Affordable Care: Self-employed domestic partner may find cheaper coverage elsewhere

“I live with my partner and we are unmarried. We have two young children and my partner has another child aged 16 from her previous marriage.   I earn about $180,000 a year and she earns about $30,000 as a self- employed person. 

 My work provides health insurance on me for free. Up until now, I have been allowed to buy a family plan through my employer for my partner and our children and it costs something like $1,000 a month. 

 As we are unmarried it seems that we would be better off trying to buy insurance for my partner and the children through the California market place, but it is really unclear as to whether she would qualify for federal tax credits, as I am able to buy insurance through my work. 

My biggest question, I suppose, is how NOT being married affects all this for us and specifically how the fact that I CAN get coverage for her and our children affects her ability to get federal credits, and my obligation to buy the healthcare for her and the children through my work. 

Would it be cheaper for us to buy her insurance on the market place even without tax credits?” 

Forty-something in Frisco

Dear Forty-something in Frisco,

According to a Covered California spokesperson, your partner would not be able to get subsidies from the exchange, since she has access to an employer-sponsored plan.  As long as your employer’s plan meets health reform standards – essential health benefits and affordability – then she is considered not eligible for exchange-based (subsidized) plans.   It does not matter, in this case, that you are partners and not spouses.  The same is true for a spouse.

Your state is running its own health exchange, so the answer in your case is different from what I gave to another reader in Florida.

You can, as you suggest, look at “off exchange” (unsubsidized) plans.  It is possible that these will be cheaper.  It depends upon how generous your employer’s plan is, compared to the new health-reform plans.  For some people, the leap from their current plan to the “qualified” 2014 plans is large.  This is the reason for the sticker shock stories peppering the news.  You may or may not suffer sticker shock; don’t hold back on looking, in any case.  You might want to find an insurance broker to help you look.

There is another reason the off exchange plan might be cheaper: taxes.  Your coverage for her through your employer is post-tax dollars, unless you claim her as a tax dependent.  Buying a plan on the exchange would allow her, as a self-employed person, to pay for her health insurance with tax-free dollars.  Here is an IRS tip sheet on deducting health insurance premiums for self-employed people.

You also have the luxury of time.  Your partner can drop off of your employer plan when she gets her own plan, whether that is January 1 or later.  So, instead of being frantic to get a new plan by year-end, you can instead be frantic about holiday shopping or visiting relatives  or other heartwarming hassles.

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Linda Riddell

About Linda Riddell

A published author and health policy analyst with 25 years’ experience, Linda Riddell's goal is to alleviate the widespread ailment of not knowing what your health plan can do for you.