No doubt you have read that if you are single, and earn less than 400% of the Federal Poverty threshhold (roughly $46,000 for an individual or $94,200 for a family of four) you will be eligible for a tax credit to help you cover the cost of insurance premiums.
But most of us don’t fit into one of those two categories. What if you are a couple, or a family of three? What happens if you have four kids?.
As the table above reveals, if a couple has four children and earns less than $126,360 (400% of the FPL), they will be elibigle for the tax credits. Note: these credits are available only if you are self-employed, unemployed, or work for a company that does not offer affordable, comprehensive insurance. “Affordable” is defined as individual coverage that costs less than 9.5% of your income.
The credits are designed to make sure that no one who purchases their own insurance is forced to spend more than 9.5% of their income on health care. For instance, according to the Kaiser Family Foundation’s (KFF’s) new subsidy calculator, coverage for a 35-year-old couple with three children might cost $13,101./(This is an estimate; actual premiums will vary depending on where you live. Healthcare is much more expensive in some states than in others. ) If the parents earned roughly $100,000 a year, they would be asked to pay $9,500 toward their insurance and would receive a tax credit of $3,626.
This assumes that they purchase a “silver plan” which pays for an average of 70% of covered benefits. The family would owe the other 30% in the form co-pays and deductibles. But keep in mind that preventive care is free, there are no co-pays and the deductible does not apply.
Assuming they need care other than preventive care, total out-of-pocket spending would be capped at $12,750, even if the entire family wound up in a car accident, three of them were hospitalized, and two needed surgery.
If they preferred, the family could purchase a less expensive Bronze plan which would pay for 60% of covered benefits. Their co-pays and deductible would be higher, but once again, preventive care would be free, total cost sharing still would be capped at $12,700, and the premium for a Bronze plan would be lower: KFF estimates that a family of five earning $100,00 would still receive a subsidy of $3,626 and their share of the premium would be just $7,253.
Why is the Government Subsidizing Households That Earn more than $125,000?
If people choose to have four children, that certainly is their business. But why should I help pay for their healthcare?
The answer is two-fold:
First, people don’t necessarily choose to have 4 children –or more. Some couples are surprised (not to mention overwhelmed) when they disccover that they are having twins or triplets.
Secondly as a society, we care about children. We don’t want any child to go without needed care.
But there also is a pragmatic reason for supporting large families. If those children don’t receive preventive care such as dental checks as well as timely treatments when they are sick, down the road, we as a society will pay the price. The health of the population will play a major role in determining how productive we, as a nation, are.