Obamacare: health care still too costly

My 34-year-old daughter (she is single) owned a business. It did not succeed. After closing the business January 1st, it took her 3 1/2 months to find a job.

Before finding the job she applied for ObamaCare. Her coverage kicks in May 1st but she will be forced to cancel it because the job she now has offers insurance. Her choices for insurance are free catastrophic or the next tier which is $115 a month. Both have a high deductible.

Her income for 2014 will end up being less than $20,000 or about $2154 a month before taxes for the remainder of 2014. She has a mortgage and debts from the failed business which cost her $1400 a month. This leaves her less than $500 a month for food, gas, heat, electricity, water/sewer and all other expenses. There isn’t one cent (I have worked the numbers with her) available for medical.

 ObamaCare allowed her to get into a decent insurance program but because she got a job she will be in the same boat she has been for 10 years – no way to afford medical care.

I advised my daughter to take the free catastrophic since it will keep her out of bankruptcy if she lands in the hospital (although I’m not sure how she would pay the deductible and other expenses). Is this the norm with ObamaCare? Before ObamaCare the options suggested – doctor’s offices with income tiers, low income clinics, etc – already existed. So, in effect, the working poor are still without affordable health care, with no means to go to a doctor for a check-up or when they are sick. I’d like someone to explain to me how ObamaCare is an improvement for her?

Cheryl in Maine

Dear Cheryl in Maine,

Your daughter’s case is very interesting.  Twenty thousand a year puts her right about 175% of Federal Poverty for a household of one.  She would therefore get subsidies to pay her deductible and co-pays.  The high deductible would be much reduced, in other words.  The $115 per month is roughly six percent of her income, which is how much the law requires people at her income level to pay.  The government pays the difference between her $115 and the total cost of her plan.  So, for buying her own plan, health reform gives her help to buy the plan and to pay the deductible.

I’m confused about her current situation.  I take it her current job offers her insurance that costs more than she can afford.  As long as her job “charges” her less than 9.5% of her gross income to join (and cover herself), then the subsidized plans on the exchange are not open to her.  An employer’s plan would take her share out of her paycheck before taxes, so the 9.5% bite ends up being less.   The employer’s plan also has to meet other health reform standards.

You are correct that the working poor may still find health insurance too expensive to afford.  The law recognizes this, in a way: people who would have to pay more than eight percent of their income for the lowest cost plan do not face the tax/penalty.  Going uninsured is still a viable option for many people.  The low income clinics, charity care, and other programs still exist to help people get medical care without insurance.

I hope that is helpful, though I’m not sure it answers your question.  I stay clear of politics as much as possible!

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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.