MacIver News Service | September 1, 2017

By M.D. Kittle

[Madison, Wis…] Work a little bit harder, earn just a little bit more, and the federal government will make you pay for your initiative.

That’s the story of the U.S. tax code, and that’s the story of Obamacare and its suite of health insurance premium subsidies that disappear once a taxpayer hits particular income thresholds.

Vern and Shari Colby found out working hard to get ahead comes with a steep price when it comes to Obamacare.

The River Falls couple earlier this week told MacIver News Service that they had to tap into their 401(k)s and ultimately sell their “forever home” after being hit with thousands of dollars in Obamacare penalties and skyrocketing health care bills.

But the Colbys’ health care nightmare is far from over.

Shari and Vern, both 50, in 2013 attempted to sign up for health care coverage through the Affordable Care Act, commonly referred to as Obamacare after its namesake, former President Barack Obama. Like millions of Americans, the Colbys had all kinds of trouble logging onto the constantly crashing website. “It took forever,” Shari recalled.

Finally she reached a real human being. An Obamacare customer service agent walked Shari through the application process and assured her that she and her husband would qualify for premium tax credits under the health care law. Vern works 60-hour-plus weeks as a milk truck driver. Shari logs between 30 and 35 hours per week as a florist. Their combined income in 2014 was around $60,000, Shari said.

The Colbys paid their premiums and ultimately submitted their check stubs to make sure they qualified for the subsidies they had received.

After they filed their tax return in March 2015, the IRS broke the bad news. The Colbys had to pay back the $7,000 they had received in subsidies to cover their expensive Obamacare premiums because they made a little too much money and slipped over the income threshold for the federal subsidies.

This year, the income cap on the health insurance tax credits for a married couple without qualifying children, like the Colbys, is just over $64,000 at 400 percent of the federal poverty level, and $48,000 at 300 percent. But even families under the threshold may be ineligible for subsidies based on other factors.

The Colbys were denied – long after they were told not to worry that if they were promised subsidies, they could keep their subsidies.

“It’s not like we’re not trying to help ourselves. We were working and trying,” Shari said.

The surprise IRS bill was the proverbial straw that broke the Colbys’ financial back. The couple in recent years has encountered some severe health problems. Vern had a stroke. He was yanked off of scaffolding, breaking both of his feet. He was caught underneath a tractor, smashing his lungs. And Shari this summer suffered a back injury.

“We’ve got into our savings. We don’t buy new cars. We duct tape everything together and make it work,” Shari said. “We had to dip into our 401(k) on two different occasions. We did everything we can to stay afloat.”

“We’ve gone through all of any money we ever had and still had to sell our house,” she added.

But the Colbys’ sad health care odyssey continues.

They were priced out of Obamacare, and now have limited options for the bare bones short-term major medical policies they have been forced to purchase, Shari said. That’s a common problem across the country, as more and more health insurers drop out of the Obamacare marketplace.

“It’s a whole different monster,” Shari said. “As far as trying to get insurance, I am in a pickle right now.”

The Colbys’ current three-month policy expires later this month, and they’re looking at higher premiums and few choices ahead.

They’ve had to go without health insurance for a stretch because they simply couldn’t afford it.

They explored the Obamacare route again in late spring, but the Affordable Care Act has become even more unaffordable for the Colbys. They faced a monthly premium of $1,180, or $14,160 per year, with a $12,600 deductible, Shari said. Such costs would drive this middle income couple closer to the poverty line. Currently, the Colbys are paying $480 per month in premiums.

On top of all of that, Shari and Vern had to pay the Obamacare penalty for not carrying insurance for part of the year. The “shared responsibility fee” under the law’s individual mandate is 2.5 percent of taxable household income above the filing threshold.

Unsubsidized premiums are sharply higher this year than last year, according to, pushing more people – particularly healthy young people – out of the collapsing Obamacare marketplaces.

U.S. Sen. Ron Johnson (R-Oshkosh) called the Colbys the “quintessential example of the forgotten men and women within this health care system.”

“Shari and Vern…have been so drastically harmed and damaged by Obamacare,” Johnson said.“They’re working hard, making a little too much money, but they simply can’t afford these premiums that have doubled and tripled, and it cost them their 401(k) and their house.”

Last year, the Colbys sold the River Falls home that Shari designed, the “forever home” where the couple had lived 26 of the 28 years they were married and where they’d hoped to spend their golden years. The property, built on Shari’s grandfather’s farmland, had even more sentimental value. Now it belongs to someone else.

“We would like to keep it in the family, but I guess it’s just sheet rock and concrete and wood,” Shari said. “We’ll take the memories with us.”

“I hope at some point, sooner rather than later, things change in a big way to make it easier for folks like us,” she said. “I’m not opposed to paying premiums but when they’re gouging you … it’s all a mess. The private sector and the public sector.”

This article appears courtesy of the MacIver Institute.
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