How the Build Back Better legislation might affect your coverage

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Key takeaways

Just before Thanksgiving, the House of Representatives passed the Build Back Better Act (HR5376) and sent it to the Senate. The version that the House approved was scaled down from the initial proposal, but it’s still a robust bill that would create jobs, protect the environment, help families meet their needs, and improve access to health care.

Lawmakers had initially hoped that the bill would be enacted before Christmas. But the situation has changed in December, with West Virginia Senator Joe Manchin stating recently that he will not vote for the current Build Back Better legislation. The situation is still in flux, and it’s noteworthy that the nation’s largest coal miners union has asked Manchin to reconsider his position.

For the time being, we don’t know what might come of this. Manchin might reconsider, or the legislation might be changed to support his earlier requests, or it might be scrapped altogether and replaced with various piecemeal bills.

But for now, we wanted to explain how the House’s version of the Build Back Better Act would affect your health insurance in 2022 and future years. We’ll also clarify what you can already count on in 2022, even without the Build Back Better Act. And how should you handle the current open enrollment period, given that the legislation is still up in the air?

Let’s start with a summary of how the House’s version of the BBBA would affect people who buy their own health insurance (keeping in mind that we don’t know whether the Senate will pass any version of the BBBA, and if they do, what changes might be incorporated):

Law would extend larger and more widely available subsidies

The enhanced premium tax credit (subsidy) structure created by the American Rescue Plan (ARP) would remain in place through 2025, instead of ending after 2022. This would mean:

  • There would continue to be no “subsidy cliff” through 2025. Subsidies would be available to households earning more than 400% of the poverty level, as long as the cost of the benchmark plan would otherwise be more than 8.5% of household income.
  • Subsidies would continue to be larger than they were prior to the ARP. People with household income up to 150% of the poverty level would be able to enroll in the benchmark plan at no cost. And people with income above that level would continue to pay a smaller percentage of their income for the benchmark plan, relative to what they had to pay pre-ARP.

These enhanced subsidies have made coverage much more affordable in 2021, and the BBBA would extend them for another three years.

It’s also important to note that HHS finalized a new rule this year that allows year-round enrollment via HealthCare.gov for people whose income doesn’t exceed 150% of the poverty level. This rule remains in place for as long as people at that income level are eligible for $0 premium benchmark plans. Under the ARP, that would just be through 2022. But the BBBA would extend the availability of this special enrollment opportunity through 2025.

BBBA would include one-year extension of unemployment-related subsidies

The ARP’s subsidies related to unemployment compensation would be available in 2022, instead of ending after this year. The Congressional Budget Office (CBO) projects that about a million people will receive these enhanced subsidies, and that about half of them would otherwise be uninsured in 2022.

Under the ARP, if a person receives unemployment compensation at any point in 2021, any income above 133% of the poverty level is disregarded when they apply for a marketplace plan. That means they’re eligible for a $0 benchmark plan and full cost-sharing reductions (CSR).

The BBBA would set the income disregard threshold at 150% of FPL for a person who receives unemployment compensation in 2022. But the effect would be the same, as applicants at that income are eligible for $0 benchmark plans and full CSR. As noted above, there’s also a year-round enrollment opportunity for people whose income doesn’t exceed 150% of the poverty level (that’s available in all states that use HealthCare.gov; state-run marketplaces can choose whether or not to offer it).

As is the case under the ARP, the unemployment-related subsidies would be available for the whole year if the person receives unemployment compensation for at least one week of the year. But as is also the case under the ARP, the marketplace subsidies would not be available for any month that the person is eligible for Medicare or an employer-sponsored plan that’s considered affordable and provides minimum value.

Law would close Medicaid coverage gap for 2022-2025

In 11 states that have refused to expand Medicaid under the Affordable Care Act, there’s a coverage gap for people whose income is under the poverty level. As of 2019, there were more than 2.2 million people caught in this coverage gap (mostly in Texas, Florida, Georgia, and North Carolina). They are ineligible for Medicaid and also ineligible for premium subsidies in the marketplace.

The BBBA would close the coverage gap for 2022 through 2025. The current rules (which only allow marketplace premium subsidies if an applicant’s income is at least 100% of the poverty level) would be changed to allow premium subsidies regardless of how low a person’s income is.

This would be applicable nationwide, but subsidies would continue to be unavailable if a person is eligible for Medicaid. So in most states, subsidies would continue to be available only for applicants with income above 138% of the poverty level, as Medicaid is available below that level in the 38 states that have expanded Medicaid under the ACA.

In 2022, people who would otherwise be in the coverage gap would be eligible for $0 benchmark plans and full cost-sharing reductions (CSR). In 2023 through 2025, they would continue to be eligible for $0 benchmark plans, and their cost-sharing reductions would become more robust. Instead of covering 94% of costs for an average standard population (which is currently the most robust level of CSR), their plans would cover 99% of a standard population’s costs.

The CBO projects that the BBBA’s subsidy enhancements would increase the number of people with subsidized marketplace coverage by about 3.6 million. Many of those individuals would otherwise be in the coverage gap and uninsured.

Nothing would change about Medicaid eligibility or subsidy eligibility in the states that have expanded Medicaid. But the BBBA would provide additional federal funding for Medicaid expansion in those states for 2023 through 2025. Currently, the federal government pays 90% of the cost of Medicaid expansion, and that would grow to 93% for those three years.

Build Back Better Act would improve insulin coverage

The BBBA would require individual and group health plans to cover certain insulins before the deductible is met, starting in 2023. Enrollees would pay no more than $35 for a 30-day supply of insulin (or 25% of the cost of the insulin, if that’s a smaller amount).

This requirement would apply to catastrophic plans as well as metal-level plans. And although HSA-qualified high-deductible health plans are often excluded from new coverage mandates, that would not be the case here. In 2019, the IRS implemented new rules that allow HSA-qualified plans to cover, on a pre-deductible basis, some types of care aimed at controlling chronic conditions; insulin is among them.

Law would reset affordability rules for employer-sponsored coverage

Under ACA rules, a person cannot get premium subsidies in the marketplace if they have access to an employer-sponsored plan that provides minimum value and is considered affordable.

Under current rules, an employer-sponsored plan would be considered affordable in 2022 if the employee’s cost for employee-only coverage isn’t more than 9.61% of the employee’s household income. Under the BBBA, this threshold would be reset to 8.5% of household income for 2022 through 2025.

For some employees, this would make marketplace subsidies newly available. And for others, employers might opt to cover more of their premium costs, making their employer-sponsored coverage more affordable. But some employers might simply stop offering employer-sponsored coverage altogether, despite the fact that they would potentially be subject to the ACA’s employer mandate penalty if they have 50 or more employees (if an employer stops offering coverage, the employees can enroll in a marketplace plan with income-based subsidies).

It’s important to note that the BBBA would not address the family glitch. So the family members of employees who have an offer of affordable self-only coverage would continue to be ineligible for marketplace subsidies if they have access to the employer-sponsored plan, regardless of the cost. But prominent health law scholars have opined that the Biden administration could fix the family glitch administratively, without legislation. There is some cause to hope that the administration may do so.

BBA would make changes to MAGI calculation

The ACA has its own definition of modified adjusted gross income (MAGI), used to determine eligibility for premium tax credits and cost-sharing reductions (a very similar version of MAGI is used to determine eligibility for CHIP, Medicaid expansion, and Medicaid for children and pregnant women).

The BBBA would make a couple of changes to the way MAGI is calculated when a tax dependent has income or the household receives a lump sum payment from Social Security:

  • Through 2026, the first $3,500 in income earned by dependents would not have to be added to the family’s household income.
  • From 2022 onward, lump sum Social Security payments attributable to prior years would not have to be included in a person’s MAGI. The median processing time for a Social Security disability appeal is well over a year, so it’s common for people to wait a long time and then suddenly receive several months of Social Security payments all at one time. This can sometimes result in them having to repay premium tax credits for the year in which they receive the lump sum. The BBBA would prevent that in future years.

