The feds now must recognize same-sex marriage. That changes Obamacare.

June 26, 2013

Welcome to Health Reform Watch, Sarah Kliff’s regular look at how the Affordable Care Act is changing the American health-care system — and being changed by it. You can reach Sarah with questions, comments and suggestions here. Check back every Monday, Wednesday and Friday afternoon for the latest edition, and read previous columns here.

A year ago, the Affordable Care Act starred front and center as the most-anticipated Supreme Court decision that session. This session, two rulings on same-sex unions took the spotlight: In one, the high court decided Wednesday to overturn the Defense of Marriage Act, requiring the federal government to recognize gay marriages.

(Photo by Mark Wilson/Getty Images)
(Photo by Mark Wilson/Getty Images)

And this time around, the Affordable Care Act has a supporting role: to require the feds to recognize that same-sex marriages now change how the health law's insurance expansion works.

The health reform law uses income levels to determine who is eligible for what subsidies. Anyone earning less than 133 percent of the federal poverty line ($15,320 for an individual) will qualify for Medicaid coverage if the state is expanding Medicaid. Anyone earning from 133 percent to 400 percent of the poverty line qualifies for a tax subsidy to purchase health insurance.

The federal poverty line is very important here, as it determines who gets financial assistance and who does not. The poverty line also varies by family size, increasing incrementally as the family grows larger, as shown in this chart.

This brings us back to DOMA: With the United States recognizing same-sex marriage, a same-sex couple can be counted by the federal government as one family unit. Instead of two separate individuals applying for health benefits, each judged by the federal poverty line for one person, they're now a team. Their federal poverty line is $15,510.

What does this mean for same-sex couples? A preliminary analysis from tax firm Jackson Hewitt suggest it largely depends on what each person earns. A couple where both have similar earnings could stand to lose out, as combining their incomes would put them above the 400 percent federal poverty level threshold for receiving benefits.

"For example, same-sex partners who each have an income of $40,000 may be eligible for the premium assistance tax credits under the ACA – but only if they remain single," the Jackson Hewitt analysis suggests. "If they marry (in those states that allow same-sex marriage), then they would lose eligibility because their income would be over the threshold for a household of two."

But there's also a potential for benefit for couples who have relatively different salaries. For example, say one spouse is unemployed and one earns $50,000. Separate, the unemployed person would qualify for benefits, but the $50,000 earner would be ineligible, having a salary too high to qualify.

Put them together in a family unit, however, and their combined earnings are now low enough to qualify both of them for a tax credit.

These are two relatively simple situations; others will certainly be more complex. And there's still a question of whether it's in a gay couple's best financial interest, under the Affordable Care Act, to be married (although likely not a couple's primary concern!). In that previous example, the unemployed spouse would get a much bigger salary if he or she had no income at all, rather than part of a unit earning $50,000.

"Suffice it to say, it’s complicated – and these are just the federal tax issues!" the Jackson Hewitt analysis concludes. "Further, we expect  guidance from the Internal Revenue Service and other federal agencies later this year to clarify some of the outstanding questions."

KLIFF NOTES: Top health policy reads from around the Web.

Working poor lose out in states that don't expand Medicaid. "Ruiz, a home health aide to Medicaid patients, has no medical insurance herself. Her best shot at getting access to doctors and medicines for her own needs was through President Barack Obama’s expansion of the federal-state Medicaid programs. That hope was scuttled for Ruiz and thousands of other health-care workers across Texas when the state opted out of the Medicaid expansion earlier this month. Texas has the highest rate of uninsured people in the U.S." Alex Wayne and David Mildenberg in Bloomberg.

The White House is looking for celebrities to pitch Obamacare. "The White House is working to recruit Hollywood celebrities to help promote ObamaCare, a top celebrity political adviser told The Hill. Trevor Neilson, a veteran of the Clinton White House, said he's in talks with the Obama administration and that his clients are "looking at ways to be involved." Elise Viebeck in the Hill

In the wee hours of the morning, after 13 hours of filibuster and debate, Texas failed to pass a set of sweeping abortion restrictions. "The nation watched on Tuesday — and into Wednesday — as Democratic Sen. Wendy Davis and hundreds of impassioned reproductive rights advocates stalled proceedings and ultimately defeated controversial abortion legislation in a storm of screams and shouts as the clock struck midnight." Becca Aaronson in the Texas Tribune

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