$1 Extra in Pay Could Mean $20,000 More in Obamacare Premiums

Friday, 07 Feb 2014 10:33 AM

By Lisa Barron

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In the wake of Tuesday's Congressional Budget Office report showing that Obamacare will lead to a reduction in employee working hours, there is also bad news on the wages front.

Noting that Obamacare provides subsidies for coverage to people earning up to 400 percent of the federal poverty line, and that the subsidies decrease as income increases, the CBO said there is a strong incentive to reduce wages.

"People whose income exceeds 400 percent of the FPL are ineligible for premium subsidies, and for some people those subsidies will drop abruptly to zero when income crosses that threshold," the report stated.

Obamacare Alert: Massive Rule Changes to Affect Your Medicare

That drop will be so steep, in fact, that someone earning just $1 above the threshold could end up paying from a few thousand dollars to $20,000 more for insurance, depending on their age, reports The Weekly Standard

"Take the case of a couple of 55-year-olds living in St. Croix County, Wisconsin, where the median household income is a little over $68,000," wrote the Weekly Standard's John McCormack. "Let's say that they earn $62,040 in 2014. They would pay $211 per month for the cheapest Obamacare plan available on healthcare.gov. But if they earn $62,041—just one dollar more—they would pay $1,342 per month. "That's an extra $13,572 per year for the same bare-bones insurance plan."

The cost of earning more than the threshold varies based on age, McCormack noted. It could cost a couple in their 30s a little more than $4,000, but for a couple who are both 64, a year short of qualifying for Medicare, it could cost more than $20,000.

"Whether or not it's a good thing to encourage workers to cut their hours or quit their jobs is a matter of debate among Obamacare's supporters and opponents," McCormack wrote. "Liberals point out that some people will gladly choose to work less now that they have greater economic security."

"But for Americans teetering on the edge of Obamacare's subsidy cliff, the decision to work more in order to earn less isn't much of a free choice at all," he added.

Meanwhile, the latest legal challenge to the Obamacare subsidies, focusing on whether the law allows for subsidies in all states or only in states that have set up their own exchanges, has failed.

On Jan. 15, a federal judge upheld the health insurance subsidies that are available in the 34 states that declined to establish their own online marketplaces, Reuters reported.

U.S. District Judge Paul Friedman in Washington, D.C., ruled that the subsidies were consistent with the healthcare law the president signed in 2010.

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