Obamacare’s Marriage Penalty

In almost every case under the Affordable Care Act, married couples will fare poorly compared to unmarried couples. The reason: subsidies in the newly created health insurance exchange will treat two singles better than a married couple.

Suppose you are earning 200 percent of the federal poverty level (currently $21,660). You will be required to pay a premium equal to 6.3 percent of your income in the exchange—or about $1,365 for a health plan that has an actual cost of, say, $5,000. Thus, you and a cohabitating partner who also earns 200 percent of the federal poverty level could both obtain health coverage for about $2,730. However, if you marry your partner, the two of you will be required to pay 9.5 percent of your income in premiums—or about $4,115. Being married will cost the two of you $1,385 a year.

In some cases, getting married may be worth the financial penalty, however. If you and your partner each earn 100 percent of the federal poverty level (currently $10,830), you would (individually) qualify for Medicaid and would not be allowed to purchase private coverage in the exchange. However, if you are married, your combined income would disqualify you for Medicaid. If you bought insurance in the exchange, you would be required to pay 4 percent of your household income (or $866). The ability to get out of Medicaid (which pays low doctor fees) and into a private plan (which may pay market rates) may be worth the extra premium you have to pay—especially if you value more ready access to care.

For more on the Affordable Care Act—and sound alternatives to it—please see my Independent Institute book, Priceless: Curing the Healthcare Crisis.