The Doughnut Hole of Obamacare
Posted: September 19, 2013
How the ACA May Force Spouses and Children into Un-Affordable Health Care
By John Hansen
The Affordable Care Act insures â€śaffordableâ€ť health insurance for employees, but not necessarily for the employeesâ€™ spouses and children. This doughnut hole in Obamacare is commonly referred to as â€śThe Dependent Gapâ€ť.
The Problem of â€śThe Dependent Gapâ€ť
Brokers at recent Covered California Trainings across California have been asking this question: What about the spouses and children? Hereâ€™s the problem. If employees are offered â€śaffordable coverageâ€ť, meaning coverage that costs them less than 9.5% of their income, then these employees are ineligible to get a tax credit if they decide to purchase individual coverage from Covered California. Thatâ€™s not surprising, but what is shocking to many Californians is that these employeesâ€™ spouses and children are also ineligible to get a tax credit for coverage purchased from an plan through Obama Care California.
The All Too Common Worst Case Scenario
My friend Pedro is a stay-at-home Dad. His wife, Talia, gets employer-sponsored coverage, which requires her to fork out just over 9% of her paycheck. Affordable for her? Technically yes. But because Talia has â€śaffordable coverageâ€ť through her employer, this means that Pedro and the kids will have to pay full price for their health insurance coverage.
Even if family purchases a Bronze plan for Pedro and the kids, the family premiums will easily be over 20% of Taliaâ€™s income. And what makes this all the more bitter of a pill to swallow, is that if Pedro and the kids donâ€™t purchase this coverage, which is clearly unaffordable, they may face penalties due to the mandate, and the penalties are the greater of $95/person ($47.50/child) or 1% of their income.
But my employer doesnâ€™t contribute towards dependentsâ€™ premiums?
This is the worst case scenario. No contributions from the employer and no subsidy from the government. The fact that your employer does not contribute toward dependentsâ€™ premiums does not make the dependents eligible for a subsidy.
What if my employer doesnâ€™t offer dependent coverage?
Good news! If your employer doesnâ€™t offer dependent coverage, then your spouse and children may be eligible for a subsidy if they purchase coverage through Covered California. In light of this fact, it may be a big help to employees if their employers either start contributing for dependent coverage or drop coverage for dependents.
Not sure how Obamacare affects your health care plans in California? Learn how the ACA works in California, including benefits, costs and enrollment.
Covered California is the Golden Stateâ€™s official health exchange marketplace where individuals, families and small businesses can find high-quality, low-cost California government health insurance.
Learn about Obamacare income guidelines in California using our income limits chart, and see if youâ€™re eligible for government assistance.
Learn about the Covered California website. Find easy online enrollment. Set up your account, log in, buy insurance and more on the California health marketplace website.