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At biggest risk are people whose annual household income put them near the thresholds where the Obamacare subsidies make steep declines. These cliffs are steepest for those people who earn 150% of the federal poverty level (a family of four earning $35,000 in annual household income); 250% (a family of four earning about $55,000 annually); and 400% (a family of four earning about $95,000 annually).
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Take this example: A family of four whose annual household income is $90,000 will get a $3,700 premium subsidy to buy Obamacare. If their household income rises to $96,000, they get nothing. So if they have already received (and spent) that $3,700 subsidy on health insurance, then in 2015 theyll owe the money back to the IRS.
The Obamacare Tax That Nobody Expects - Forbes
Considering that Obamacare is more about wealth redistribution and a power grab than health care, this doesn't surprise.
People who could afford plans before now pay way more or go without. No sympathy for the higher number of people uninsured now. The administration has no sympathy for the sick people who lost insurance since they just cost money anyway and who needs them?
People who didn't want or couldn't afford plans before are still opting out because the costs are ridiculous. And the libs are mad because these people were supposed to pay through the nose to make their scheme work.
People who get subsidies are the only ones who think it's great and now we know that they are being fooled and will have hell to pay later.
The only ones comfortable are those who live off others. Of course, good luck to them on finding doctors who actually accept Obamacare patients. How many people will have insurance but no actual health care?
At the margin a rounding error that puts you $0.01 over the line costing $3,700 is a marginal tax rate of 37,000,000% minimum.
At the margin a rounding error that puts you $0.01 over the line costing $3,700 is a marginal tax rate of 37,000,000% minimum.
I'd be interested in knowing where they pulled that number from. The value of the premium subsidy is the difference between the price of the 2nd cheapest silver plan available to a family and some percentage of that family's income.
The percentage depends on the family's income; for a family near the subsidy cut-off point, that percentage is 9.5%. So for a family of four making $90,000, the relevant number is 9.5% of $90,000, or $8,550.
The other piece of the puzzle, the value of the 2nd cheapest silver plan available, depends on the particular marketplace and the age of the adults in the family. But across all of the marketplaces using healthcare.gov, the average age-weighted premium for that benchmark silver plan) is $774/month or $9,288/year.
So the average value of the subsidy for a family of 4 making $90,000 is going to be $9,288 - $8,550 = $738.
For a family of four at the actual cutoff ($94,200 for a family of four), the value of the subsidy at the "cliff" is actually $339. If you did the same exercise for an individual at the cutoff ($45,960) using the weighted average for benchmark individual silver plans ($328/month), you'd actually find no cliff at all because the subsidy has already phased out by that point--the required contribution of someone at the threshold already exceeds the value of the 2nd cheapest silver plan, so they're receiving no subsidy.
Again, the actual value of the subsidy at the cliff is going to vary based on the local price of the plan (which scales with age), this is just the average size of the cliff. But a cliff of a few hundred dollars for a family making nearly $100,000 isn't much of a cliff.
