If you have "no place to go," come here!

PPACA FAQ: Affordability and Subsidies (Part 2)

katiebird's picture

(This would be so much more fun if I was writing about a plan for universal health care for everyone. Medicare for Everyone or whatever.  Put us all in one bucket and let us all wait in the same lines.)

(Cross-posted to The Confluence)

My plan was to continue the discussion of Affordability and Subsidies with an answer to a remaining after discussion in the comments on The Corrente site regarding this piece of the story:

I'll list the essentials:

  1. Employee earns $35,000/yr
  2. Employee-only coverage = $275/mo (This is just under 9.5% of her salary)
  3. Employee +children = $500/mo or 17% of Employee Income (The IRS ruling says that only the cost of Employee-Only coverage is considered for affordability. But, PPACA does require an option for dependent coverage on parent's policies)
  4. There is no spousal coverage option (there is no PPACA requirement for spousal coverage)
  5. Spouse may purchase insurance through an Exchange and would be eligible for a subsidy (because family income is under 400% of poverty)
  6. Employee & Children do not qualify for Subsidies because the Employee's share of the insurance is affordable.

The question I've been hammering on all week (6 hours when I stopped counting) Relates to points 4 & 5 above. He may purchase insurance through the Exchange -- but what will he be expected to pay? His wife is already paying 9.5% of the household income (using MAGI which will not be explained here) for her affordable employee-only coverage. Will he be expected to pay another 9.5% of their income before his subsidy kicks in?

Sadly, those 6+ hours didn't reveal a definitive answer (to me). If I was going to make a guess, I would go to the California Calculator and enter the family's information and take that for my answer. Their calculator happens to have one of my favorite explainations -- the one labeled, "A married couple earning $40,000 per year if one spouse in on Medicare" (You might be able to tell just how frustrating my week has been that I am collecting favorite explanations.) It seems possible that this family's situation might be comparable to that One Spouse on Medicare situation. But, I'm not at all sure.

For now at least, file this one under Questions Without Answers.

Commenter (at The Confluence) t, quoted below gave me an Ah, HA! (or Duh!) moment:

No, he won’t be required to fork over 9.5%. Search Mandate exceptions. One of the exceptions of the ACA is that if individual insurance premiums with subsidy cost more than 8% of the MAGI, then the individual is exempt from the mandate. He will not be required to carry insurance at all. If he does carry insurance in your scenario, because he is part of a family of 4, he will qualify for a subsidy that will take his costs quite a bit below 9.5%. Exactly how much below, it’s hard to say. I’m guessing via looking at calculators that it will be in the range of 6.5%, which is still exorbitant.

But yes, this is a sticking point for sure. MAGI in his case should exclude the cost of the other family premiums. But because this law is a complete mess, it doesn’t.

I am predicting pitch forks, tar and feathers by 2014.5

T clarified something I didn’t understand:

1) Mom’s insurance could cost as much as 9.5% of her salary because that is how affordability is defined for employer-offered insurance.

2) But the subsidies for Exchange policies are calculated by which Bucket group your family falls into … see this Table from Wikipedia
Which explains why entering this family’s into the California Calculator, the cost to the family is so far below 9.5%

Still not a firm answer – The mom’s purchase of insurance through her employer (at 9.5% of family income) is within the scope of the PPACA requirements. And, Medicare (referring to the California Calculator explanation) is NOT within the scope of PPACA requirements.

But, we can be pretty sure that Dad’s premiums will be something under another 9.5% of their household income.

As t says, “still exorbitant.”


What DID I find during that 6+ hours of research? .... Lots and lots and lots of interesting stuff.  And an idea for keeping track of it all. Now I can say that as part of the PPACA FAQ we'll have an organized resource library to be unveiled as soon as it actually exists!

One of the most interesting essays I found is, "How the Affordable Care Act Will Create Perverse Incentives Harming Low and Moderate Income Workers" by David Gamage. I'm still reading through it (and the over 150 footnotes!) but I can already tell that it will be a very important reference throughout the course of this project.

It cannot be said often enough: Things do not have to be this complicated. We could be talking about the changes coming with Medicare for Everyone. Struggling to understand how the PPACA affects us is not what I expected from the 2008 election.

No votes yet


Rainbow Girl's picture
Submitted by Rainbow Girl on

... lots to sink one's teeth into.

I like the category of "Questions without Answers" (yet another "bucket" !&*!).

Re. your No. 5 -- "What will he be expected to pay?" I'll hazard (*) a guess.
He will pay (just for access to a policy's "world of (non)coverage") the monthly premium of the policy he "choses" (after "comparison shopping" on his state's online marketplace) minus whatever subsidy he is entitled to, if any, which would depend on which "FPL Bucket" he falls into. (Buckets and more buckets.) (**)

(*) I say "hazard" quite deliberately. I can't call this an "educated" guess because I am having the same experience that you are having of spending wasting inordinate amounts of time looking at every piece of "explainers" out there to answer really simple Qs and come empty, or a basket full of uselessly general pseudo-information. (I think that's a feature of PR campaigns -- the currency is infoMERCIALS, not inforMATION.) I think that documenting all the simple questions that we were unable to answer will be a meaningful exercise.

(**) If I were a Navigator with the duty to provide accurate and complete information to a potential ObamaCare customer I would *not* be able to vouch for this "answer." I would have to tell the person who called me, or came to see me at the local church or community organization, that unfortunately I do not know what he would have to pay for a policy. That's if I were doing my job honestly.

Rainbow Girl's picture
Submitted by Rainbow Girl on

Page 18.

"An offer of "affordable" employer-sponsored health insurance will result in an employee's entire family being ineligible for premium tax credits, not just the employee."