What does this mean for the current open enrollment period?

Given that the legislation is still up in the air, here’s what you need to keep in mind when enrolling in coverage for 2022:

General subsidies

  • There is no set income cap for marketplace subsidies in 2022. That provision is already in place, and doesn’t depend on the BBBA. (Your eligibility for a subsidy does depend on your income, but that eligibility now extends above 400% of the poverty level in most places, depending on your age.)
  • The more robust subsidy structure that the ARP introduced this year will continue to be in effect in 2022, regardless of whether the BBBA is enacted.
  • Subsidies are much larger and more widely available than they were last fall. And most of the ARP’s subsidy enhancements were already slated to continue through 2022. This means most enrollees can sign up now and rest assured that their 2022 coverage options and subsidy amounts will not change if and when the BBBA is enacted.

Unemployment-related subsidies

  • If you received unemployment compensation in 2021 and got the ARP’s unemployment-related subsidies, you may find that your after-subsidy premium is currently slated to increase significantly for 2022, due to the expiration of the unemployment-based subsidies.
  • If you’re still going to be receiving unemployment compensation after the start of 2022, you might end up qualifying for another round of robust subsidies in 2022. But that will depend on the BBBA. For the time being, the application will just ask for your projected income, which will need to include the total amount that you expect to earn in 2022. That might result in a substantial subsidy or not, depending on your household’s specific details.
  • The fact that open enrollment continues through at least January 15 in most states can be used to your advantage. For now, you can enroll in the plan that best fits your budget based on the existing subsidy rules for 2022. (In some states, you still have time to sign up for coverage that starts January 1, although most states are now enrolling people in plans with February effective dates.) If the BBBA is enacted in early January, you would then have a chance to pick a different plan prior to the end of the open enrollment period. It would have a February effective date (or March, depending on the state) and your out-of-pocket costs would reset to $0 on the new plan. But for some people, this will be the opportunity to upgrade from a Bronze plan to a Silver plan, so it’s worth considering as an option if you know that you’ll still be receiving unemployment compensation after the start of 2022.
  • If the BBBA isn’t enacted by mid-January, you should still keep an eye on this. A different version of the bill, or smaller piecemeal versions, might be enacted later in 2022. If that happens and unemployment-based subsidies are included in the final legislation, you might become eligible for new subsidies at that point. That may or may not come with a special enrollment period to allow people receiving unemployment compensation to switch plans. For now, it’s all up in the air, but the situation could change in 2022.

Learn how you might avoid the coverage gap

If you have a low income, are in a state that hasn’t expanded Medicaid, and the marketplace is showing that you’re not eligible for any premium tax credits, you’ll want to read this article about ways to avoid the coverage gap.

Assuming you can’t get out of the coverage gap for the time being, you’ll want to keep a close eye on the BBBA. If it’s enacted with the same coverage gap provisions that the House approved, you may be eligible for full premium tax credits as of early 2022. And you’d have a chance to enroll in coverage at that point.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

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Four reasons to not wait until January to enroll in an ACA health plan

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Reasons to enroll in an ACA health plan by December 15?

  1. If you’re currently uninsured, delaying your enrollment will mean no coverage in January.
  2. If you’re uninsured or enrolled in a non-marketplace plan, delayed enrollment might mean missing out on free money.
  3. If you’re auto-renewing your 2021 plan, you could by surprised on January 1.
  4. Out-of-pocket expenses under your 2021 plans won’t transfer in February and March.

Open enrollment for 2022 individual/family health coverage began on November 1. The enrollment window is longer this year, continuing until at least January 15 in nearly every state. (For now, Idaho still plans to end the open enrollment period on December 15.)

The longer open enrollment period does give people some extra wiggle room during the busy holiday season. But for most people, December 15 is still the soft deadline you’re going to want to keep in mind. In most states, that’s the last day you can enroll in coverage that will take effect January 1.

Which states have open enrollment dates past December 15 – but still have January 1 effective dates?

There are some exceptions, however. The following state-run exchanges are giving people extra time to sign up for a plan that takes effect January 1:

But in the rest of the country, you need to enroll by December 15 to have your plan start on January 1. And that’s important for several reasons.

1. Currently uninsured? Delaying your enrollment will mean no coverage in January.

If you’re not already enrolled in ACA-compliant coverage in 2021, the current open enrollment period is your chance to change that for 2022.

But if you wait until the last minute to enroll, you won’t have coverage in place when the new year begins. Instead, you’ll be waiting until February 1 — or March 1 – if you enroll at the last minute in a few states with longer enrollment windows.

2. Currently uninsured or enrolled in a non-marketplace plan? Delayed enrollment might mean missing out on free money.

If you considered marketplace coverage in the past and found it to be unaffordable, you might currently be uninsured or enrolled in a plan that isn’t regulated by the ACA. Or you might have opted to buy ACA-compliant coverage outside the exchange, if you weren’t eligible for premium tax credits (subsidies) the last time you looked.

But thanks to the American Rescue Plan, many people who weren’t eligible for subsidies in previous years will find that they are now. Those subsidies are only available if you’re enrolled in a marketplace/exchange plan, and the current open enrollment period is your chance to make the switch to a marketplace plan.

In addition to being more widely available, premium subsidies are also larger than they were last fall. People who didn’t enroll last year due to the cost may find that coverage now fits in their budget.

Four out of five people shopping for coverage in the 33 states that use the federally-run marketplace (HealthCare.gov) will find that they can get coverage for $10/month or less. And millions of uninsured Americans are eligible for premium-free coverage in the marketplace, but may not realize this.

Waiting until the last minute to enroll in coverage will mean that you leave all that money on the table for January. You can use our subsidy calculator to get an idea of how much your subsidy will be for 2022. Then, make sure you enroll by December 15 so that you’re eligible to claim the subsidy for all 12 months of the year.

3. Letting your plan auto-renew? You might be in for a surprise.

If you already have coverage through the marketplace in 2021 and are planning to just let it auto-renew for 2021, you might wake up on January 1 with coverage and a premium that aren’t what you expected.

Even if you’re 100% happy with the plan you have now, you owe it to yourself to spend at least a little time checking out the available options before December 15. The premium that your insurer charges is likely changing for 2022. And your subsidy amount might also be changing, especially if there are new insurers joining the marketplace in your area.

Your insurer might also be making changes to your benefits, provider network, or covered drug list — or even discontinuing the plan altogether and replacing it with a new one. In short, the plan and price you have on January 1 might be quite different from what you have now.

This is part of the reason HHS opted to extend the open enrollment period – in order to give people a chance for a “do-over” if their auto-renewed plan isn’t what they expected. In nearly every state, you’ll have until at least January 15 to pick a new plan. But that plan selection won’t be retroactive to January 1.

4. Out-of-pocket expenses won’t transfer in February or March.

What if you’re enrolled in a marketplace plan in 2021, let it auto-renew for 2022, and then decide after December 15 that you’d rather have a different plan? Thanks to the extended open enrollment period, you can do that, and your new plan will take effect in February (or potentially March, if you’re in one of the state-run exchanges with the latest enrollment deadlines).

But it’s important to understand that you’ll be starting over with a new plan in February or March. This means the out-of-pocket costs counted against your deductible and out-of-pocket maximum will reset to $0, even if you ended up with out-of-pocket expenses in January.

Out-of-pocket expenses reset to $0 on January 1 for all marketplace plans, so your auto-renewed policy will start over with a new deductible at that point. But if you need medical care in January (and have associated out-of-pocket costs) before your new plan takes effect in February, you’ll potentially have a higher out-of-pocket exposure for the whole year than you would have if you’d picked your new plan by December 15 and had it start January 1.

All of this is a reminder that while most enrollees have until at least mid-January to sign up for 2022 coverage, it’s in your best interest to get your plan selection sorted out by December 15.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

The post Four reasons to not wait until January to enroll in an ACA health plan appeared first on healthinsurance.org.

Think you’re not eligible for ACA subsidies? Think again.

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Who should review their eligibility for 2022 health insurance subsidies?

