One of the most unfair aspects of the health care reform, whether it's the result of the legislation called the "Affordable" Care Act (but should have been called the Mandatory Care Act), or the result of how the Marketplace is actually run is this:
If your income falls within a certain range, 100% to 400% of the federal poverty level, and based on the number of people in the household, in general a person qualifies for a tax credit. This helps lower the annual cost of a premium.
*However--and this is often what most people either do not know or overlook-- a person who is offered employer sponsored health insurance is NOT eligible for tax credits, despite having the right income and household members for it, if the job-based insurance costs no more than 9.5% of the person's income (i.e., the ACA definition of "affordable" for job-based insurance), and if it pays for at least 60% of medical costs (the ACA definition for "quality"). It created a circumstance like this:
Person A needs health insurance. Living in a household of 2, he is the only person employed and his income is $32,000 annual. Because his income is between 100% and 400% of the federal poverty level ($15, 510 to $62, 040 for a household of 2), he goes to the Marketplace and finds he is eligible for a tax credit. He buys the lowest cost insurance that meets the federal standard (the so-called bronze plan) and ends up with a monthly premium of $200, with a tax credit lowering the cost to about $175.
Person B also needs health insurance. Living in a household of 2, he is the only person employed and his income is $32,000 annual. Because his income is between 100% and 400% of the federal poverty level ($15, 510 to $62, 040 for a household of 2), he goes to the Marketplace BUT -- when he is required to provide information asking if his employer is offering insurance, how much it costs, and if it meets the federal standard for quality, because this job-based insurance is not more than 9.5% of his income and it pays for at least 60% of medical costs, guess what? The results he gets do not indicate he qualifies for a tax credit. He can't get a Marketplace plan that is cheaper than his job-based insurance. The employer sponsored insurance has a monthly premium of $200, with no tax credit available.
Note the only difference between the two people above is one insurance plan is job-based and the other would be from the Marketplace. Anyone who is being offered job-based insurance is being denied the same opportunity for a tax credit as someone who can buy insurance through the Marketplace. The difference in cost depends on the case, but any way you look at it the person being offered employer sponsored health insurance is denied the chance of tax credits that could, based on the person's actual income, have lowered the cost of having to buy health insurance.
If the above doesn't convince you that something isn't quite fair, consider the numbers that are used to define "affordable" for an individual:
Job-based insurance: considered affordable as long as cost does not exceed 9.5% of the person's income
Private health insurance (including the Marketplace): considered affordable as long as cost does not exceed 8% of the person's income
So, 1) job-based insurance plans can cost an additional 1.5% of a person's annual income, PLUS 2) given it's job based insurance with a cost below 9.5% the person is disqualified for tax credits through the Marketplace, that's quite unfair for some people. In the case above, $200 is $200 whether you're paying for job-based insurance or a private/ Marketplace plan.
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