Dylan Roby, PhD
Dylan Roby, PhD, assistant professor in the department of health policy and management, UCLA Fielding School of Public Health, Los Angeles.
A little-known trap means that some families won’t be able to take advantage of the new tax subsidies created by the Affordable Care Act, commonly known as Obamacare.
Starting next year, Obamacare will provide tax credits to taxpayers who purchase health insurance on the open market if they earn less than 400% of the federal poverty level—that’s up to $94,200 for a family of four.
But you won’t qualify for those tax credits if you have access to affordable coverage through an employer’s plan—and the way the rules are written, “affordable” employer coverage might not actually be affordable for families.
The law considers a family to have access to affordable employer coverage if the employee in the family can obtain quality coverage for himself/herself at a cost of no more than 9.5% of the family’s annual household income. The rules don’t take into account the fact that many companies now subsidize health benefits for their employees much more than they do for those employees’ dependents. Thus an entire family might be disqualified from the tax credits, even though only one member of the family—the employee—truly has access to affordable employer coverage.
Potential solution: Families who find themselves in this trap should consider splitting up coverage…
If the spouse isn’t eligible for the employer’s coverage, he is eligible for tax credits if he obtains insurance through the Obamacare health insurance exchanges, household income permitting.
For more information, go to Healthcare.gov/will-i-qualify-to-save-on-monthly-premiums or KFF.org/health-reform.