Tags: obamacare | work | less | better

Obamacare Glitch: It Pays Off to Work Less

Tuesday, 30 Jul 2013 09:34 PM

By Todd Beamon

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Putting in even a little overtime could cause you to lose thousands of dollars in subsidies to buy health insurance under Obamacare, according to a new analysis.

A quirk in the Patient Protection and Affordable Care Act taking effect on Oct. 1 could cause people to cut back on their working hours to avoid losing money, according to ValuePenguin.com.

"Working more can actually leave you worse off," the price-comparison site says in a new analysis.

"It's sort of an absurd scenario," Jonathan Wu, ValuePenguin.com's co-founder, told CNBC. "It's something for people to be aware of."

Under that scenario, CNBC reports, an individual or family whose annual income surpasses maximums set by the federal government — even if it's only by $1 — will totally lose subsidies available to buy health insurance under Obamacare.

The loss of those subsidies in some cases would mean that people may well have been better off financially if they had worked less during the year, Wu said. Otherwise, they then would have to work significantly more to make up for the lost subsidy.

"They'd be surprised to see how drastic it is," Wu told CNBC. "I'd be kind of shocked to see if I make $100 less [in total income each year], I get all these benefits, but if I make $100 more, I get nothing."

"You basically don't want to fall in that hole," Wu added, noting that he believed contractors and others with more control over their incomes would most likely adjust the number of hours they worked to avoid the Obamacare "subsidy cliff."

He also said that because of lower insurance premiums often offered younger people under Obamacare, the effect will more likely be seen by older people.

But "you will see it across all age groups," particularly in the seven states — including New York and Vermont — where insurance premiums are either barred from being affected by age, or restricted from being dramatically affected, Wu told CNBC.

Under Obamacare, federal subsidies in the form of tax credits to buy insurance on new state health insurance exchanges will be available to millions of people who can start enrolling on the exchanges on Oct. 1.

The subsidies are available to people or families whose incomes total up to 400 percent above the federal poverty level, and are designed to cap their insurance premiums at 9.5 percent of their total income.


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