  1. The uninsured, many of who will be eligible for free or very low-cost health coverage
  2. Consumers who purchased coverage that’s not ACA-compliant
  3. Consumers who bought ‘off-exchange’ health plans
  4. Consumers enrolled in on-exchange plans, but who haven’t provide income details to the exchange or haven’t reconsidered their options recently

For millions of Americans, the open enrollment period (OEP) to shop for 2022 ACA-compliant coverage will be unlike any of the previous eight OEPs. The reason? These consumers will – for the first time – be able to tap into the Affordable Care Act’s premium tax credits (more commonly referred to as health insurance subsidies).

Thanks to the American Rescue Plan, consumers who in previous years might have found themselves outside the eligible level for subsidies – or who may have found that subsidy amounts were so low as to not be enticing – are now among those eligible for premium tax credits. So if you haven’t shopped for health insurance lately, you might be surprised to see how affordable your health coverage options are this fall (starting November 1), and how many plan options are available in your area.

Millions have already tapped into the subsidies

Most people who currently have coverage through the health insurance exchanges have seen improved affordability this year thanks to the American Rescue Plan (ARP). That includes millions of people who were already enrolled in plans when the ARP was enacted last March, as well as millions of others who signed up during the special enrollment period that continued through mid-August in most states (and is still ongoing in some states).

But there are still millions of others who are either uninsured or have obtained coverage elsewhere. And there are also people who already had coverage in the exchange in 2021 but didn’t take the option to switch to a more robust plan after the ARP was implemented. If you’re in either of these categories, you don’t want to miss the open enrollment period in the fall of 2021.

The Build Back Better Act, which is still under consideration in Congress, would extend the ARP’s subsidies and ensure that health insurance stays affordable in 2023 and beyond. But even without any new legislative action, most of the ARP’s subsidy enhancements will remain in place for 2022.

That means there will continue to be no upper income limit for premium tax credit (subsidy) eligibility, and the percentage of income that people have to pay for the benchmark plan will continue to be lower than it was in prior years. The overall result is that subsidies are larger than they were in the past, and available to more people.

Who should make a point to review their subsidy eligibility?

So who needs to pay close attention this fall, during open enrollment? In reality, anyone who doesn’t have access to Medicare, Medicaid, or an employer-sponsored health plan – because even if you’re already enrolled and happy with the plan you have, auto-renewal is not in your best interest.

But there are several groups of people who really need to shop for coverage this fall. Let’s take a look at what each of these groups can expect, and why you shouldn’t let open enrollment pass you by if you’re in one of these categories:

1. The uninsured – eligible for low-cost or NO-cost coverage

The majority of uninsured Americans cite the cost of coverage as the reason they don’t have health insurance. Yet millions of those individuals are eligible for free or very low-cost health coverage but haven’t yet enrolled. This has been the case in prior years as well, but premium-free or very low-cost health plans are even more widely available as a result of the ARP.

If you’re uninsured because you don’t think health insurance is affordable, know that more than a third of the people who enrolled via HealthCare.gov during the COVID/ARP special enrollment period this year purchased plans for less than $10/month.

Even if you’ve checked in previous years and couldn’t afford the plans that were available, you’ll want to check again this fall, since the subsidy rules have changed since last year.

2. Consumers enrolled in non-ACA-compliant plans

There are millions of Americans who have purchased health coverage that isn’t compliant with the ACA. Most of these plans are either less robust than ACA-compliant plans, or use medical underwriting, or both. They include:

People purchase or keep these plans for a variety of reasons. But chief among them has long been the fact that ACA-compliant coverage was unaffordable – or was assumed to be unaffordable.

There are also people who prefer some of the benefits that some of these plans offer (the fellowship of being part of a health care sharing ministry, for instance, or the abundantly available primary care with a DPC membership). But by and large, the reason people choose coverage that isn’t ACA-compliant, or that isn’t even insurance at all, is because ACA-compliant coverage doesn’t fit in their budgets.

This has long included a few main groups of people: Those who earned too much to qualify for subsidies, those affected by the “family glitch,” and those who qualified for only minimal subsidy assistance and still felt that the coverage available in the exchange wasn’t affordable.

(Another group of people unable to afford coverage are those who earn less than the poverty level in 11 states that have refused to expand Medicaid and thus have a coverage gap. Some people in the coverage gap purchase non-ACA-compliant coverage, but this population is also likely to not have any coverage at all. If you or a loved one are in the coverage gap, we encourage you to read this article.)

The ARP has not fixed the family glitch or the coverage gap, although there are legislative and administrative solutions under consideration for each of these.

But the ARP has addressed the other two issues, and those provisions remain in place for 2022. The income cap for subsidy eligibility has been eliminated, which means that some applicants can qualify for subsidies with income far above 400% of the poverty level. And for those who were already eligible for subsidies, the subsidy amounts are larger than they used to be, making coverage more affordable.

So if you are enrolled in any sort of self-purchased health plan that isn’t compliant with the ACA, you owe it to yourself to check your on-exchange options this fall, during the open enrollment period. Keep in mind that you can do that through the exchange, through an enhanced direct enrollment entity, or with the assistance of a health insurance broker.

3. Buyers enrolled in off-exchange health plans

There are also people who have “off-exchange” ACA-compliant plans that they’ve purchased directly from an insurance company, without using the exchange. (Note that this is not the same thing as enrolling in an on-exchange plans through an enhanced direct enrollment entity, many of which are insurance companies).

There are a variety of reasons people have chosen to enroll in off-exchange health plans over the last several years. And for some of those enrollees, 2022 might be the year to switch to an on-exchange plan.

Since 2018, some people have opted for off-exchange plans if they weren’t eligible for premium subsidies and wanted to enroll in a Silver-level plan. This was a very rational choice, encouraged by state insurance commissioners and marketplaces alike. But if you’ve been buying off-exchange coverage in order to get a Silver plan with a lower price tag, the primary point to keep in mind for 2022 is that you might find that you’re now eligible for premium subsidies.

Just like the people described above, who have enrolled in various non-ACA-compliant plans in an effort to obtain affordable coverage, the elimination of the income limit for subsidy eligibility is a game changer for people who were buying off-exchange coverage to get a lower price on a Silver plan.

Some people have opted for off-exchange coverage because their preferred health insurer wasn’t participating in the exchange in their area. This might have been a deciding factor for an applicant who was only eligible for a very small subsidy — or no subsidy at all — and was willing to pay full price for an off-exchange plan from the insurer of their choice.

But 2022 is the fourth year in a row with increasing insurer participation in the exchanges, and some big-name insurers are joining or rejoining the exchanges in quite a few states. So if you haven’t checked your on-exchange options in a while, this fall is definitely the time to do so. You might be surprised to see how many options you have, and again, how affordable they are.

4. Consumers enrolled in on-exchange plans, but no income details on file and no recent coverage reconsiderations

If you’re already enrolled in an on-exchange plan and you had given the exchange a projection of your income for 2021, you probably saw your subsidy amount increase at some point this year.

But if the exchange didn’t have an income on file for you, they wouldn’t have been able to activate a subsidy on your behalf (on the HealthCare.gov platform, subsidy amounts were automatically updated in September for people who hadn’t updated their accounts by that point, but only if you had provided a projected income to the exchange when you enrolled in coverage for 2021). And even if your subsidy amount did get updated, you might have remained on the plan you had picked last fall, despite the option to pick a different one after the ARP was enacted.

The good news is that you’ll be able to claim your full premium tax credit, for the entirety of 2021, when you file your 2021 tax return (assuming you had on-exchange health coverage throughout the year). And during the open enrollment period for 2022 coverage, you can provide income information to the exchange so that a subsidy is paid on your behalf each month next year.

Reconsidering your plan choice during open enrollment might end up being beneficial as well. If you didn’t qualify for a subsidy in the past, or if you only qualified for a modest subsidy, you might have picked a Bronze plan or even a catastrophic plan, in an effort to keep your monthly premiums affordable.

