The scene seems straight out of a movie: A young couple stands solemnly before the judge. They’ve been married just a year, and they’re here – for the second time – to ask for a divorce.

A month ago, the same judge gave them a hard time, then said no. He still thinks there is something fishy about their request.

And he’s right. The young people want to be together. But the only way they can afford that is to legally split up.

It isn’t about love. It’s not about employment or family pressure. It’s about health care.

Liana Wolk and Owen Marshall are caught in an Affordable Care Act loophole. 

Health policy wonks call it the “family glitch,” and every year it keeps an estimated 5 million people ineligible for federally subsidized health insurance, mostly women and kids. This April, the Biden administration proposed a rule change that would allow people stuck in the “glitch” to qualify for the subsidies. 

The family glitch shocked Wolk and Marshall. The couple live in Portland, Maine, where Marshall is a musician. Shortly after their 2019 wedding, Wolk landed a full-time job teaching English as a second language. 

She was thrilled that it came with health insurance. But when Wolk called to sign them up, she was told it would cost more than $16,000 a year in premiums. That was at least 20 percent of their income.   

The two decided Wolk would enroll in an individual plan, running $1,500 a year in premiums, and Marshall would stay on the ACA exchange.

“I was like, phew, this safety net’s here. I can just go back to this,” Marshall said. 

When Wolk called heathcare.gov to re-enroll her husband in an ACA plan, the operator said he no longer qualified for federal assistance. 

Wolk dug into the research. Then one night, three months into their marriage, the puzzle pieces started coming together. 

“Oh, my God, this is what is going on,” Wolk recalled saying. “We fit into this category.”  

That category was the family glitch. 

Here’s how the loophole works.

When Wolk was offered an individual plan through work that cost less than 9.6 percent of their family income, that automatically disqualified her spouse from federal subsidies no matter the price of a family plan. Going from Obamacare with subsidies to Obamacare without subsidies, Marshall’s premiums jumped from $40 a month to more than $400. 

“We’re just blowing through this money for no reason other than the stupid piece of paper that says we’re married,” Marshall said. “It was just so frustrating and demoralizing and dehumanizing.”

Even their skeptical judge agreed and granted them a divorce. 

“We got home, I immediately called healthcare.gov and reported I had a divorce, and my plan dropped back down to $40. Immediately,” Marshall said.

Some of the 5 million people caught in this predicament have decided to go without health insurance. Others have gone uninsured but purchased plans for their kids. 

Katie Keith has tracked the family glitch saga for years and talked with the Biden administration about fixing the glitch. She is the director of the Health Policy and the Law Initiative at the O’Neill Institute for National and Global Health Law at Georgetown University Law Center.  

“The Obama administration’s IRS said, we think our hands are tied. Whatever the employee is offered, that’s going to extend to the whole family. We’re not going to look at the cost of family coverage at all when we determine whether you’re eligible,” Keith explained. 

Politics played a role. A more generous policy would increase the ACA’s price tag. Plus the administration wanted to avoid taking any step that seemed to undermine employer-based coverage. 

If the Biden administration’s new rule is finalized, family members could get federal subsidies to buy ACA coverage if their work-based family plan costs more than 9.6 percent of their family income.

The White House estimates up to 1 million people would get cheaper coverage and 200,000 would get newly covered.

Keith lists three reasons why so few people currently stuck in the glitch would benefit: It could actually be cheaper to stick with a family plan and not pay two premiums or two deductibles; some families won’t want to deal with the hassle of having different family members on different plans; and some people might not even know this is an option.

It’s too early to know who stands to benefit most, but multiple estimates suggest lower-income workers; people working in agriculture, mining and the service industries; and people who work for companies with fewer than 200 employees could have the most to gain.

Researchers estimate a family of four making $53,000 a year could save anywhere from around $2,300 to $4,100 in premiums a year, depending in part on whether Congress extends expanded ACA subsidies from the American Rescue Plan Act.

Critics point to the proposal’s price tag, noting a 2020 Congressional Budget Office estimate that extra subsidies would cost $45 billion over 10 years and replace private spending on health insurance with government spending. 

“I think there are some people who would want the Biden administration to go even further and allow the employee to come into the marketplace with their family,” Keith said. “At the same time, I think this is the most significant thing that the Biden administration could do on its own to extend affordable coverage.”

Final comments on the proposed rule are due June 6. If the Biden administration finalizes the rule change, it would go into effect for the 2023 plan year.  

As for Liana Wolk and Owen Marshall, they are still divorced, but things are going well. They’re expecting their first child in July. 

They’re happy there are efforts to fix the glitch so other people won’t have to do what they did. Wolk said maybe they’ll get married again some day. Or maybe they won’t.

Tradeoffs’ coverage of health care costs is supported, in part, by Arnold Ventures and West Health.