This system rewards people who don’t marry, don’t work and don’t take care of their own children. It punishes people who do marry, work hard and take care of their own children.
Under Obamacare, the federal government orders all Americans to have health insurance. Households with adjusted gross incomes of less than 100 percent of the Federal Poverty Level (FPL) will go on government-run Medicaid, and households with adjusted gross incomes between 100 percent and 400 percent of FPL can qualify for a subsidy to help them buy their government-mandated health insurance — provided they do not qualify for Medicaid in their state and their employer does not offer them coverage.
As explained by the Congressional Research Service, the subsidy — which is technically a refundable tax credit — works as a cap on the percentage of income the household can be made to pay in annual health insurance premiums if they buy a “Silver” plan on their state exchange. (The exchanges will sell Platinum, Gold, Silver and Bronze plans, with Bronze being the cheapest and Platinum the most expensive.) If someone with a subsidy buys a more expensive plan, they must pay the additional cost out of their own pocket.
For a household earning an adjusted gross income between 100 percent and 133 percent of FPL, Obamacare caps their health insurance premiums at 2 percent of annual income. That cap incrementally increases as a household’s income increases, peaking at 9.5 percent for households earning between 300 percent and 400 percent of FPL.
When a household gets the subsidy, the federal government pays their insurance company directly for any amount the household owes that exceeds their percentage-of-income cap.
No one getting a subsidy ever pays more than 9.5 percent of their income in premiums.
But if a household earns as little as one dollar over 400 percent of FPL, the household no longer qualifies for a subsidy, and there is no longer a cap on the percentage of income they can be forced to pay for health insurance.
Married couples seeking the subsidy are required to file joint tax returns and whether their premiums are capped or not is determined by the couple’s combined income.
The law thus imposes a steep penalty on Americans who live in traditional families.
Take the hypothetical twin sisters Lucille and Linda, who live across the street from each other and who will buy health insurance on the same state exchange.
They are 50 years old, and their husbands have abandoned and divorced them and their three children. Each earns $47,100 per year, which is 200 percent of FPL for a family of four.
The Kaiser Family Foundation maintains an online “Subsidy Calculator” that “illustrates health insurance premiums and subsidies for people purchasing insurance on their own” in the exchanges.
This calculator estimates a Silver plan for a family of four headed by a single mom like Lucille or Linda would cost $11,140 in annual premiums. But because their income is just 200 percent of FPL, the government will cap the premiums Lucille or Linda would pay at 6.3 percent of their income. Thus, they would each pay $2,967 per year in premiums, and the government would make up the difference by paying $8,172 directly to their insurance companies.
But then Lucille falls in love with 56-year-old Bill. They decide to marry. Bill’s adjusted gross income is $63,300, which is more than 400 percent of FPL for a single person. Before marrying Lucille, Bill bought a Silver plan on the state exchange for what the Kaiser Family Foundation calculator estimates was $7,041.
Under Obamacare, as unmarried people, Lucinda and Bill pay combined health insurance premiums of $10,008 per year and receive total subsidies of $8,172 per year.
After their wedding, Bill and Lucille settle down in one home with Lucille’s three kids. They are now a five-person family with an adjusted gross income of $110,400 — just a bit more than 400 percent of FPL for a family of five.
Now, as a married couple, they look into buying a Silver family plan on the state exchange. The calculator says their new annual premiums will be $18,181 — and because Bill and Lucille and the three children are too wealthy to qualify for the Obamacare premium cap, they must pay every penny of the $18,181 out of their own pockets.
As a penalty for marrying, Bill and Lucille have lost Lucille’s $8,172 subsidy and must pay $8,173 more in annual health insurance premiums than the combined $10,008 they paid before they were married. Their federally mandated health insurance plan costs 16.5 percent of their family income.
Linda, after seeing the plight of Lucille and Bill, falls in love with Bill’s twin brother, Jack, who like Bill, earns $63,300 per year. Will she marry him?
By Terence P. Jeffrey — editor-in-chief of CNSnews.com