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Monday, September 30, 2013

Obamacare side effect - look for increasing divorce rates and individuals working the game to keep earnings under the line



Under the Act, if workers have affordable single-family coverage from an employer — coverage that by law workers are obligated to accept — their family members will not be eligible for premium subsidies on the exchanges. This can make the cost of insurance for some low- or middle-income families unaffordable. But if they divorce, they get the subsidy.

Without subsidies, low-income families will not be able to afford to buy insurance on the state exchanges. The Internal Revenue Service estimates that family plans will cost $20,000 (in after-tax dollars) a year by 2016. Anyone under 400% of the poverty line, currently $94,000 for a family of four, qualifies for a subsidy — unless a family member has employer-provided insurance.

In a 2011 National Bureau of Economic Research working paper , Cornell Universityprofessor Richard Burkhauser, Indiana University professor Kosali Simon, and Cornell PhD candidate Sean Lyons showed that in 2014, when the law will take full effect, 13 million low-income Americans may be unable to get subsidized health insurance through new state health care exchanges because one family member has employer-provided coverage for that person only.

Perversely, the only way for other family members to get subsidized coverage would be for the spouses to get divorced. Then the spouse without coverage and the children could get coverage on the exchange.