetown University Law Center, J.D. expected 2022; Clark University, M.P.A. 2012; Clark University, B.A. 2011
• Pages: 953-972

NOTE

What’s in a Contribution?: How the IRS’s

Misinterpretation of the ACA Precludes Millions of

Families from Accessing Affordable Health

Coverage

PATRICK D. O’NEIL*

This Note is about the “family glitch” in the Affordable Care Act

(ACA), focusing on the regulatory interpretation of the statutory afford-

ability requirements. Under the ACA, individuals are not eligible for pre-

mium tax credits to purchase health insurance coverage if they receive

an offer of affordable health insurance coverage from an employer.

However, the Internal Revenue Service (IRS) determined that an offer of

employer-sponsored insurance that includes dependent coverage should

preclude dependents from receiving premium tax credits if the employ-

ee’s self-only coverage is affordable. This makes entire families ineligible

to buy subsidized insurance on the ACA Marketplace if any individual in

the family is eligible for affordable self-only coverage, even if the premi-

ums for family coverage are prohibitively expensive. This Note demon-

strates that regardless of whether one interprets the statute using a

textualist approach, a legislative intent approach, or an objective pur-

pose approach, the statute requires that affordability be determined by

the employee’s full contribution for family coverage rather than self-only

coverage. In other words, the IRS’s interpretation is without support

under the three dominant theories of modern statutory interpretation.

This Note then assesses varying methods of fixing the family glitch and

how they may be affected by what the future has in store for the ACA.

TABLE OF CONTENTS

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 954

* Georgetown University Law Center, J.D. expected 2022; Clark University, M.P.A. 2012; Clark

University, B.A. 2011. © 2022, Patrick D. O’Neil. Thank you to Professors Lawrence O. Gostin and

Jeffrey S. Crowley for helping me iron out my topic and guiding me through the initial drafts. Thanks to

Professor Katie Keith for her feedback and sharing her expertise in the subject matter. For their tireless

work and helpful contributions, I would like to thank all of the editors of The Georgetown Law Journal—

particularly Helen Mun, Wynne Leahy, Clare Saunders, Darren James, Nicholas Yacoubian, and Agnes Lee.

Most importantly, I would like to thank Hannah Dorr O’Neil for making me aware of the family glitch, being

my sounding board as I developed the topic, proofreading drafts, and tolerating the amount of time I spent

writing this.

953

I. WHAT IS THE FAMILY GLITCH? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 956

A. HOW THE FAMILY GLITCH ORIGINATED . . . . . . . . . . . . . . . . . . . . . . . 956

B. HOW THE FAMILY GLITCH IMPEDES ACCESS TO AFFORDABLE

HEALTH INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 957

C. ADMINISTRATIVE LAW PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 957

II. HOW SHOULD THE ACA’S DEPENDENT COVERAGE PROVISIONS BE

INTERPRETED? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 959

A. THE TEXTUALIST APPROACH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 959

B. THE LEGISLATIVE INTENT APPROACH . . . . . . . . . . . . . . . . . . . . . . . . . 964

C. THE PURPOSIVIST APPROACH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 967

III. WHAT CAN BE DONE TO FIX THE FAMILY GLITCH? . . . . . . . . . . . . . . . 968

A. THE IRS COULD USE ITS STATUTORY AUTHORITY TO PROMULGATE A

REVISED RULE .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 969

B. CONGRESS COULD PASS LEGISLATION TO CLARIFY THE STATUTE . . . 969

C. STATES COULD ACT INDIVIDUALLY . . . . . . . . . . . . . . . . . . . . . . . . . . 970

IV. THE FUTURE OF THE ACA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 971

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 972

INTRODUCTION

You ask me for a contribution

Well, you know

We’re doing what we can

–The Beatles

1

One of the signature provisions of the Affordable Care Act (ACA) provides

subsidies through premium tax credits to individuals and families to buy private

health insurance on the Marketplace set up by the law.

2

The main focus of the

subsidies was to make coverage accessible to people who did not have access to

health insurance through their employers.

3

People with access to affordable

employer-sponsored coverage are not eligible for ACA subsidies.

4

See Katie Keith, Fixing the ACA’s Family Glitch, HEALTH AFFS. (May 20, 2021), https://www.

healthaffairs.org/do/10.1377/hblog20210520.564880/full/ [https://perma.cc/HW8G-JMYM].

Employer-

1. THE BEATLES, Revolution 1, on THE BEATLES (Apple Records 1968).

2. See I.R.C. § 36B(b).

3. See id. § 36B(c)(2)(C).

4.

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