Our household income is well below the 400% of FPL, at which ACA subsidies go away. So the frustrating part is: If I was self-employed or worked at a company small enough to avoid offering health insurance, our entire family of 4 could buy an affordable plan through the exchange AND get a subsidy. But because I (and wife and kids thru me) have access to that plan, we are not eligible for the subsidized premiums, even though the cost of ~$10K is much more than the 9.5% or whatever of household income that the law uses as the benchmark to determine "affordable". It's called the "kid glitch" because the law is only concerned with whether the employer-offered coverage is "affordable" when measuring the cost of covering the individual employee! It completely ignores the cost to add other family to the plan. The sad part is, there are employees here that make half what I make, have more than 2 kids, but have the same bad options. Sign up the family for $10K a year or buy insurance on the exchange, but with no subsidy! no matter the proximity to the federal poverty level.
I hadn't heard about the kid glitch. Thanks for sharing! It's clear that this is one of the holes in the ACA that needs to be fixed. That said, at least the ACA guarantees access to plans for your family members, even if it doesn't subsidize them.
Why is this a glitch? It sounds as if he can afford it if there are others here who make half of what he makes. If you can afford it, why on earth would you be looking for a handout in the form of a subsidy? (Thats welfare!). I know it's no longer PC to feel shame in accepting handouts, but if you can afford the cost (even if you feel the pain) then you should be ashamed to ask for a handout! Subsidies are for people who really need them. Not for people who want to save money so they can retire early.
Keep in mind that the ACA only concerns itself with providing subsidies to those families between 133% and 400% of the family poverty level! That's right your family can earn up 4 times as much as a family at the poverty line and still get some subsidy for insurance premiums!! That makes for a pretty large group of folks eligible for "handouts". Don't forget there's a whole other government program to help families below 133% of the poverty line.
While we are on that subject, the "subsidy cliff" at 400% of the FPL is another unfair consequence of the ACA. The ACA subsidy brackets are not marginal like tax brackets. It your family's income comes in 398% of the poverty level, you get a significant subsidy. Earn 402% and you get nothing.
BlueHouse, I hope you can see that the discussion here is about fairness of this law using anecdotes from affected participants. There are guys at my company that have good jobs that pay $16 an hour, about twice the minimum wage. By the way, the FPL for a family of 4 is $23,850, so at $33,280, they far from "poor". They have always been "lucky" enough to work for a company that provides health insurance for them and their family. The problem for folks like that, before the ACA, was that they had to pay $10K per year!! to buy insurance for their family (and that's with the employer "subsidizing" (there's your dirty word) the employee portion. A family of 4, lucky enough to even have access to an employer plan, living on twice the minimum wage has to pay roughly 1/3 of their gross income for insurance. Surely that scenario is enough for you to recognize there was a need for health insurance reform. Surely you can see why a family in that situation would welcome reform. Surely you can see why those of us making more would see the need for reform, whether it affected us directly or not.
But that same family, after the ACA, is in the situation I first described. Why does it matter to you whether that man is on this early retirement forum chatting with us, trying to save for early retirement or just trying to feed his family? After the ACA, his options are more numerous, but no better. He still has to pay the same (higher actually) to cover his family on is employer plan. The cost to insure just himself on his work plan would cost him about .5% of their household gross. The cost to insure his family would be 30.4% of gross!! Is that affordable? It doesn't meet 9.5% limit outlined by the ACA. But do to the glitch, it's not the 30.4% that is used to measure. It is the .5%. Yes, the ACA now provides for an exchange for this family to go buy coverage for all 4 (or just the spouse and kids). But they are forced to pay the sticker price AND lose the benefit of paying with pre-tax money. If this couple is older, they will have no chance of buying an equivalent plan and saving on premiums. If they are very young there's a chance they may save some.
This family could live next door to family of 4 in which the working spouse also makes $16 an hour, but works for an employer small enough to not provide insurance. This family gets to buy insurance on the exchange and get a "subsidy" to ensure that their cost is not more than 9.5% of their gross household income. Do you think this family should show some pride and pass on this subsidy like you passed on free lunch? Or do you think they should feel guilty but take the handout the just like you take yours for your mortgage interest?
It's a shame that "subsidy" is such a loaded word that it has become the tree that hides the forest from you. As beltim points out, there countless "tax incentives" out there for home owners, retirement savers, etc that are in effect subsidies. Money is nothing but a tax credit anyway. Which means every tax incentive you take advantage of is just as much a handout as an the free lunch you avoided due to avoid shame or maintain your pride.