Not only sick, but divorced too?

In my ongoing series about the flaws in the Affordable Care Act one of the most morally and emotionally upsetting is the law’s two marriage penalties. Hopefully though, given that Republicans now apparently are all about promoting marriage to reduce income inequality this is a design flaw that might have a chance of getting addressed in the near future.

The first marriage penalty comes in the form of lower tax subsidies on the exchange because of how the federal poverty level is calculated for couples versus single people. A person in their 50′s living in Charlottesville, VA making $32,000 would qualify for roughly $2,500 in exchange subsidies, but a married couple making $64,000 wouldn’t qualify for any subsidies at all. Being married can cost the couple an extra $5,000 a year in premiums. This is a byproduct of the law’s horrible subsidy cliff.

While this first marriage penalty has gotten more attention, it is the second one that I consider most serious. Because of how the law is written the annual out-of-pocket limit for most silver plans on the exchanges is $6,350 for an individual, but $12,700 for a family plan. This is absurd since it is rare for both people to get extremely sick in the same year.

What this means that if the wife in my scenario got cancer the couple could end up paying $6,000 more in health care that year because they are married and have a family insurance plan. That is a total marriage penalty of $11,000 for a couple only making $64,000. That is real money couples can’t afford.*

Divorcing your sick spouse can save you even more money because of another provision in the law. The only time you can change your plan mid-year is if you have a “qualified life event” like marriage or divorce. If they get a quick divorce presumably the sick wife could select a new platinum plan with a much lower annual out-of-pocket limit, saving several thousand more.

The law doesn’t need to treat certain married couples so poorly but this is what happens when the people writing the law are more concerned with getting a nice round CBO score instead of policies that make sense.

*Correction: A mistake was made regarding how the out-of-pocket cost for a couple is calculated and the section was deleted to reflect that.

Photo by Ryan Osawa, used under Creative Commons license