“Just as there are penalties in the tax code for couples who get married, financial penalties in the Affordable Care Act also discourage couples from tying the knot,” says Devon Herrick, senior fellow with the NCPA.
All legal U.S. residents will be allowed to purchase health coverage in the exchange. However, subsidies will be available only to qualifying individuals and families with incomes from 100 percent to 400 percent of the federal poverty level — from about $23,550 to more than $94,200 for a family of four.
No Marriage, More Subsidy
The exchange subsidies are rather generous to low-income individuals. However, the exchange subsidies are more generous to unmarried couples than to couples who marry. Herrick explained how the subsidies work in an op-ed November 7 in Investor’s Business Daily.
For example: consider the case of two unmarried college students who move in together, each of whom earn about $23,000 annually. If that same couple married, their combined household income of nearly $46,000 would rise as a percent of the poverty level from 200 percent (individually) to 296 percent for a married family of two. As a result, their premiums in the health insurance exchange would be capped at a higher percentage of their income, providing a smaller total subsidy.
- Individually they would each qualify for a subsidy of about $1,087, or $2,174 per household.
- If that same couple were to marry, their subsidy would fall to $753.
- Thus, their marriage penalty is $1,421. The exchange marriage penalty is especially pronounced for couples in moderate-income households with an income of $30,000 to $55,000 annually.
The structure of the exchange subsidies creates perverse disincentives to family formation that add to the existing marriage penalty in the tax law.
“Moderate-income couples are twice as likely to forgo marriage as couples with a bachelor’s degree,” said Herrick. “There is something fundamentally wrong about government regulations forcing moderate-income couples to decide whether they can afford the financial penalties of marriage.”
One example of the marital impact of ObamaCare is a recent CBS News story profiling a married couple who are contemplating divorce to save money.
Source: National Center for Policy Analysis
“The Health Exchange Marriage Penalty,” Devon Herrick, National Center for Policy Analysis: http://heartland.org/policy-documents/health-exchange-marriage-penalty