Danko Iordanov, EA In many scenarios it is fairly easy to make a decision but the following is very intricate.
Working for a company: It is very important to know if your or your spouse’s employer offers a health insurance plan through work. If they do – you may not qualify for subsidies at all, even if your income is low. You have to consider the employer’s offer first before going to an exchange. There are 2 components of insurance through work: 1- it has to provide minimum acceptable coverage equal to the “bronze” plan and 2 – it has to be “affordable” – calculated as cost being less than 9.5% of the HOUSEHOLD income. Affordability is based on the amount you have to pay from the salary for YOUR coverage only. It does not apply to the additional cost for your dependents. Also the percentage is based on the income for the WHOLE family including your spouse’s.
So if in your family of 4 you make 40K and your spouse 30K, then if your employer offers to provide insurance for only YOU costing $300 a month from your paycheck, this would make it 5.2% of your household income and means that it is affordable and you cannot use the exchange and get financial help for your premium. The fact that to get coverage for your whole family it would cost you $1,200 per month from your paycheck and that is 20.6% of your household income and thus unaffordable, does not matter. You get no help in paying the premiums. You would have been much better off if your work didn’t offer health insurance but this is why the government is starting to “force” big companies to offer insurance by taxing them. The government’s long term goal is to pay less subsidies. As for the penalty for not getting insurance, your family may be exempt from paying it based on premium unaffordability. Unfortunately the intended purpose of Obamacare is to offer affordable health insurance to most and this scenario isn’t helping at all. There is a bit of relief if your employer does not offer coverage for your spouse and dependents. In this case they can go to the exchange and get help if they qualify otherwise.
If in the same situation you were single without dependents, the outcome isn’t so bad for you. Your employer would most likely offer to pay some of your premiums and with your $40,000 income if your portion of the cost is more than $317 per month then you would qualify for assistance credit through an exchange. It is very likely that it will be cheaper to get insurance through work and you may prefer doing just that. If you decide not to get insurance, you may end up paying a penalty of up to $300 for 2014.
