By NextBestFitHousehold: Family of three, $30k, Medicaid
Parent works part-time at a large retailer that doesn't offer coverage to part-timers; family is on Medicaid.
Result
−$1,414
How it's calculated
| # | Step | Arithmetic | Value |
|---|---|---|---|
| 1 | AGI today | $30,000 | |
| 2 | Employer premium (hidden compensation) | $0 | |
| 3 | Covered out-of-pocket costs end Deductibles, copays, coinsurance, and uncovered dental, vision, and hearing. | $200 | |
| 4 | Slower wage growth from employer tax Employer owes $2,250 in new health payroll tax on this worker; over time that is passed into lower wage growth. | −$1,777 | |
| 5 | Income tax on newly taxable compensation Premiums were paid with pre-tax dollars; wages are taxed. Federal + state. | $36 | |
| 6 | Employee FICA on newly taxable compensation 7.65% Social Security and Medicare. The Social Security part also raises future benefits. | $136 | |
| 7 | Income-based health premium 4.0% of AGI above the $28,000 exemption for a household of 3. | −$9 | |
| 8 | Net change per year, long run | −$1,414 | |
| 9 | Net change per year, Year 1 | $120 |
Trade-off: Money barely changes in the short run (a small new premium). The gain is access: physicians who refused Medicaid now accept this family's card. Long run: if the employer passes the new tax into wages, this family is worse off financially. A minimum wage limits how far wages can fall, so some of the cost would instead fall on prices or profits. This is one of the plan's most uncomfortable trade-offs.