But with the ARP in place, you might find that you can afford a more robust health plan. And if your income doesn’t exceed 250% of the poverty level (and especially if it doesn’t exceed 200% of the poverty level), pay close attention to the available Silver plans. The larger subsidies may make it possible for you to afford a Silver plan with built-in cost-sharing reductions that significantly reduce out-of-pocket costs.

One other point to keep in mind: If you are receiving a premium subsidy this year, be aware that it might change next year due to a new insurer entering the market in your area and offering lower-priced plans. Here’s more about how this works, and what to consider as you’re shopping for coverage this fall.

The takeaway point here? Even if you’ve been happy with your plan, you should check your options during open enrollment. This is not the year to let your plan auto-renew. Be sure you’ve provided the exchange with an updated income projection for 2022, and actively compare the plans that are available to you. It’s possible that a plan with better coverage or a broader provider network might be affordable to you for 2022, even if it was financially out of reach when you checked last fall.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

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Congress boosted ACA subsidies. An enrollment surge followed.

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The American Rescue Plan, signed into law by President Biden on March 11 of this year, included major boosts to the affordability of health plans sold in the ACA marketplace for people of all incomes.

Effective through 2022 and likely to be made permanent by pending legislation, the ARP improvements to affordability were as follows:

  • A benchmark Silver plan (the second least expensive Silver plan) with strong cost sharing reduction (CSR) subsidies became free to enrollees with household income up to 150% of the Federal Poverty Level (FPL) and costs no more than 2% of income for enrollees with income up to 200% FPL. That’s a maximum of $43 per month for a single person with an income of $25,520.
  • The previous income cap on subsidy eligibility was removed, so that no one who lacks access to affordable coverage elsewhere (i.e., from an employer) has to pay more than 8.5% of income for a benchmark Silver plan (less at lower incomes). The eliminated cap was 400% FPL ($51,040 for an individual, $104,880 for a family of four), and some households with income well above that level now qualify for subsidies.
  • The percentage of income required to buy a benchmark Silver plan was reduced at all income levels.
  • Anyone who received any unemployment insurance income during 2021 was eligible for free high-CSR Silver coverage. (Note that the pending legislation calls for this subsidy enhancement to be extended by several years, but not necessarily made permanent.)
open enrollment 2021

Our 2022 Open Enrollment Guide: Everything you need to know to enroll in an affordable individual-market health plan.

Preceding and then coinciding with these major subsidy boosts, the Biden administration had opened an emergency Special Enrollment Period (SEP) running from February 15 through August 15 in the 36 states that use the federal ACA exchange, HealthCare.gov.

The SEP, implemented to help Americans get covered during the pandemic, functioned like a second open enrollment period: anyone who lacked access to affordable coverage from other sources (e.g., employers) could enroll in a marketplace plan. The 15 state-based exchanges also opened emergency SEPs, with somewhat different durations and conditions, summarized here.

ARP prompted an enrollment surge during the 2021 SEP

The enhanced subsidies were posted on HealthCare.gov on April 1, and in the state-run exchanges within a few weeks of that date. Existing enrollees were encouraged to update their information and get the new subsidies credited, and were allowed to switch plans if they chose.

Americans responded with a major surge in new enrollment and enrollment upgrades. From February 15 through August 15:

  • More than 2.8 million people enrolled in new health coverage. Of new enrollees, 91% qualified for premium subsidies.
  • Of new enrollees, 44% obtained coverage for less than $10 per month. Most of these enrollees (41% in HealthCare.gov states) received free coverage with the highest level of CSR. As a result, the median deductible fell from $750 in 2020 to $50 this year – meaning that half of enrollees obtained a plan with a deductible at or below that level (most of them in high-CSR Silver plans).
  • The average premium paid by new consumers during the SEP (Feb. 15 – Aug. 15) fell 30%, from $117 in 2020 to $81 in 2021.
  • Marketplace enrollment in August 2021, at 12.2 million, was 15% higher than in August 2020, the previous August high, and 22% above the pre-pandemic August high (see p. 14 here) recorded in 2016.
  • More than 200,000 new and existing enrollees qualified for free high-CSR Silver plans because they had received unemployment insurance income in 2021.

Savings were also dramatic for existing marketplace enrollees:

  • 8 million existing enrollees reduced the premiums on their existing plans or obtained new plans after ARP implementation.
  • Existing enrollees reduced their premiums by 50%, or by $67 per month, on average.

My premium went down how much?

To get a sense of the extent to which the ARP reduced enrollee costs (or encouraged people who might previously have considered coverage too expensive to enroll), consider these examples:

  • In November 2020, a 40-year-old in Miami with an income of $24,000 per year would have paid $115 per month for the least expensive available Silver plan, with a $1,500 deductible, and $119 per month for the second-cheapest Silver plan, with a $0 deductible. Thanks to the ARP, those plans would now cost this person $26 and $30 per month, respectively.
  • In November 2020, a pair of 60-year-olds in Dallas, Texas with an income of $70,000 – slightly over the income cap for premium subsidies, which the ARP eliminated – would have had to pay $1,669 per month for the lowest cost Gold plan, with a $2,300 deductible (Gold plans are cheaper than Silver Plans in Dallas), or $1,228 for the lowest cost Bronze plan, with an $8,550 deductible.
    Now, this couple can choose to pay $393 per month for the Gold plan (which includes free doctor visits and generic drug prescriptions, neither subject to the deductible), or consider two free Bronze plans with deductibles over $8,000, a $2/month Bronze plan with a $6,100 deductible, and other options. A BlueCross Silver plan available for $420 per month might also be in the mix, if, say, the provider network is preferable.

Which states saw the biggest gains in new enrollees?

The new enrollment surge – and the savings – was particularly strong in twelve states that had not enacted the ACA Medicaid expansion as of June 2021. Due to their failure to expand Medicaid, these states have a “coverage gap” for people who earn too little to qualify for marketplace coverage (less than 100% FPL, or $12,760 for an individual in 2021) but mostly also don’t qualify for Medicaid because of their states’ restrictive Medicaid eligibility. (That excludes Wisconsin, which has not enacted the ACA expansion but grants Medicaid eligibility to adults with income up to 100% FPL. Oklahoma, which expanded Medicaid beginning in July 2021, and Missouri, which will begin covering new Medicaid expansion enrollees in October, are included.)

These twelve states – Alabama, Florida, Georgia, Kansas, Missouri, Mississippi, North Carolina, Oklahoma, South Carolina, South Dakota, Tennessee, Texas and Wyoming – accounted for 1.55 million new enrollees during the SEP, or 55% of all new enrollees nationally.

In the non-expansion states, eligibility for marketplace subsidies begins at 100% FPL, as opposed to 138% FPL in Medicaid expansion states, where adults below that threshold qualify for Medicaid. Accordingly, in these states, about half of enrollees qualified for free high-CSR coverage, reporting incomes between 100% and 150% FPL. In these states, enrollment as of August 2021 (6.0 million) was 44% above enrollment in August 2019, the last pre-pandemic year (4.2 million).

More than 2 million people in non-expansion states are estimated to be stuck in the coverage gap – ineligible both for Medicaid and for ACA premium subsidies. For people in these states, reporting an income just below or just above 100% FPL ($12,760 for an individual, $26,200 for a family of four) is the difference between receiving no help at all and having access to free Silver coverage with high CSR and low out-of-pocket costs.

It’s important to keep in mind that the application for marketplace coverage requires an income estimate – and many people, unaware of the minimum income requirement, underestimate their potential income. For tips on how to make sure you leave no stone unturned in seeking help paying for coverage, see this post.

What do these numbers mean for 2022 open enrollment?

As open enrollment for 2022 approaches (it begins on November 1), the subsidies enhanced by the ARP remain in place for 2022. As Congress hashes out new investments for coming years in a pending budget bill, the pressure is intense to keep this good thing going in future years.

As of now, with the sad exception of those stuck in the coverage gap in states that still refuse to enact the ACA Medicaid expansion, any citizen or legally present noncitizen who lacks access to other forms of affordable coverage should be able to find it in the marketplace. If you need coverage, make sure to check out your options on HealthCare.gov or your state exchange.

