By NextBestFitHousehold: High-earning family, $400k, job-based coverage
One earner at a large employer, family plan, two children.
Result
−$12,190
How it's calculated
| # | Step | Arithmetic | Value |
|---|---|---|---|
| 1 | AGI today | $400,000 | |
| 2 | Employer premium (hidden compensation) | $20,143 | |
| 3 | Worker premium contributions end Paycheck deductions for health insurance stop. | $6,850 | |
| 4 | Covered out-of-pocket costs end Deductibles, copays, coinsurance, and uncovered dental, vision, and hearing. | $3,000 | |
| 5 | Slower wage growth from employer tax Employer owes $30,000 in new health payroll tax on this worker; over time that is passed into lower wage growth. | −$7,783 | |
| 6 | Income tax on newly taxable compensation Premiums were paid with pre-tax dollars; wages are taxed. Federal + state. | $355 | |
| 7 | Employee FICA on newly taxable compensation 7.65% Social Security and Medicare. The Social Security part also raises future benefits. | $71 | |
| 8 | Income-based health premium 4.0% of AGI above the $32,000 exemption for a household of 4. | −$14,683 | |
| 9 | Net change per year, long run | −$12,190 | |
| 10 | Net change per year, Year 1 | −$8,271 |
Trade-off: The employer tax on a $400k salary ($30,000) exceeds the family premium ($20,143), so total compensation falls in the long run. Today's flat premium is a much smaller share of this family's income than of a $60k family's. That is why this family pays more.