We were talking with a client last week about her health insurance situation, and it inspired me to do a little more digging around to see how eligibility for subsidies could be impacted by the availability of employer-sponsored health insurance. In our client’s situation, she’s a homemaker and her husband makes about $20,000 per year, working for a small business. They also have a child, who is currently covered by Medicaid. Her husband can get health insurance from his employer for $75/month. But if he adds his wife, the cost goes up to $500/month. $6,000 per year for health insurance when you earn $20,000 isn’t really a viable option. Fortunately, as of January 2014, Medicaid will be available in Colorado to families with household incomes up to 133% of FPL (in 2013, that’s almost $26,000 for a family of three).
But let’s consider a hypothetical family that makes a little more – say $28,000/year – and has the same option for employer-sponsored health insurance. They would be above the cutoff for family Medicaid, but well below the 400% of poverty level that determines eligibility for premium assistance tax credits (subsidies) in the exchange (400% of FPL for a family of three is a little over $78,000 in 2013). And I think we can probably all agree that spending $6000 a year on health insurance would be a significant burden for a family that earns $28,000 a year.
We’ve all heard lots of talk about how subsidies are available in the exchanges for people who don’t have access to “affordable” employer-sponsored health insurance. I think most of us take that to mean that for families who earn less than 400% of FPL, subsidies are available both to those without an option to purchase employer-sponsored health insurance, and for families that have the option to do so but at a prohibitively high premium. You’ve probably also heard that the cutoff for determining whether employer-sponsored health insurance is “affordable” is 9.5% of the employee’s wages.
Unfortunately, it’s not as simple as it might sound, and the official rules might leave some families without a lot of practical options. I discussed this scenario last week with the Colorado Coalition for the Medially Underserved (CCMU). Gretchen Hammer is the Executive Director of CCMU, and she’s also the Board Chair of Connect for Health Colorado (the state’s exchange), so there’s a good flow of information between the two organizations. CCMU (and Connect for Health Colorado, via CCMU) responded to my questions quickly and thoroughly, and I highly recommend both sources if you’re in Colorado and curious to see how your specific situation will be impacted as the ACA is implemented further (here’s contact info for CCMU and Connect for Health Colorado).
My concern in the case of our hypothetical family was that the employee’s contribution for his own health insurance is $75/month, which works out to only 3.2% of his income – well under the threshold for “affordable,” based on the 9.5% rule. And as […]