The word that ACA marketplace plans are more affordable than ever has not yet reached many of the people who need coverage and qualify for premium subsidies. The Kaiser Family Foundation estimated in May that nearly 11 million uninsured people were subsidy-eligible. ACA enrollment assisters consistently report that many people who are eligible for coverage have no idea what’s on offer.

The Biden administration is trying to change that: after years of radical cuts in federal funds for enrollment assistance, the administration this year has allocated a record $80 million to fund nonprofit enrollment “navigator” groups charged with outreach as well as enrollment assistance. The Urban Institute forecast that if the ARP subsidies are made permanent – solidifying the perception that truly affordable coverage is here to stay — enrollment would increase by more than 5 million in 2022.

The emergency SEP provided a jump start, boosting coverage as of August more than 1.5 million above the August 2020 level. In a fraught and complex legislative session, Congress will most likely – though not certainly – do its part and extend the subsidies beyond 2022. There is certainly room for enrollment to run higher in the open enrollment season that begins on November 1.

Andrew Sprung is a freelance writer who blogs about politics and healthcare policy at xpostfactoid. His articles about the Affordable Care Act have appeared in publications including The American Prospect, Health Affairs, The Atlantic, and The New Republic. He is the winner of the National Institute of Health Care Management’s 2016 Digital Media Award. He holds a Ph.D. in English literature from the University of Rochester.

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Subsidy availability drives consumers to shop for health insurance

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A major premise of the Affordable Care Act (ACA) was that Americans who need to buy their own health coverage in the individual market should be able to obtain coverage – regardless of their medical history – and that the monthly premiums should be affordable.

The rules to facilitate those goals have been in place for several years now. And although they have worked quite well for some Americans, there have been others for whom ACA-compliant health coverage was still unaffordable.

But the American Rescue Plan, enacted earlier this year, has boosted the ACA’s subsidies, making truly affordable coverage much more available than it used to be.

The numbers speak for themselves: Exchange enrollment has likely reached a record high of nearly 13 million people in 2021, after more than 2.5 million people enrolled during the COVID/American Rescue Plan enrollment window, which ended this month in most states.

How much are consumers saving on health insurance premiums?

And the amount that people are paying for their coverage and care is quite a bit lower than it was before the APR’s subsidy enhancements. We can see this across the states that use the federally run exchange (HealthCare.gov), as well as the states that run their own exchanges:

  • Among the people who enrolled during the recent special enrollment period in the 36 states that use HealthCare.gov, average after-subsidy premiums were 27% lower than the amounts people were paying pre-ARP.
  • Among HealthCare.gov enrollees who signed up during the special enrollment period or who updated their enrollments to claim the enhanced subsidies, 35% are now paying less than $10/month for their coverage.
  • Average deductibles for new HealthCare.gov enrollees were 90% lower than pre-ARP deductibles, likely driven in large part by the number of people who were able to enroll in free or low-cost Silver plans with built-in cost-sharing reductions. (This includes people receiving unemployment compensation in 2021, as well as people who aren’t eligible for Medicaid and whose household income is between 100% and 150% of the federal poverty level.)
  • The state-run exchange in Washington reported that 78% of their enrollees are now receiving premium subsidies, versus 61% before the ARP was implemented. And consumers with income above 400% of the poverty level, who were not eligible for subsidies pre-ARP, are now paying an average of $200 less in premiums each month. Washington’s exchange also noted that 15% of their enrollees are now paying $1/month or less for their coverage, versus only 5% whose premiums were that low pre-ARP.
  • The state-run exchange in California reported that consumers with household incomes between 400% and 600% of the poverty level are saving an average of almost $800/month on their premiums. (That’s an individual with income up to about $76,000, or a household of four with an income up to about $157,000.)
  • The state-run exchange in Nevada reported that people who enrolled or updated their account since the ARP was implemented are paying an average of $154/month in after-subsidy premiums, whereas the after after-subsidy premium at the end of last winter’s open enrollment period (pre-ARP) was $232/month.
  • Maryland’s state-run exchange reported a 12% increase in the number of enrollees receiving subsidies; more than 80% of Maryland’s current exchange enrollees are subsidy-eligible.

These examples highlight the improved affordability that the ARP has brought to the health insurance marketplaces. People who were already eligible for subsidies are now eligible for larger subsidies. And many of the people who were previously ineligible for subsidies — but potentially facing very unaffordable health insurance premiums — are benefiting from the ARP’s elimination of the income cap for subsidy eligibility.

How long will the ARP’s subsidy boost last?

Although the ARP’s subsidies for people receiving unemployment compensation in 2021 are only available until the end of this year, the rest of the ARP’s premium subsidy enhancements will continue to be available throughout 2022 — and perhaps longer, if Congress extends them.

This means that the affordability gains we’ve seen this year will be available during the upcoming open enrollment period, when people are comparing their plan options for 2022.

Robust ACA-compliant coverage will continue to be a more realistic option for more people, reducing the need for alternative coverage options such as short-term plans, fixed indemnity plans, and health care sharing ministry plans.

Even catastrophic plans – which are ACA-compliant but not compatible with premium subsidies – are likely to see reduced enrollment over the next year, since more people are eligible for enhanced subsidies that make metal-level plans more affordable.

Can everyone find affordable health insurance now?

Unfortunately, not yet. There are still affordability challenges facing some Americans who need to obtain their own health coverage. That includes more than two million people caught in the “coverage gap” in 11 states that have refused to expand eligibility for Medicaid, as well as about 5 million people affected by the ACA’s “family glitch.”

There are strategies for avoiding the coverage gap if you’re in a state that hasn’t expanded Medicaid, and Congressional lawmakers are also considering the possibility of a federally-run health program to cover people in the coverage gap.

Families affected by the family glitch have access to an employer-sponsored plan that’s affordable for the employee but not for the whole family – and yet the family is also ineligible for subsidies in the marketplace/exchange. (It’s possible that the Biden administration could tackle this issue administratively in future rulemaking.)

Have ARP’s subsidy boosts been successful?

With the exception of those two obstacles, the ARP has succeeded in making affordable health coverage a more realistic option for most Americans who need to obtain their own health coverage. We can see success in the record-high exchange enrollment, the increased percentage of enrollees who are subsidy-eligible, and the reduction in after-subsidy premiums that people are paying.

If you’re currently uninsured or covered by a non-ACA-compliant plan (including a grandfathered or grandmothered plan), it’s in your best interest to take a moment to see what your options are in the ACA-compliant market. Open enrollment for 2022 coverage starts in just two months, but you may also find that you can still enroll in a plan for the rest of 2021 if you live in a state where a COVID/American Rescue Plan enrollment window is ongoing, or if you’ve experienced a qualifying event recently (examples include loss of employer-sponsored insurance, marriage, or the birth or adoption of a child).

Even if you shopped just last winter, during open enrollment for 2021 plans, you might be surprised at the difference between the premiums you would have paid then and now. The ARP wasn’t yet in effect during the last open enrollment period, so if you weren’t eligible for a subsidy last time you looked, or if the plans still seemed too expensive even with a subsidy, you’ll want to check again this fall.

The subsidies for 2022 will continue to be larger and more widely available than they’ve been in the past, and you owe it to yourself to see what’s available in your area.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

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The COVID SEP ended in most states. The ARP is still making premiums more affordable.

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Although August 15 marked the end of a one-time COVID-related special enrollment period (SEP) for marketplace health insurance in most states, the enhanced subsidies that enticed millions of consumers are still available for many individual-market buyers (as noted below, the SEP is ongoing in some states).

The American Rescue Plan’s enhancements to the Affordable Care Act’s health insurance subsidies will continue long after the end of the COVID SEP. That means that when you do have an opportunity to buy coverage again – either through open enrollment or due to a personal qualifying life event – you’ll likely find individual health insurance much less expensive than you might have expected.

