Understanding Insurance Options for Newborns: Navigating the ACA and Employer Plans

Introduction

When expecting a baby, ensuring their healthcare coverage is a crucial concern. However, navigating the complex world of health insurance can be daunting. This blog will explore specific topics related to ACA insurance for newborns, inspired by a post where a parent faced challenges insuring their newly born child.

Understanding the ACA’s Family Glitch

The ACA (Affordable Care Act) introduced the “family glitch,” which impacted families with employer-provided health insurance that was not considered affordable. This meant that even if a family did not qualify for Medicaid or CHIP (Children’s Health Insurance Program), they could not access ACA subsidies to purchase coverage on the Marketplace.

Changes to the Family Glitch

The American Rescue Plan Act of 2021 made significant changes to the family glitch. For 2023 and beyond, families with employer-sponsored insurance that is not affordable can now qualify for ACA subsidies. This means they can enroll in a Marketplace plan and receive financial assistance to lower their monthly premiums. The subsidy amount depends on the family’s income and the cost of the Marketplace plan selected.

Affordability of Employer-Sponsored Insurance

To determine if your employer-sponsored insurance is affordable, you need to calculate the Employer-Sponsored Insurance Affordability Percentage (ESIAP). ESIAP is the percentage of your household income that would be used to pay for your family’s employer-sponsored health insurance. If your ESIAP is greater than 9.12%, your employer-sponsored plan is considered unaffordable, and you may be eligible for ACA subsidies.

Marketplace Insurance for Newborns

If you do not qualify for employer-sponsored insurance or your employer’s plan is unaffordable, you can purchase a plan on the ACA Marketplace. You can enroll in a Marketplace plan during open enrollment periods or during a special enrollment period triggered by a qualifying life event, such as having a baby.

When enrolling your newborn in a Marketplace plan, you will need to provide the baby’s birth certificate or other proof of their identity. The coverage will be effective as of the baby’s date of birth.

Switching from Employer-Sponsored Insurance to ACA Insurance

If you initially add your newborn to your employer-sponsored plan but later decide to switch to an ACA plan, you can do so during a special enrollment period. This period extends for 60 days after the baby’s birth or adoption.

Important Considerations

NICU Coverage: If your baby requires NICU care at birth, it is important to ensure immediate coverage. You can add the baby to your employer-sponsored plan or enroll them in a Marketplace plan. The plan will be retroactive to the date of the baby’s birth.
Specific State Regulations: Some states, like Oregon, have their own CHIP programs with different income eligibility limits. It is important to check with your state’s Medicaid agency to determine if you qualify for CHIP.
HSA Funds: Dependent care means childcare expenses, not medical expenses for dependents. If you add your newborn to your husband’s high-deductible plan, he cannot use his HSA to cover the baby’s medical expenses. Instead, you can contribute to a dependent care FSA (Flexible Spending Account) to cover childcare costs.

Conclusion

Ensuring your newborn’s healthcare coverage can be complex. By understanding the ACA, affordability guidelines, and your options for employer-sponsored or Marketplace insurance, you can make informed decisions to protect your child’s health and financial well-being. If you encounter any challenges, do not hesitate to seek guidance from our licensed agents who can assist you with the application process and answer your questions.