For example, one local hotel employee, who has been insured in the marketplace since the beginning, is currently deciding whether to keep her working hours reduced so she can stay on the Essential Plan health insurance she has through the New York State of Health insurance marketplace (the state vehicle for the Affordable Care Act), or go without insurance and work the career she enjoys full time.
“It’s not affordable,” said the hotel employee. “It’s like your high school teacher is giving you homework without understanding that every other teacher is giving you homework. They think theirs is the only one that matters. It isn’t just your healthcare that has to come out of your income; it’s your retirement and other things you need to plan for. Now, the conundrum is, do I keep not working so I qualify for healthcare or do I work as I’m able to and want to, and risk losing it?”
Tim Holmes, restaurateur and president of the Saratoga Springs Downtown Business Association, is hearing these worries from his own staff. He recently offered a $5,000 annual raise to an employee who has been doing excellent work, only to have the raise turned down.
“What is being conveyed back to us as the employer,” he said, “is our employees – at least a dozen – found they were over the threshold for their health coverage in NYS after doing their taxes. They come to it in complete shock. They worked so hard and are now told they’re being kicked out in 30 days. It’s (Affordable Health Care) not working the way it was intended.”
Holmes went on to say that in his industry, it’s very common for managers and owners to begin their careers as hourly workers. “That’s how Colleen (his wife and partner) and I did it,” he said. “The ripple effect is not allowing us to grow people with skills and earning potential and benefits, which we want for our employees, and it’s what they want, too.”
Holmes said the amount of salary increase needed to cover the Affordable Health Care costs are above and beyond a nice 8 or 10 percent annual raise. Raises would need to be double digits in order for employees to afford premiums and deductibles.
“This puts employers in quite the dilemma,” he said. “You have your full time employees becoming part time, or you’re paying a gross salary out of a business model that doesn’t support that level of income for that position.”
Combine this with the upcoming minimum wage increases, and Holmes is left to wonder how he and other small businesses will keep good employees when only large corporations and big box stores can afford to cover all these costs, especially considering employees asking him not to financially reward them for a good job well done, just so they can keep the Essential Plan.
The problem with the Affordable Care Act that its creators failed to consider is the impact of the dramatic cut-off point between options with financial assistance and those without. Below 200 percent of the Federal Poverty Level, the Affordable Care Act is a relief and very affordable. But once household income hits 201 percent of the Federal Poverty Level, or even just one penny over it, the pain begins.
To put it in perspective, 200 percent of the Federal Poverty Level is equivalent to $48,600 for a family of four, and 400 percent is $97,200 for the same family size.
An educator residing in Saratoga Springs is struggling with that 200 percent line because her husband is involved in the current Verizon labor strike, so her family of four is facing many tough decisions, including health insurance.
Not able to afford the $1,700 per month cost of COBRA, which would continue the coverage they had under her husband’s plan, the family turned to the healthcare marketplace and were initially told that, due to the loss of her husband’s income, they would qualify for the Essential Plan, an affordable $20 monthly premium, because her income alone is below 200 percent of the FPL for their size family.
“We were so relieved,” said the educator. Here were their tax dollars at work, this middle class family who has been paying taxes for years, and now in an emergency, the government is doing its part to help.
At least, so it seemed. A few days later, her husband’s union representative said he was sure the husband’s income would count, so the family went back to the marketplace navigator from the Adirondack Health Institute, who had initially advised them, to double-check, and was told – oops – the union representative was right. They had less than two weeks to come up with the insurance premium for a family of four at the current market rate. It would still be less expensive than COBRA, but the news was devastating to the family and a far cry from $20.
“To get a comparable plan to what we currently have,” said the educator, “we’d have to look at platinum plan, which has premiums from $600 to $1,000 per month and deductibles of $2,000 to $5,000 per person. Plus copays. Who can afford that?”
This is just one of a number of families discovering how unaffordable the healthcare marketplace really is. After 200 percent FPL, there are some cost-sharing benefits and tax credits that start to come into play, but the amount of assistance is sharply smaller in comparison, and at the end of the year come tax time, even the tax credits might have to be paid back.
This family’s children are in high school, so they have been facing college application fees, prom tickets and dresses, cap and gown and senior year expenses, on top of everything else. The sharp jump from $20 to $600 is not as bad as COBRA at $1,700, but still a serious hardship.
“I feel scared,” said the educator, “It’s not like that money from our regular income is sitting in the bank. It’s been spent on bills and regular living. I’m fearful that I won’t be able to maintain monthly bills, or worse yet, how we’re going to pay the bills, put food on the table, and upcoming college costs, when I do not get paid through the summer due to my teaching job?”
In addition to this family, the hotel employee, and Holmes’ restaurant staff, there is a hairdresser in Malta with allergies who can afford her premiums and barely afford her copays, but can’t afford to save for her future. There is a communications worker in Saratoga Springs who had already gone through a 50 percent income downsize during the recession in 2009, and is considering giving up the raise she just received that would have started heading her back on track, because it kicked her over the 200 percent FPL threshold.
Overall, the Affordable Care Act is an improvement, but like the politician who has no idea of the price of milk, the creators of the healthcare marketplace – perhaps unintentionally – shortened the distance between affordable and unaffordable health care to a penny. Just one penny over 200 percent of the Federal Poverty Level is making good, hard-working people locally and across the country fall over a financial cliff. They are turning down raises and promotions, choosing to work fewer hours, deciding between paying for health insurance or college application fees, and slowing their spending. Small businesses, as much of a backbone to the economy as the middle class, are losing full-time staff or seeing good workers walk away from careers they love just to take any big box job with health insurance.
The long-term consequences of the Affordable Care Act’s penny cliff remain to be seen.
For more information about the healthcare marketplace, Saratoga Hospital has trained, certified navigators to help individuals, families, and small businesses shop for, compare, and enroll in health insurance plans through NY State of Health: The Official Health Plan Marketplace. Call Saratoga Hospital Health Insurance Navigation Program at 518-580-2021 or, toll free, at 1-888-242-1418. To reach the marketplace directly, call NY State of Health Customer Service Center at 1-855-355-5777.