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  • Love Conquers All…Except Obamacare

    Thanks to Obamacare, Americans looking to tie the knot may find that it’s a lot cheaper to stay single.

    Last week, the House Oversight Committee released a report and held a hearing to unpack its subject matter: a hidden penalty on marriage created by the structure of the Patient Protection and Affordable Care Act’s (PPACA) tax subsidies for low- and middle-income Americans to purchase health insurance.

    Obamacare’s new tax subsidies are linked to the federal poverty level, discriminating against married couples by failing to increase proportionally with household size. Heritage research has shown how two individuals could qualify for more financial assistance to purchase health insurance individually than as a couple, leading many to forego marriage altogether. The difference could amount to several thousand dollars.

    The Oversight Committee report reveals just how big the problem may be:

    Nearly half of the beneficiaries of the Obamacare tax credit will be single individuals without any dependent children and most of the other beneficiaries will be single parents.… Married couples will receive only 14 percent of PPACA’s tax credits. At most, only two million married couples (out of nearly 60 million married couples) are projected to benefit from the health insurance tax credit in any year through 2021.

    Yet another glitch in the legislation exacerbates the marriage penalty. The subsidies to purchase insurance will be available only to individuals and families who do not have an offer of affordable, employer-sponsored coverage. But “affordability” is determined by the cost of a self-only policy, not family coverage.

    So a worker may be ineligible to receive a subsidy if he could afford his employer’s self-only coverage, even though he could not afford coverage for his family. If he and his wife stay married, they will receive no assistance to purchase coverage for their whole family, but if they divorce, the worker could carry his employer’s coverage while his wife and children receive taxpayer-subsidized coverage in the exchange. Take the example given in the committee report:

    Assume a 40-year old couple with two children: the husband makes $40,000 per year and the wife makes $30,000 per year. The wife’s employer does not offer coverage through work but the husband’s does. The husband’s company provides only self-only coverage and the employee only pays a small percentage of the total premium. This company would satisfy the criteria of the PPACA’s employer mandate provision even though they don’t offer family coverage. Since the husband has access to [employer sponsored insurance], the rest of the family is not eligible for the PPACA tax credits. The family would be faced with the decision of buying private coverage at an annual cost exceeding $10,000 for the mom and kids (unless the kids are covered by the state’s CHIP) or foregoing insurance and being forced to pay the tax penalty instituted by the health care law for individuals who lack health insurance. If the father and mother are unmarried, however, the woman and the two children would qualify for a tax credit of $10,895 to use to purchase a policy that would cost about $12,130.57. Because of the PPACA, marriage costs this family $10,895.

    The flawed structure of the Obamacare subsidy program encourages employers and individuals to game the system in order to become eligible, which will drive the cost to taxpayers sky high.

    In addition to penalizing marriage, the subsidies create other perverse incentives for employers and their workers. As a recent Heritage analysis explains, the program will increase deficit spending, decrease the number of Americans who pay federal income tax, discourage productivity, and harm the economy.

    Posted in Obamacare [slideshow_deploy]

    13 Responses to Love Conquers All…Except Obamacare

    1. Bobbie says:

      Please get rid of this trap! where is the "quality of care" regarding obamacare? there isn't any! Please repeal!

    2. CraigJCasey says:

      Now we've seen what's actually in Obamacare, after they voted it into law, we are definitely not loving it. Another example of government gone wild. Obamacare is but a symptom, of legislators passing tens of thousands of Laws. A good start is repealing Obamacare. http://www.slideshare.net/CraigJCasey/obamacare-and-cobr...

    3. marcustullius says:

      Missing from this discussion is the fact that today’s working families have multiple wage earners, often with part-time employment. The burden for an employer to provide family coverage for a single wage earner is overwhelming and now (under ACA) if they provide coverage for their employee, the family is punished! How tragic.
      There is a solution being offered for employers, part-time workers, and working families. http://healthcare-economist.com/2010/09/15/health… explains how this works. A group called LyfeBank has figured a way for family members or part time workers to pool money from each job to buy health insurance within the current tax structure._

    4. Ryan says:

      Debunking Part 1:

      The alarmist quote by the oversight committee in this piece simply misstates the law. There is no marriage penalty as described in this piece. For anyone interested in reality:

      The quote, in relevant part, states: "This company would satisfy the criteria of the PPACA’s employer mandate provision even though they don’t offer family coverage. Since the husband has access to [employer sponsored insurance], the rest of the family is not eligible for the PPACA tax credits."

