The Affordable Care Act’s hotly-debated subsidies will lessen the cost of health-care for those making up to 400% of the federal poverty level, but they may also be discouraging Americans from walking down the aisle.
A new study (http://www.ncpa.org/pub/ba788 ) from the National Center for Policy Analysis reports there are “penalties in the ACA” that discourage couples from tying the knot. While all legal U.S. residents will be allowed to purchase health insurance, subsidies will be available for those making up to 400% of the federal poverty level, which is about $45,000 for an individual and $94,000 for a family of four.
The more a family makes, argues NCPA senior fellow Devon Herrick, the lower their potential subsidy will be, which may make young couples in particular think twice before getting married. Herrick’s study uses two unmarried college students who move in together, each earning $23,000 annually. If this same couple married, they would rise to $46,000 in annual household income, and increasing their rank as a percent of the FPL from 200% to 296%.
As singles, each would qualify for a subsidy of $1,087, or $2,174 per household. But married, their joint subsidy falls to $753. Herrick points out that moderate-income couples are twice as likely to forgo marriage than those with a bachelor’s degree.
But programs that use the FPL as a measure to scale benefits can create perverse incentives among beneficiaries.
“If you provide an incentive for someone to take a certain action, they will be inclined to do that,” Herrick says.
CBS even reported earlier this month that a New York-based couple was contemplating divorce to save cash under the ACA’s subsidy program (http://newyork.cbslocal.com/2013/11/06/obamacare-restrictions-lead-brooklyn-couple-to-consider-divorce/). Herrick says divorce may be a major stretch here, but for young couples contemplating whether or not marriage is worth it when they are already stretching to pay for coverage could be a reality.
“This will impact some people,” Herrick says. “There is already a huge gap among young people—throw in other disincentives to enroll, and it is never good.”
Marvin Solomiany, partner at Kessler & Solomiany Family Law Attorneys in Atlanta and a member of the American Academy of Matrimonial Lawyers, agrees, and says younger individuals may decide living together unmarried is their best bet to save cash.
“It’s possible young people would continue to live together without getting married, especially younger individuals,” Solomiany says. “If they are making a combined income of less than $65,000. The reverse is that there may be individuals who look to get divorced to enjoy the subsidies they would otherwise not be able to enjoy if they were married.”
That being said, divorces are messy and costly, so while people may float the idea, that doesn’t mean it’s a definite motive to take the plunge and file divorce papers in the name of a subsidy, Solomiany says.
“Some may consider it, but this is easier said than done,” he says.