Martin Vaughan, writing in the Wall Street Journal (1-6-10), described the marriage penalty in the health care bills as follows: “for scores of low-income and middle-income people, it could mean a hike of $2,000 or more in annual insurance premiums the moment they say, ‘I do.’”
As I have pointed out, however, the marriage penalty becomes far more serious for individuals making over 400% of the Poverty Level. For two married people, that is expected to be $64,000 per year in combined income, $32.000 each. Two married people at that income level should be ready to pay over $9,000 more in health insurance premiums than they would if they were unmarried.*
This huge marriage penalty occurs because the bills cap premiums and provide subsidies only for those making less than 400% of the Federal Poverty Level. Two married people will leave this subsidized system when their combined income reaches approximately $64.000 by 2016. The same couple, however, if unmarried, won’t be off the subsidized system until their combined income approaches $100,000—a window of over $35,000 where people will pay more than $9,000 additional for their health insurance if they marry.
This discriminatory system will have a big impact on people at lower income levels, too. They will realize that if they marry and improve their earnings, they may reach a point where their health insurance premiums will skyrocket, increasing by over $9,000 a year. Only half of those insurance premiums will be tax deductible. This huge added cost, real or potential, will provide a powerful incentive to not marry.
The marriage penalty will also be devastating for married persons now receiving health insurance from their employer, should that insurance be discontinued. Once such persons are on the individual insurance market, they will receive a portion of their former health insurance benefits only if their combined income is below 400 percent of the Federal Poverty Level. For this reason millions of couples are likely to see their insurance costs go up by that same $9,000 plus figure—if they stay married—a cost many of them will avoid if they divorce.
Under the new system, whether people are single or married, it will additionally be difficult to rise above 400% of the Poverty Level because of the major increases in health insurance premiums people will then be required to pay.
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*(Analysis by Congressman Dave Camp, House Ways & Means Committee, The Prescription Pad, 12-17-09). This added premium cost of over $9,000 for couples who marry is based on the cheapest insurance available.
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