Marriage Penalty In Healthcare Reform

Story

Marriage Penalty In Healthcare Reform

Special Report - January 14, 2010
Health insurance premiums would be higher for some married couples than for comparable unmarried cohabiting couples under health reforms currently being considered by Congress. As passed, both the House and Senate healthcare reform bills would cap annual health insurance premiums in ways that are more beneficial for those who are unmarried. The penalty would be most heavily borne by low and middle-income couples who could pay $2,000 or more in higher annual insurance premiums than their single counterparts.

The bills establish subsidies to purchase health insurance plans based on the federal poverty guidelines. The subsidies are more limited for married couples with a combined income. Health insurance provided through employers would be unaffected. These subsidies would only be available for those who purchase health insurance through exchanges newly established by the proposed legislation. The Congressional Budget Office estimates that, under the House plan, 17 million people would receive these subsidies in 2016. As written, the bills would cap annual health insurance premiums for those incomes less than 400 percent of the poverty level at anywhere between 1.5 and 11 percent of income, depending on the poverty level.

The House plan would effectively impose a penalty of $2,084 on a married couple with a combined income of $50,000. The Senate plan would penalize married couples with $1,650 in higher annual premiums as compared to their unmarried counterparts making $25,000 a year each. These penalties result from a set-up that provides a single subsidy to eligible married couples, but grants a subsidy to each eligible income-earner in an unmarried couple, which when added together exceeds the amount of the single subsidy to the married couple. The penalty is even higher—as much as $5,000—for married couples who are ineligible for the government subsidies.

“The government should not be penalizing those couples that take it upon themselves to strengthen and develop the foundational block of our society by forming families through marriage,” said Bill Brooks, president of the North Carolina Family Policy Council. “Married couples contribute more to the economy in the form of careers, consumption, education, children, and the general welfare. Government should always encourage and support such relationships.”