PPACA FAQ: Affordability and Subsidies (Part 2)
(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:
- Employee earns $35,000/yr
- Employee-only coverage = $275/mo (This is just under 9.5% of her salary)
- 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)
- There is no spousal coverage option (there is no PPACA requirement for spousal coverage)
- Spouse may purchase insurance through an Exchange and would be eligible for a subsidy (because family income is under 400% of poverty)
- 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.