The ARP’s affordability provisions are still helping with premiums

As we’ve noted over the past few months, the American Rescue Plan included numerous provisions that make ACA-compliant plans more affordable than ever. The additional health insurance subsidy enhancements delivered by the ARP include:

All of those benefits continue to be available. The additional subsidies based on unemployment compensation continue through the end of 2021, while the other subsidy enhancements will be available through the end of 2022 (and possibly longer, if Congress extends them).

How popular are the ARP’s subsidy enhancements?

HHS reported last week that more than 2.5 million people had already enrolled in coverage during the COVID-related special enrollment period, and that another 2.6 million existing marketplace enrollees had activated their ARP subsidies.

Among all of the new enrollees, average after-subsidy premiums were just $85/month, as opposed to $117/month before the ARP’s subsidies became available. And across all of the new and renewing enrollees, about 35% had obtained coverage with after-subsidy premiums of less than $10/month.

That illustrates how substantial premium subsidies have become under the ARP. And again, nothing has changed about those subsidies: the special enrollment window has ended in most states, but the subsidies are still available if you’re eligible to enroll for the remainder of 2021 — and again during open enrollment for 2022, which starts November 1.

So if you’re in a state where enrollment is still open, or if you’re eligible for an individual special enrollment period in any state, it’s certainly in your best interest to see what plan options are available to you.

Enrolling as soon as you’re eligible will mean that you’re able to start taking advantage of the ARP’s subsidies right away, rather than having to wait for open enrollment and coverage that starts in 2022.

States where enrollment continues

Although the COVID SEP ended on August 15 in the states that use HealthCare.gov – and some of the states that run their own exchanges – enrollment is still actually ongoing in several states:

Enrollment if you have a qualifying life event

Not in one of those states? Special enrollment periods are available to individuals who experience a wide range of “life changes.” The most common trigger for a personal SEP is a loss of other coverage — usually job-based coverage.

(Note that there’s usually only a 60-day window to enroll in a new plan after losing other coverage. But HealthCare.gov is making an exception for people who lost their coverage as long ago as January 2020, if they missed their enrollment deadline because they were “impacted by the COVID-19 emergency.” People who need to utilize this flexibility have to call the marketplace directly to qualify for a special enrollment period on a case-by-case basis.)

In addition to a loss of coverage, there are also other situations in which you’ll qualify for a SEP. They include events such as the birth or adoption of a child, marriage (as long as at least one spouse already had minimum essential coverage), or even your grandmothered or grandfathered plan coming up for renewal.

More opportunities to enroll in ACA-compliant coverage

In addition to the states with ongoing COVID-related enrollment periods and the individual SEPs triggered by qualifying life events, there are other circumstances under which you might still be eligible to enroll in affordable health coverage:

Mark your calendar for 2022 open enrollment

If you don’t have an enrollment period now, be sure to mark your calendar for the start of open enrollment on November 1. That’s when you’ll be able to sign up for health coverage that will take effect in January, with coverage for essential health benefits and pre-existing conditions. During open enrollment, your medical history won’t matter, and neither will your coverage history.

And if you’re already enrolled in an ACA-compliant plan – or soon will be – you’ll still want to pay attention to open enrollment this fall. There are new insurers joining the marketplaces in many areas, which might have an unexpected effect on your premium subsidy. And even if you’re happy with the plan you have now, you might find that a different plan works better for the coming year.

Fortunately, the ARP’s subsidy enhancements will continue to be available for 2022. So if you’re eligible for subsidies – and most people are – your coverage for next year is likely to be quite affordable.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

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Why you should care about the August 15 special enrollment deadline

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This spring and summer, more than 2 million Americans have already flocked to the health insurance marketplaces in their states, enticed by larger health insurance subsidies during a one-time special enrollment period (SEP). This SEP was created to address the COVID-19 pandemic and allow people to take advantage of the extra subsidies created by the American Rescue Plan (ARP).

But this limited enrollment opportunity is about to end in most states.

There are a few state-run exchanges where the COVID-related SEP has already ended, and a few others where it extends past August 15. But in most of the country, August 15 is the last day to sign up for 2021 coverage without needing to show proof of a qualifying life event.

How many people bought individual health insurance during the SEP?

HHS reported that 2.1 million people had already enrolled in coverage under this SEP by the end of June. This is two to three times higher than typical enrollment volume during that time of year (when a qualifying event would normally be necessary).

And enrollment likely increased even more in July, when the additional subsidies were made available for people who had received unemployment compensation in 2021.

What happens when the SEP ends on August 15?

Once the COVID/American Rescue Plan special enrollment period ends in your state, regular individual-market enrollment rules will apply. This means that you’ll need a qualifying event in order to enroll in coverage with a 2021 effective date.

The next open enrollment opportunity will start nationwide on November 1, but that enrollment period will be for coverage that takes effect January 1, 2022.

Why review your coverage before the SEP deadline?

Even if you’re already enrolled in a health plan through the marketplace in your state and you’re happy with your coverage, you should take a few minutes to double check everything before the SEP ends.

You can update your account to make sure that you’re receiving the enhanced subsidy amount available under the ARP. And if you need to switch plans to best take advantage of that subsidy, now’s your chance to do so.

This could be the case, for example, if you’re newly eligible for cost-sharing reductions because you’ve received unemployment benefits this year. (You need to be enrolled in a Silver plan to receive that benefit.)

It could also be the case if you’re currently enrolled in a plan that costs less than your new subsidy amount. You might find that you can upgrade your coverage and still have minimal premiums each month.

One thing to note: Before you make a plan change, make sure you understand whether deductible and out-of-pocket amounts will transfer to the new plan. They probably will, as long as you stick with the same insurer.

If you’re enrolled through HealthCare.gov and you don’t update your account to activate the new subsidies, you should still see your subsidy amounts updated as of September. HHS will be updating accounts in August to align the ARP’s subsidy structure with the income amounts that enrollees had previously projected for 2021.

This will be helpful in terms of giving people more affordable coverage for the final few months of the year, as opposed to having to wait until tax season to claim the extra subsidy. But there will be no opportunity to change your 2021 coverage at that point, unless you have a qualifying event.

Why should you enroll now if you haven’t already?

Millions of Americans are already enrolled in health coverage through the exchanges. But there are still millions more who are uninsured or enrolled in non-ACA-compliant coverage such as short-term health plans or health care sharing ministry plans.

If that’s you or someone you know, the current enrollment period is an excellent opportunity to make the switch to comprehensive major medical health insurance. And chances are, it’ll be less expensive than you’re expecting, especially if it’s been a while since you checked your coverage options.

There are several reasons for this:

Will my premiums be higher if I wait until November?

The current SEP is for 2021 coverage, whereas the open enrollment period that starts in November will be for 2022 coverage. If you buy health coverage now, you’ll be locking in your premiums for the rest of this year.

In January 2022, your premium is likely to change, though we don’t yet have a clear picture of exactly how premiums will be changing. Across the states where rate filings have been made public, we’re seeing insurers proposing mostly single-digit rate increases, although there have also been some decreases and a handful of larger increases proposed.

But since most marketplace enrollees receive premium subsidies, changes in benchmark premium prices (and the related changes in subsidy amounts) will play a significant role in how much your net premiums change for 2022.

Should I enroll before the deadline if I’m uninsured?

If you’re uninsured, there’s no benefit to skipping coverage now and waiting for the start of open enrollment. That will just guarantee that you won’t have coverage in place until January, and your 2022 premium will be the same either way.

If a sudden and serious health condition were to arise while you’re uninsured, you would have no way to obtain coverage that starts before January 2022 unless you experience a qualifying event.

When will my coverage start if I enroll during the SEP?

As is always the case, your coverage won’t take effect immediately. If you enroll during the current SEP in most states, your plan will take effect the first of the following month.

How long will my coverage last if I enroll by the SEP deadline?

ACA-compliant individual/family health plans renew each year on January 1. This is true regardless of when you sign up for the plan. So if you’re enrolling during the current SEP, the specifics of your health plan – including the monthly premium – will remain the same through the end of December. (Note that your after-subsidy monthly premium could change if your income changes later in the year.)

