Obamacare: $1 Pay Raise Costs Middle Class Family $9,355 in Premiums

Even Max Baucus, a Democrat, admitted that Obamacare is a train wreck. I think he was being polite. It’s an utter fiasco. It was dead on arrival. But thanks to Nancy Pelosi, we had to pass the monstrosity in order to find out what was in it.

Members of Congress want no part in it, and even several big insurance companies are bailing out of the state exchanges. Part of the bill’s mandates had to be postponed – illegally, by executive order – and even the individual mandate may not be ready by the deadline. Every new provision unearthed in the Obamacare bill presents a new disaster.

It was reported recently that if an individual or family makes “too much” money, they will lose their eligibility for a federal subsidy, and they’ll be stuck paying the entire insurance premium themselves. This would force them to fork over thousands of dollars more to the insurance companies, all because they made over the federally mandated income threshold.

The income thresholds are based on the Federal Poverty Level (FPL), which varies by family size, age and other factors. Under Obamacare, there is an insurance premium cap based on where an individual’s or family’s income falls in relation to the FPL.

For instance, if a family makes between 100% and 133% of the FPL, they would be responsible for paying no more than 2% of their income toward health insurance. The more money they make, the higher their insurance premium cap is. So, if a family made between 300% and 400% of the FPL, they’d be responsible for paying no more than 9.5% of their income toward insurance premiums. As long as the family’s income remains at or below 400% of their respective FPLs, they’re eligible for federal subsidies that pick up the remainder of the insurance premium.

As soon as a family makes even $1 over 400% of the FPL, they’re no longer eligible for a federal subsidy, and they must pay the entire premium themselves.

Consider a hypothetical family of five as an example. Both parents are 56 years old, and there are three kids. Their income is exactly 400% of the FPL at $110,280. Because their income is at the highest threshold, they are responsible for putting no more than 9.5% of their income toward insurance premiums, and they qualify for a subsidy that picks up the difference.

Plugging in these numbers into the Kaiser Family Foundation “subsidy calculator,” we find that the “Silver” plan’s annual premium is $19,832. The subsidy would cover $9,355, and the family would be responsible for the remaining $10,477 (9.5% of their income).

CNS News continued the example:

 “But…this mom and dad each get a 50-cent raise in their annual salaries. As a result of those 50-cent raises, their household income climbs an entire dollar to $110,281—putting their household income exactly $1 over 400 percent of the Federal Poverty Level. When this $1 increase in household income is plugged into the Kaiser Family Foundation subsidy calculator, the calculator accurately notes that the family no longer qualifies for Obamacare’s 9.5-percent-of-household income cap on their health-insurance premiums. According to the calculator, the family’s total annual premium for their Silver health-insurance plan remains $19,832. Now, however, because they earn too much money to qualify for the federal subsidy, they must pay every penny of that $19,832 premium. As a result, the cash they must pay out of pocket for their health insurance plan goes from $10,477 per year to $19,832 per year, an increase of $9,355.

So, this hypothetical family gets a raise, but their take-home pay is drastically reduced, considering the thousands of dollars worth of “taxes” they must pay in order to satisfy government mandates. I have a feeling that this example won’t be hypothetical for long.