ObamaCare Wants to Know: How Much Do You Will You Earn?

incomeThe problem:

Everybody that I’ve led through a CoveredCA application stumbles when they get to the subsidy section. The problem lies in the estimation of next year’s income. The law asks you to predict the future and that’s not possible to any degree of accuracy. California addresses the issue by requiring enrollees to login and update their information every time their income change…a requirement that’ll be forgotten (or ignored) by most people. I assume other states have a similar requirement.

And a suggestion:

Change the law to base next year’s subsidy on the current year’s income. If someone is signing up in the October through December enrollment period, they should be able to estimate year end income far more accurately than next year’s income. And if you’re signing up after January 1, the books are already closed.

InsureBlog.

Comments (13)

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  1. Billy says:

    So I can theoretically say that I predict I will become catastrophically ill with no chance of work and thus no income and receive a huge subsidy in California?

    • Wilbur says:

      Better yet, predict a natural disaster will happen that will destroy your job. Huge subsidy.

      • Wiliam says:

        Or we can just tell the truth that we have a President who is destroying our jobs, so I won’t have one next year.

  2. Mark says:

    Ah, the government requiring something from us that is impossible to provide?

    Par for the course.

  3. Tom G. says:

    “California addresses the issue by requiring enrollees to login and update their information every time their income changes”

    Not going to happen.

  4. Adam says:

    “Change the law to base next year’s subsidy on the current year’s income.”

    This just seems like common sense.

  5. Chris says:

    Better suggestion: Stop basing the subsidy on income, which is stupid, mucks up the tax code by creating artificially high marginal tax rates, and discourages work and productivity.

    Give everyone the exact same subsidy, give a millionaire and a homeless person the exact same subsidy.

    We don’t NEED a progressive benefits system if we have a progressive taxation system. If you want to raise the taxes on the millionaire so that the subsidy zeroes out, go ahead, but do it in the tax code. Give him a $10,000 subsidy (or whatever), and the raise his taxes by X% to result in an increase in tax bill of $10,000. (and really, if a guy making $1m a year who probably pays $450,000 in taxes, giving him a new healthcare subsidy of $10,000 is a net decrease in his taxes of 0.02%)

    Think of what a K.I.S.S. system that would be. All the problems with healthcare.gov stem from trying to figure out these subsidies. Get rid of all that BS. It would be so simple.

  6. Bob Hertz says:

    Chris you are absolutely right.

    Maybe the tough question is this however:

    would the ACA have passed if it had tax increases across the board to pay for level subsidies?

    It probably would not have passed. Is that all bad? If the body politic does not want a new program badly enough to tax themselves for it, maybe the program should not pass.