At that point, your plan will likely be available for renewal for 2022, but the premiums and the coverage details might change. So for example, the deductible and out-of-pocket limit might change, and your premium will almost certainly change – due to both the change in your own plan’s premium, as well as changes to your subsidy amount caused by fluctuations in the benchmark premium amount in your area.

If I enroll now, do I need to enroll again in November?

In most cases, coverage will auto-renew if you don’t log back into your account during the fall open enrollment to manually pick your coverage for 2022. But for a variety of reasons, auto-renewal is not in your best interest.

Instead, you should plan to spend at least a few minutes this fall comparing your options for 2022. Even though the open enrollment window is just around the corner (it starts November 1) the options for 2022 might be very different from what you’re seeing right now for the rest of 2021. Insurers are joining the marketplaces in many states, and existing insurers are expanding their coverage areas.

That can affect plan availability as well as subsidy amounts, so you’ll want to plan to spend some time reconsidering your options for 2022.

Is there any way to enroll in 2021 coverage after August 15?

In California, DC, New Jersey, New York, and Vermont, the COVID-related special enrollment period is already scheduled to extend past August 15. (In Vermont, this applies to uninsured residents. Current enrollees who wish to switch plans must do so by August 15.) But even in those states, it’s in your best interest to enroll sooner rather than later, in order to take advantage of the enhanced subsidies that are available under the American Rescue Plan.

After August 15, in most states, you’ll need a qualifying event to be able to sign up for coverage that starts prior to January 2022. You’ll have access to open enrollment this fall, but that coverage won’t take effect until January, even if you enroll right away on November 1.

What do I need to do if I’m getting a COBRA subsidy?

The American Rescue Plan’s COBRA subsidy continues through the end of September. Assuming your COBRA or state continuation coverage is eligible to continue past that date, you’ll have the option to keep it by paying the full premiums yourself as of October, or switch to a self-purchased individual/family plan instead.

If you want to switch to a self-purchased plan, you can enroll in a plan in the marketplace in September and have your new coverage take effect seamlessly on October 1. Although the COVID-related special enrollment period will have ended by that point, you’ll be eligible for a special enrollment period triggered by the termination of the COBRA subsidy.

If you’re choosing to switch to a new plan when the COBRA subsidy ends, you’ll want to pay close attention to details regarding any deductible and out-of-pocket costs you’ve accumulated this year. As a general rule, you should assume that those will reset to $0 when you switch to an individual market plan. But it’s possible that your insurer might allow you to transfer them if you switch to an individual plan offered by the same insurer that provides your group coverage.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

 

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How the ARP makes marketplace health plans more affordable for older buyers

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The American Rescue Plan (ARP) is the single biggest improvement in health insurance affordability since the Affordable Care Act was implemented. For 2021 and 2022, it has increased the size of premium subsidies in the marketplace/exchange, and eliminated the “subsidy cliff.”

The ARP ensures that Americans who receive unemployment compensation at any time in 2021 can enroll in a premium-free Silver plan with full cost-sharing reductions. (If you’re eligible for this benefit but enrolled in a non-Silver plan, you’ll need to switch to a Silver plan in order to take advantage of the cost-sharing reductions. In most states, you have until August 15, 2021 to make this change.) It also provides subsidies to cover the full cost of COBRA or state continuation coverage, through September 2021, for people who involuntarily lose their jobs or have their hours reduced.

To allow people an opportunity to access the enhanced premium subsidies in the marketplace, there’s a one-time special enrollment window that continues through August 15, 2021 in most states. Largely as a result of this enrollment opportunity and the ARP’s subsidy enhancements, effectuated enrollment in the marketplaces nationwide has almost certainly reached a record high, with an estimated 1.65 million people enrolling during the first three-and-a-half months of the special enrollment period.

ARP subsidies particularly valuable for older plan buyers

People of all ages, including the “young and invincible” population, are finding that coverage is more affordable now that the American Rescue Plan has been implemented. But because the full-price cost of health insurance is based on age — and is therefore higher for older enrollees — the ARP’s additional subsidies are particularly valuable for older Americans.

Some older consumers have been purchasing their own individual-market health insurance for years, and are now finding that their premiums are lower than they were before the ARP was enacted. (This is true only if these consumers update their marketplace application to activate the new subsidies or claim them later on their tax returns. People who have off-exchange coverage will need to transition to the exchange in order to take advantage of the new subsidies, either upfront or on a tax return.)

But the ARP is also making it easier for people to transition from employer-sponsored health insurance to a self-purchased health plan. This is especially true for older applicants, since their subsidies are larger (to offset the higher premiums they would otherwise have to pay).

So if you’re still a few years out from Medicare eligibility and facing the loss of your employer-sponsored health plan, rest assured that you’ll have options for health coverage. And thanks to the ACA and the ARP, it’s more likely you’ll be able to afford it.

A closer look: age 60 and transitioning to the individual market

You can use this spreadsheet to get a sense of how much the ARP has boosted premium subsidies, particularly for older Americans who didn’t previously qualify for a subsidy due to income. (See the second section, with examples for a 60-year-old.) But here’s an example to help illustrate the point:

Let’s consider Giuseppe, a 60-year-old who lives in Dallas and has chosen to retire despite having another five years before he’s eligible for Medicare. To show just how much the American Rescue Plan has improved the situation, we’ll assume that he’s already earned $55,000 in 2021 before leaving his job.

Because his income level is above 400% of the federal poverty level for a single person, Giuseppe would not have been eligible for a premium subsidy at all under the pre-ARP rules, even for the months after he ceased to earn an income. And since Texas has refused to expand Medicaid eligibility under the ACA, he would also be ineligible for Medicaid – even if his monthly income drops to $0 due to the job loss. (This is still the case, even with the American Rescue Plan in place.)

Thanks to the ARP, Giuseppe will qualify for a premium tax credit (premium subsidy) of nearly $500/month once he transitions from his employer-sponsored plan to a plan in the Texas marketplace. (That’s based on the assumption that he won’t have any additional income for the remainder of the year, and that his annual income for 2021 will end up being $55,000.)

Giuseppe will be able to choose from among 83 different plans, with after-subsidy premiums that start at just $84/month. That’s a plan with a high deductible; depending on his expected medical needs, it might make sense to pay more to get a more robust plan. But no matter what plan he chooses, out-of-pocket costs for in-network care won’t exceed $8,550 in 2021, essential health benefits will be covered on all of the available plans, and pre-existing conditions will also be covered.

Before the American Rescue Plan was implemented, Giuseppe would have had to pay a minimum of $584/month for individual health insurance in 2021 (the full-price cost for the cheapest Bronze-level plan available in the marketplace), because he would have been ineligible for premium subsidies due to the income he earned earlier in the year.

ACA + ARP subsidy is particularly valuable for older enrollees

If Giuseppe were 30 instead of 60, the full-price cost for the least expensive Bronze plan would only be $243/month. That disparity highlights the importance of the ACA/ARP subsidies: Without any subsidies, Giuseppe would be paying almost two and a half times as much as a 30-year-old.

But thanks to the subsidies, Giuseppe has access to plans that are significantly less expensive than the options he would have if he were 30 years old. If he were 30 and earning the same $55,000 in income this year, he would not qualify for a subsidy at all, even with the ARP in place.

That’s because the cost of the benchmark plan would already be less than 8.5% of his income, which is the cap imposed by the ARP. (For a 30-year-old in Dallas, the full-price cost of the benchmark plan is $371/month. It would have to be more than $390/month to trigger a subsidy.)

But as we saw above, 60-year-old Giuseppe’s subsidy is large enough that it brings down the cost of the least expensive plan to just $84/month. (It will make the benchmark plan equal to about $390/month, which is 8.5% of his income.)

