They have been paying $7,200 a year for a bare-bones Kaiser Permanente health plan with a $5,000 per person annual deductible. “Kaiser told us the plan does not comply with Obamacare and the substitute will cost more than twice as much,” about $15,000 per year, she says.
This new plan, Kaiser’s cheapest offering for 2014, would consume about 25 percent of their after-tax income. The new plan still has a $5,000 deductible but provides coverage for things her current policy does not, such as maternity care, healthy child visits and coverage for dependents up to age 26. Proctor has no use for such coverage, since her son is 30.
So the Kaiser Family Foundation is recommending people try to reduce their incomes in order to qualify for subsidies:
“If they can adjust (their income), they should,” says Karen Pollitz, a senior fellow with the Kaiser Family Foundation. “It’s not cheating, it’s allowed.”
The PPACA apparently sets a marginal tax rate well in excess of 100% on incomes above 400% of the federal poverty line for those insured in the nongroup market, especially those who are older:
To get a subsidy, the couple’s modified adjusted gross income for 2014 income would need to fall below $62,040, which is 400 percent of poverty for a family of two. . . Proctor estimates that her 2014 household income will be $64,000, about $2,000 over the limit. If she and her husband could reduce their income to $62,000, they could get a tax subsidy of $1,207 per month to offset the purchase of health care on Covered California.
That would reduce the price of a Kaiser Permanente bronze-level plan, similar to the replacement policy she was quoted, to $94 per month from $1,302 per month. Instead of paying more than $15,000 per year, the couple would pay about $1,100.
Instead of a poverty trap, a lower-middle-income trap?
HT: Chris B.