      As explained in the next two parts, neither of these two sentences are true.

    5. Ryan says:

      Debunking (Part 2)

      As for the first sentence in the quote regarding employer mandates, beginning in 2014, a large employer must provide "minimum essential coverage" (MEC), not just any coverage, to meet the penalty. (See PPACA 1513(a)). In turn, MEC, as far as employer provided plans are concerned, are defined as any employer sponsored plan offered in the small or large group markets. (See IRS Code 5000A(f) as amended by the PPACA). In turn, "small and large group markets" are defined as insurance markets providing coverage to individuals and their dependents (emphasis on "dependents"). (See PPACA 1304(a)). Therefore, if an employer only offers self-only, but not coverage to dependents, they do not meet the mandate, and would be subject to penalty.

    6. Ryan says:

      Debunking (Part 3)

      Now for the second sentence, pertaining to the supposed "marriage penalty", which is an outright lie and more germane to the main topic at hand. It is simply untrue that if one earner has access to self-only coverage the rest of the family is ineligible for ACA credits. Specifically, PPACA 1401, the provision which addresses tax credits, states clearly that that only those who are eligible for "minimum essential coverage" are ineligible for tax credits. (See PPACA 1401(c)(2)(B)). As explained above, MEC for purposes of an employer plan is defined as an employer sponsored plan that extends coverage to dependents. So if the employer plan does NOT extend to dependents, as would be the case of a "self-only" plan as described in this quote, then the husband could choose not to enroll and instead purchase a family policy through the exchange and obtain credits.

    7. Ryan says:

      Debunking (Part 4)

      Further, even if the hubsand wanted to stay in the employer self-only plan, his spouse and children would STILL be able to obtain tax credits. Specifically, his wife would be an "applicable taxpayer" who does not have access to MEC (b/c the husband's plan doesn't offer to her), so she could purchase a policy in the exchange for her and their children and the family recieve tax credits for that plan. (See PPACA 1401(a), providing generally that a tax credit is available to any applicable taxpayer; PPACA 1401(b), providing that a taxpayer is eligible for a tax credit to pay for policies in the exchange in which their dependents and/or spouses are enrolled).

    8. Ryan says:

      Debunking (Part 5)

      The interim final regulations issues by the IRS and HHS on premium tax credits and exchange policy eligibility both make it abundantly clear that a "primary taxpayer" (in this case likely the husband, the top earner filing with the lowing earner spouse) can recieve an advance credit if his spouse or dependents are enrolled in a health exchange plan, even if the primary taxpayer is not, so long as the spouse and/or dependents are not eligible for minimum essential coverage (whcih in this example they would not be). See for example section 136B-2 of the interim IRS reg, found at this link:

    9. Ryan says:

      Debunking (Part 6)

      It is one thing when periodicals and web sites such as this one spread gross, alarmist misinformation about the PPACA (sadly, it is really to be expected these days); but it is much more troubling when Congress disseminates clear false legal conclusions in an apparent attempt to confuse and cause people to be alarmed.

      Sorry it took so many posts to debunk this myth. But that is the think with myths: they can be started in a few seconds with a few sentences, but to prove them incorrect can really take some leg-work.

    10. Bobbie says:

      What you can't debunk are the unconstitutional acts of federal overreach and by your own wording you also can't debunk how much more complicated with intent to confuse the federal government intrusion makes it.

      • Mary says:

        Amen to you Bobbie! What took Ryan 6 parts to explain, you debunked him with 1 sentence. Way to go!

    11. Peter says:

      What is it about freedom and personal responsibility that supporters of Obamacare can't stand? The American people have had it with the sanctimonious and condescending attitude from power hungry re-distributionists!

    12. Andrew says:

      Right now I am on my wife's insurance and my company does not offer health ins. If my company is now required to offer health ins, am I required to drop my wife's plan (which is great) and be on my company's plan? Am I allowed to stay on her company's plan?

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