Does Obamacare Have an Affordability Glitch?


As the title suggests, the text of the Affordable Care Acts states explicitly that medium-sized and large employers — or those companies that employ 50 or more workers — must offer “affordable” coverage to those working more than 30 hours per week or face fines. “Affordable” health insurance, as defined by the legislation, means that premiums can cost no more than 9.5 percent of an employee’s income.

But industry and policy experts are postulating that the healthcare reform championed by President Barack Obama will actually make health insurance unaffordable for many low-wage workers employed by restaurants, retail stores, hotels, and similar businesses. The problem is simple to understand; premiums the government defines as affordable may just not be so easy to fit into budgets for many of the uninsured Americans the law was designed to help.

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For low-wage workers — many of whom live paycheck to paycheck and earn barely enough to cover basic necessities — 9.5 percent represents a lot of money. Take, for example, a restaurant worker who makes $21,000 per year. A premium that costs 9.5 percent of their income would run $1,995 for the whole year, or $166.25 per month, and the insurance would be considered by the federal government as affordable. In addition to the cost of premiums, workers could also face an annual deductibles amounting to about $3,000 before insurance starts paying healthcare costs.