No, this isn’t a Geico commercial. Come 2013, America’s bachelors may want to think twice before popping the question. Thanks to Obamacare, some couples can save thousands on health insurance just by opting to cohabit rather than marry.
How? The subsidy system erected in the complicated new health law manages to create a brand new “marriage penalty.”
Under the law, individuals who earn between 133 and 400 percent of the federal poverty level and can’t get health coverage through their employers qualify for generous subsidies to buy insurance in the government-run exchanges. These subsidies decrease with need, so the more you make, the less you get.
But, as Diana Furchtgott-Roth of the Hudson Institute recently remarked, the subsidies are structured so that two people can get more government as singles rather than as a married couple.
Furchtgott-Roth gives the example of two people making $43,000 each. As singles, they both qualify for subsidies, but if they marry, their combined earnings of $86,000 far exceed the $58,000-cut-off for aid to a couple.
Heritage analyst Robert Rector raised a red flag about this problem back in January in an analysis of the Senate-passed version of Obamacare. He showed that for two young individuals making a combined $35,000, marriage would result in a loss of $3,451 in government aid. For older couples, the effect is more pronounced: two individuals in their sixties making a combined $60,000 would receive an additional $10,425 to purchase insurance if they become or remain single. The reconciliation bill made slight modifications to the subsidy system, but the marriage penalty remains substantially intact.
Who suffers most from marriage penalties? Single mothers. They head up 45 percent of all families living in poverty. For the sake of these women and their children, Washington should be embracing policies that encourage marriage, rather than punish it. As Furchtgott-Roth notes: marriage promotes a stable society; penalizing it will “increase the number of fatherless families, leading to more poverty and a lower quality of life.”
To help low and middle-income families purchase insurance, Congress should have created an equitable and universal tax credit. To learn more, click here.