To illustrate, let’s start with the 60-year-old married couple with no children whose situation I illustrated at the end of Part 1:
If they have identical earnings totaling $65,000, which will usually net down to $50,000 or below after all income and payroll taxes, their Obamacare exchange Silver Plan premium next year with the same earnings will be
$16,382, or about one-third of what used to be their take-home pay. (And they call it the “Affordable Care Act”?)
What can this couple do? Well, they could decide to earn a few thousand dollars less, which will negate the five-figure premium hit. Encouraging ordinarily willing workers to put in less effort isn’t good in any economy, but especially
not this one. But if either spouse’s earnings are unpredictable or hard to precisely track, they could still “mess up” and get socked with a premium they can’t afford.
The “easiest” solution would be to avoid the “wedding tax” entirely by getting divorced while still living together. Here’s what would happen if they make that choice:
Instead of facing an exorbitant premium increase once their combined earnings hits $62,041 if they were to stay married, each cohabiting adult can earn up to $45,960 before Obamacare’s “tax credit”-free premiums kick in. Their annual after-tax savings at age 60 if they shack up and keep their individual earnings between $31,021 and $45,960 will range from $7,650 to over $11,000. The annual savings will slightly increase every year until Medicare kicks in at age 65. That kind of money can buy a lot of gifts for the grandkids.
But the grandkids will also face the prospect of seeing their moms and dads divorce because of Obamacare.
Let’s look at the situation of a 40-year-old couple with two children. The spouses’ annual earnings are $70,000 and $23,000, respectively:
The couple’s annual unsubsidized premium while married is
$11,547 (OFA’s vaunted “tax credits” disappear at $92,401 for married couples with two children). But if they divorce and shack up while giving custody of both children to the lower-earning spouse, their combined annual premiums, at $4,317, will be over $7,200 lower. That’s over $600 a month. As was the case in the previous example, the savings from divorce will gradually increase every year. Parents will be torn between doing what Western civilization has considered morally right for millennia and their children’s financial well-being as never before.
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Originally Posted by jillian
