MARRIAGE PENALTY IN HEALTH BILLS COULD COST MARRIED COUPLES THOUSANDS

January 26, 2010

Depending on what version of health care legislation survives the next few weeks, tying the knot could cost couples more than just their wedding expenses.  Under either bill, married couples would face a health care "marriage penalty," says the Heartland Institute.

For example: 

  • The penalty would hit low and mid-income couples who purchase their insurance through the new exchanges created in the bills.
  • While those who receive employer-based insurance will not be affected, those in the exchanges could face premium increases of $2,000 or more. 

The penalty results from the subsidy levels set in the bills: 

  • Because the subsidies correspond to federal poverty guidelines, married couples with a combined income are limited in the subsidies they would receive in a way individuals are not.
  • According to the Congressional Budget Office, roughly 17 million people who would receive subsidies in 2016 under the House-passed legislation, including millions of married couples.
  • Estimates show the penalty for married couples will hit those whose incomes are between $58,280 and $86,640.
  • This will happen because once the couple's combined income reaches 400 percent of the Federal Poverty Level, there is no cap on premiums and their premiums are not subsidized, according to John LaPlante, editor of StateHouseCall, a nonprofit health care policy solutions site. 

Devon Herrick, a senior fellow at the National Center for Policy Analysis, believes the marriage penalty could affect millions of Americans if employers push their employees into health exchange plans in lieu of providing more costly employer-based insurance themselves. 

"This is an example of how poorly conceived public policy can discourage activities beneficial to society," Herrick said.  "Young couples will be adversely impacted in additional ways.  Insurance policies in the exchange will have modified community ratings that gouge young couples to offset costs for older -- often wealthier -- couples.  A better solution is to provide a uniform tax credit while allowing individuals to purchase the coverage that meets their needs." 

Source: Sarah McIntosh, "Marriage Penalty in Health Bills Could Cost Married Couples Thousands," Heartland Institute, January 25, 2010.

 

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