In other words, in the scenario that you've posited, if the employed wife receives an offer of h/c/i from her employer that's just under 9.5% of her MAGI, neither her husband nor her kids can go on the exchange and get subsidies for exchange policies. So this family seems to have two choices: buy the full family policy from the employer or the employed spouse buys the employer policy but the other spouse and the kids go on the exchange to get unsubsidized Bronze-Loser or Silver-Less-Loser policies.

But another question comes up now. When the husband and the kids go on the exchange to shop for policies -- is the employed spouse's income imputed to the husband and kids? Jointly? Individually? If imputed to him but not the kids, does this means he buys an unsubsidized Loser-Bronze policy and the kids go on CHIPS? If his wife's MAGI is not imputed to him and he has no income, then does he get tossed into Medicaid by the exchange "Big Brain"?

I thought Obama was a "family-friendly" president.

Rainbow Girl's picture
Submitted by Rainbow Girl on

Or the employed spouse, non employed spouse and kids all go on the exchange and can purchase ObamaCare policies but without any subsidies. (Kids still may get funnelled to Chips.)

katiebird's picture
Submitted by katiebird on

He gets subsidies if employer doesn't offer a spouse plan (realistically, don't all employers offer spouse plans)

No Subsidy if employer DOES offer a spouse policy.

Income is HOUSEHOLD income. Spouses must file jointly to be on the exchange. And I'm really not sure if they CAN go on the exchange if they employer offers an affordable plan to the employee. I believe that is the reason for the kids going on sCHIP if the family plan is too expensive.

But, all this is for the next time I pick up this question (which may not be next week.... I might want to switch gears a little?)

Rainbow Girl's picture
Submitted by Rainbow Girl on

It's "no subsidy for non-employed spouse if the employed spouse is offered an affordable employer policy (i.e., one that doesn't cost -- premiums only of course -- more than 9.5% of employed spouse's MAGI).

If the employer does not offer an affordavle plan to the employee, the whole family goes on the exchange qualifying for subsidies. (This is a "perverse incentive" that Gamage thinks is created by the ACA's penalties on the employers -- "perverse" because by offering unaffordable plans, employers send everyone to the exchanges eligible for subsidies which -- ding ding -- raises the costs of ObamaCare well beyond what the CBO had "estimated" ... and there goes Obama's claim that we're giving Americans better health care for "less money."

Ack -- it's all PR and Propaganda. Of course none of it makes any sense :)

coyotecreek's picture
Submitted by coyotecreek on

Isn't it possible that a lot of people will be paying premiums they should be - 'cause if you can't figure it out after 6 hours of intense study, how in the world can one of the "agents" be expected to do so...and get it right? I"ll bet people with the same set of circumstances in the same states, etc. will be paying a variety of premiums.....

Rainbow Girl's picture
Submitted by Rainbow Girl on

I'm willing to bet 10 of my pennies that you are exactly right and that if there are channels for Americans to compare notes across the country, it will emerge that -- just like today's Magic Insurance Market -- 2 people with identical policies will be paying vastly different premiums, or deductibles, or copays, or exclusions, etc. etc.

One morass of market INefficiency replacing another.

Rainbow Girl's picture
Submitted by Rainbow Girl on

He worked for Treasury on ObamaCare and is a Law & Economics academic so he writes about straightforward political-economic subjects (e.g., taxes and health care and their (mis) allocation in our ex-democracy) using the pseudo-scientific language and tropes of economists -- "micro modeling," relative "distributions," and cardboard-bureaucratese phrases to refer to, e.g., people losing health coverage.

He's also an "expert" in the "debate" over whether the employer-health-insurance tax exemptions (borne out of post WWII price/wage controls) should be eliminated -- which in plain english would amount to a massive new tax (devastating for any middle class family, especially in a high tax state) on the same old chumps -- people who earn income and pay SS Taxes (vs. people who earn "carried interest" and "capital gains" -- on which no SST is due and which have far lower marginal rates than income tax).

Footnote 2 tells you all you need to know about who he is in the can for -- after listing a dozen or so "perverse incentives" caused by ObamaCare as written, he turns around and, pretzel like, reassures the readership that he is in no way, no way Jose, by no means, by no stretch of the imagination, criticizing ObamaCare, which is [basically] a "huge" accomplishment.

Needless to say, this is not an economics academic who has any issues with ObamaCare's central feature which is to enrich insurance company cartels and bleed Americans of both money and health care.

Shorter: With Gamage on ACA, Caveat Lector.

katiebird's picture
Submitted by katiebird on

OK. But, isn't he in the group of people who will be answering -- making the answers -- for our questions?

Rainbow Girl's picture
Submitted by Rainbow Girl on

On one point, he may have an answer -- see my post above.

Rainbow Girl's picture
Submitted by Rainbow Girl on

Great source for a few explanations of how the employed spouse + family scenario works in the ACA -- don't misunderstand me! I'm really glad that you posted this because (I think) I learned something, finally! (Assuming Gamage has it right -- and if he was working on the ACA and the tax aspects as Special Counsel to Treasury, he has some credibility in that department.)

fungible chattel's picture
Submitted by fungible chattel on

Easy answer: divorce. People will just do it earlier for health insurance instead of in anticipation of the nursing home.

I knew this would be bad. I knew it would be complicated and too expensive for people to handle. I had no idea it would be criminal. It really is.

Obama delayed implementation until 2014 both because its so damned complicated they needed 4 years to figure it out, maybe. I think it's really because if it went into effect earlier all those voters chomping on this shit sandwich would have voted against him, and President Romney would have repealed it by now.