While the Obama administration tries to douse political fires over a disastrous federal exchange website – with millions of Americans unable to keep health policies they like and others facing massive premium and deductible increases – experts now say the system also discourages marriage.
At issue is eligibility for federal subsidies under the new laws and the wide discrepancy between eligibility for two individuals compared to a married couple.
“The cut-off points under Obamacare would be $91,000 for two single people and $62,000 for a married couple. So it’s about $30,000 less income where you can get the subsidy,” said Heritage Foundation Senior Fellow David Burton, who noted that a quirk in federal tax law is responsible for the discrepancy.
“Subsidies are available to people up to 400 percent of the federal poverty level,” Burton told WND. “The marriage penalty’s really because of the way the poverty levels are calculated. If you have a one-person household, the poverty level is about $11,500.”
He explained that for a two-person household, the poverty level is $15,500.
“For those who don’t want to do the math, that means that it’s not twice as high,” Burton said. “So the long and the short of it is that two individuals that get married don’t get as much of a subsidy.”
He concluded it “may very well may give people pause that are considering marriage.”
“There are a lot of things discouraging people from getting married these days,” he noted. “This will be just one more. It’ll be a financially significant thing. It could amount to several thousand dollars a year of lost subsidies.”
Was this intentional in the new health law, or are married couples simply taking a hit over the way the poverty levels are traditionally calculated?
“If you actually read the PPACA as it’s called, the law which I have had the misfortune of having done, it’s very badly written,” Burton explained. “It was rushed through. I think it was probably a mistake, but it’s just one more of many mistakes where this law wasn’t well thought out.”
In addition to the financial disadvantage for married couples, Burton said all Americans are headed for a nightmare come tax time when they try to determine exactly how much subsidy assistance they should be getting.
“The subsidies are administered by the insurance companies in cooperation with the IRS and show up as a lower premium in the exchanges. But then, every individual in the country is going to have to do the math on their tax return due in April 2015 and reconcile how much they got from the insurance company with how much they should have gotten,” said Burton.
He added that Americans will “owe a lot of money” if calculations show their subsidies were too big.
Burton expects Obamacare supporters to resist changing the marriage rules in the law unless political pressure becomes too much to ignore. He said adopting a whole new approach to health-care reform is the best hope on the issue and for the system in general.
“If we get to a point where there’s a more reasoned approach to health care and it’s not all so blatantly political, then I would hope that this could get resolved,” Burton said.