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Working but poor? Fear the dreaded coverage gap.

Q I’m a single, healthy, female non-smoker, age 26, living in Tennessee. According to the HealthCare.gov cost calculator, with a income of only $8,000 a year I won’t qualify for a subsidy to buy health insurance. How does that make any financial sense?  

A It doesn't! That is why the health reform law as originally written expanded Medicaid, the venerable government-run health insurance program for low-income families and disabled people, to cover everyone with an income below 133% of the federal poverty level, which includes you. 

But in its 2012 ruling on the constitutionality of the new health care law, the U.S. Supreme Court gave states the option of not expanding Medicaid, and Tennessee was one of the several dozen states that decided against it. 

However, the rest of the law was left untouched. Including, unfortunately, the income ranges that determine eligibility for financial help to lower the cost of premiums for private insurance. Because the original idea was to put all low-income households on Medicaid, the law confers subsidies only on households with incomes of between 100% and 400% of the federal poverty level. In states that aren't expanding Medicaid, this has created a "coverage gap" for people like you, who make too little to qualify for a subsidy but don’t fall into a category that’s already eligible for Medicaid. To fix this would require an act of Congress, which is unlikely given the current state of Washington politics.

So right now we are stuck with a two-tier system for the working poor. In states that are expanding Medicaid, they will enjoy free or nearly free health care. In states that aren't, they will remain uninsured and unable to get subsidies to buy private insurance. For a painful contrast you only need to look next door to Kentucky, which is expanding Medicaid. They've already enrolled more than 45,000 new people into the program.

The sad and frustrating thing is that states can expand Medicaid whenever they want to. What's more, that the federal government is picking up 100% of the cost for the first two years, and 90% after that, so it's a bargain for states. According to this recent report in the New York Times, your governor is trying to get expansion done but the state legislature is balking.

You might want to get in touch with your elected representatives to ask them why they think it's a good idea for low-income working people like yourself to remain uninsured.

Got a question for our health insurance expert? Ask it here; be sure to include the state you live in. And if you can't get enough health insurance news here, follow me on Twitter @NancyMetcalf. 

Health reform countdown: We are doing an article a day on the new health care law until Jan. 1, 2014, when it takes full effect. (Read the previous posts in the series.) To get health insurance advice tailored to your situation, use our Health Law Helper, below.

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