REPORT: Obamacare Will Punish Older Workers
WASHINGTON — Older adults of the same age and income with similar medical histories would pay sharply different amounts for private health insurance due to what appears to be an unintended consequence of the new health care law.
Aware of the problem, the administration says it is exploring options to address a potential disparity that could mean added controversy for President Barack Obama’s health care overhaul. The law expands coverage to more than 30 million uninsured people and would require most Americans to carry insurance.
The glitch mainly affects older adults who are too young for a Medicare card but have reached 62, when people can qualify for early retirement from Social Security. Sixty-two is the most common age at which Americans start taking Social Security, although their monthly benefit is reduced.
As the health care law is now written, those who take early retirement would get a significant break on health insurance premiums. That’s because part or all of their Social Security benefits would not count as income in figuring out whether they can get federal subsidies to help pay for coverage until they become eligible for Medicare at 65.
“There is an equity issue here,” said Robert Laszewski, a former health insurance executive turned policy consultant. “If you get a job for 40 hours a week, you’re going to pay more for your health insurance than if you don’t get a job.”
The Obama administration says it is working on the problem.
“We are monitoring this issue and exploring options that would take into account the needs of Social Security beneficiaries, many of whom are disabled or individuals of limited means,” Emily McMahon, a top Treasury Department policy official, said in a statement to The Associated Press.
Other officials, speaking on condition of anonymity because the issue is politically sensitive, said the administration is concerned because the situation could create a perception that some people are getting a worse deal compared with their less-industrious peers.
McMahon doubted that what amounts to a hefty health care discount would start a stampede toward early retirement at a time when many experts are urging older Americans to stay on the job longer. Only a “limited number of individuals” would decide they’re better off not working, she said.
To see how the Social Security wrinkle would work, consider a hypothetical example of two neighbors on the same block.
They are both 62 and have the same income of $39,500 a year. But one gets all his income from working, while the other gets $20,000 from part-time work and $19,500 from Social Security.
Neither of them gets health insurance on the job. Instead, they purchase it individually.
Starting in 2014, they would get their coverage through a new online health insurance market called an exchange. Millions of people in the exchanges would get federal tax credits to make their premiums more affordable. Less-healthy consumers could not be charged more because of their medical problems.