First marriages are taking place later in life. And, increasingly, couples are opting out of marriage entirely. Living together prior to marriage — or as a substitute for marriage — is about 15 times more common today than it was 50 years ago.

About half of all women of childbearing age have lived with a romantic partner prior to marriage. This figure approaches three-quarters of women in their 20s. Social conservatives may dismiss this as a case of waning morality — morally-challenged couples shacking up rather than entering into holy matrimony. Yet the reasons could be partially economic.

The decline of marriage may be partly due to so-called marriage penalties in the federal tax code, and in government welfare programs. You can add another penalty to the list: the ObamaCare exchange marriage penalty.

A centerpiece of ObamaCare is the establishment of health insurance exchanges where qualifying individuals can purchase subsidized, individual health insurance. However, these exchange subsidies — which are based on the federal poverty level (FPL) — are far more generous to cohabitating partners than to married couples.

The reason cohabitating couples fare better than married ones is because the federal poverty level does not rise proportionally with the number of individuals in the family. For example, the poverty level is $11,490 for an individual, but only increases to $15,510 for a married couple — just $4,020 more.

Thus, two unmarried individuals living together qualify for larger federal subsidies than they would if they were married.


But you say it’s time
We move in together;
Raise a family of our own,
You and me.

Consider the example of two young lovers moving in together to share expenses, each earning 200 percent of the FPL (about $22,980 annually). This is how cohabitation often starts; it’s a financial marriage of convenience — minus the marriage. If that same couple were to marry, their combined household income of $45,960 would rise as a percent of the poverty level from 200 percent (individually) to 296 percent for a family of two. Tying the knot boosts their family income on paper, but has the opposite effect on their bank account. For example:

Individually they would each qualify for a subsidy of about $1,087 each, or $2,174 per household.

If that same couple were to marry, their combined subsidy would fall to $753.

Thus, getting married would cost them $1,421 annually.

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Obamacare Marriage Penalty

It gets worse. Living together also increases the likelihood of raising children without the security of marriage. Government surveys find that about one-in-five women who begin cohabitating for the first time become pregnant within a year — a figure that doubles for some segments of the population.

Few people would argue that children don’t benefit from the stability that marriage provides a family. Yet if the cohabitating couple mentioned above were to have a child together, the Tax Policy Center estimates they would suffer an additional marriage penalty of $2,672 per year in higher taxes as a result of their decision to get married (although their ObamaCare exchange penalty would fall by $456). If the single mother applies for food stamps reporting only her own income and her and her child as her family size, she would likely qualify for an additional $1,800 in annual food stamp assistance unavailable to her if she was married. It is a reasonable bet that $5,437 (the combined marriage penalty worth about $453 per month) is a large enough financial incentive to make many couples like this hesitate about marriage.

The ObamaCare marriage penalty especially discourages low-to-moderate income cohabitating couples from marriage. National statistics already show cohabitating leads to marriage far less often among low-income couples than wealthier, more highly educated ones. Low-to-moderate-income couples who cohabitate are about twice as likely to forgo marriage as couples with a bachelor’s degree. This may be because the tax penalities take a bigger bite out of lower income couples’ budgets, discouraging a trip down the aisle.

It’s not just young, moderate-income couples who experience ObamaCare marriage penalties; older couples, and those with a middle-income can as well. Exchange subsidies are a function of both income and premiums, which vary by age and region of the country. Thus, married couples whose combined income surpasses 400 percent of poverty will receive no subsidy, when their individual incomes would qualify for a generous subsidy. In some instances where middle-aged couples live in high-cost regions, their marriage penalty can approach $7,000 or more.

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Obamacare Marriage Penalty

Increasingly, many couples may decide a marriage license is a luxury they cannot afford.

Here’s Megan McArdle’s take on this issue.


Devon HerrickDevon Herrick, Ph.D., is a preeminent expert on 21st century medicine, including the evolution of Internet-based medicine, consumer driven health care and key changes in the global health market. He was among the first health policy analysts to identify and publish in-depth policy reports on consumerism in health care, including: medical tourism, telemedicine, retail clinics, concierge medical practices, cosmetic medicine, “shopping for drugs” strategies and value-based health plan design. He has researched personal technology and medical aps that empowers patients to better manage their medical needs.