Location matters

Subsidy amounts vary from one place to another, as do the number of available plans and the pricing for the lowest-cost plans. If 60-year-old Giuseppe lives in Orlando, for example, he’ll qualify for a subsidy of about $600/month, and will be able to choose from among 124 health plans. But the lowest-cost plan will be about $150/month. (Without the American Rescue Plan, it would have been about $750/month.)

But in both Dallas and Orlando — and anywhere else in the country — Giuseppe will pay no more than $390/month (8.5% of his income) for the benchmark Silver plan. Before the ARP was implemented, Giuseppe’s cost for the benchmark plan would simply have been the full-price cost for that plan — which varies from one place to another — as he wouldn’t have qualified for a subsidy since his income is more than 400% of the poverty level.

Even if Giuseppe had an income below 400% of the poverty level, and would have been eligible for a subsidy before the ARP, his subsidy is now larger than it would have been (as illustrated in the other income scenarios here), since he’s now expected to pay a smaller percentage of his income in premiums. For many enrollees, plans are available with no premiums at all. If you haven’t checked your subsidy eligibility lately, now’s a good time to do that!

Good subsidy news if you’re being laid off

For Americans who involuntarily lose (or recently lost) their job or involuntarily have their work hours reduced and no longer qualify for employer-sponsored health insurance, the American Rescue Plan provides a full subsidy for COBRA or state continuation (mini-COBRA) plans through the end of September 2021.

Assuming your coverage can be continued with COBRA or state continuation, you’ll have an option to do so regardless of whether you’re leaving your job voluntarily or involuntarily. But if you’re being laid off, you’ll be able to continue your coverage for free through September. (If you’re choosing to retire, you’ll still be able to elect COBRA or state continuation, but you’ll have to pay the premiums yourself.)

You’ll have 60 days to decide whether to extend your employer-sponsored coverage using the ARP’s COBRA subsidy (There is normally a 60-day window to elect COBRA in general, but that’s been extended during the COVID emergency period, which is expected to remain in place throughout 2021. But the ARP’s COBRA subsidy does have to be elected within 60 days of the person being notified of eligibility for COBRA and the subsidy.)

An option to take COBRA or state continuation coverage does not make a person ineligible for premium subsidies in the marketplace (as opposed to an offer of coverage from a current employer, which does generally make a person ineligible for marketplace subsidies). But it has to be one or the other: You can either enroll in a marketplace plan with ACA/ARP subsidies, or extend your employer-sponsored plan using COBRA or mini-COBRA with the federal subsidy through September 2021.

But if you choose to extend your employer-sponsored coverage and take the COBRA subsidy, HHS has confirmed that you’ll qualify for a special enrollment period to transition to a marketplace plan after the COBRA subsidy ends in the fall. The ARP’s additional premium subsidies for marketplace plans will be in effect throughout 2022 as well (and could be extended by Congress at a later date), so that’s an option that will remain affordable for the time being.

You’ll also have the option to keep the COBRA or state continuation coverage until it expires, but you’ll have to pay full price starting in October 2021. A marketplace plan may end up being much more affordable at that point, but it’s important to consider things like starting over with a new deductible when you transition from an employer-sponsored plan to an individual plan, as well as the different provider networks and drug formularies for the individual market plans.

The ARP’s COBRA subsidy and additional marketplace subsidies are available regardless of age. But because health insurance premiums are based on age — including, in most cases, premiums for employer-sponsored coverage — the ARP’s subsidies are particularly valuable for older Americans. Since the cost of coverage is higher, the subsidies are larger as well.

A couple of other points to keep in mind if you’re using the ARP’s COBRA subsidy:

You’ll want to check the cost of individual coverage through the marketplace during the open enrollment period that starts November 1, 2021. You’ll be seeing prices for 2022 coverage, so use your 2022 income projection to see what your after-subsidy premium will be. Even if you keep your COBRA coverage until the end of 2021, you might find that you’re better off switching to a marketplace plan as of January 2022.

If you’ll become eligible for Medicare during the time your COBRA will be in place, be sure you understand the rules regarding enrollment in Medicare Part B and D. You can delay Medicare Part B if you’re covered under an active employee plan, but not if you’re covered under COBRA. And your COBRA coverage may or may not be considered creditable coverage for Medicare Part D.

Guaranteed-issue coverage makes a smooth transition to Medicare

Thanks to the Affordable Care Act, older Americans can rely on individual market coverage in the years prior to Medicare, without having to worry about pre-existing medical conditions.

“Job lock” — continuing to work just for the health insurance benefits — doesn’t exist with the same level of urgency that it once did. And the individual/family plans that are available to early retirees are comprehensive, without the sort of coverage holes that often existed in individual market plans prior to the ACA.

The ACA already provided premium subsidies to many individuals who needed coverage prior to aging into Medicare. And the ARP has made those subsidies more substantial and more widely available — particularly for older enrollees.

If you’re nearing Medicare eligibility but not quite there yet, health insurance may not be as much of a retirement obstacle as you thought it would be. You might be pleasantly surprised to see how affordable the coverage options are.

And if you’re already in need of coverage, time is of the essence. The COVID-related special enrollment period ends in most states on August 15, 2021. After that, unless you experience a qualifying event, you’ll have to wait until open enrollment to sign up for individual health insurance, with coverage effective January 1. But during the COVID-related special enrollment period, you can enroll in health coverage through the marketplace and take advantage of the ACA/ARP subsidies, even if you don’t have a qualifying life event.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

The post How the ARP makes marketplace health plans more affordable for older buyers appeared first on healthinsurance.org.

ARP puts more ‘affordable’ in the Affordable Care Act

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The American Rescue Plan Act (or American Rescue Plan), signed into law by President Biden on March 11, provided many types of relief to Americans from the economic ravages of the COVID-19 pandemic. Among them, the American Rescue Plan (ARP) put the “affordable” in “Affordable Care Act” for millions of Americans.

Did ARP make coverage more affordable at all income levels?

The American Rescue Plan increased premium subsidies at all income levels for health plans sold in the ACA marketplaces, reducing the percentage of income that enrollees have to pay for the “benchmark” plan in their area – that is, the second-cheapest Silver plan.

At incomes up to 150% of the Federal Poverty Level ($19,140 for an individual, $39,300 for a family of four), the benchmark plan is free, and from 150% up to 200% FPL ($25,520 for an individual, $52,440 for family of four), benchmark Silver costs no more than 2% of family income. Silver plans at these income levels come with strong cost-sharing reduction (CSR) that reduces deductibles and out-of-pocket costs. Weaker CSR is available up to 250% FPL.

At the other end of the income scale – 400% FPL or higher ($51,040 for an individual, $104,800 for a family of four) – no citizen or legally present noncitizen who lacks access to other affordable insurance (e.g., from an employer or Medicare) will pay more than 8.5% of income for benchmark Silver. The ARP removed the ACA’s notorious subsidy cliff, which denied subsidies to applicants with incomes over 400% FPL.

In the in-between income brackets, the percentage of income required for a benchmark Silver plan has also been sharply reduced. See this post for illustrations of how ARP will reduce premiums for people at various income levels.

The American Rescue Plan also effectively made free high-CSR Silver plans free to anyone who received any unemployment insurance compensation in 2021 and lacked access to other affordable insurance.

The ARP subsidy boosts are temporary, running through 2022. But Democrats are widely expected to make them permanent in subsequent legislation. That’s the first and most basic item on their healthcare agenda, fulfilling a core promise President Biden made during the 2020 campaign.

ARP subsidies make it a great time to buy new health coverage

The ARP subsidy increases should induce millions of uninsured Americans who have been under the impression that health insurance is unaffordable to take a second look. According to estimates by the Kaiser Family Foundation (KFF), as of 2020, only about half of those who were eligible for marketplace subsidies and in need of insurance were enrolled. KFF estimates that 11 million uninsured  Americans are eligible for premium subsidies in the marketplace – including 3.5 million with incomes over 400% FPL who were ineligible prior to the ARP.

How affordable is affordable? According to KFF, 6 million uninsured people are eligible for free plans. It’s true that for most of these (4.7 million), the free plan would be Bronze, with deductibles averaging in the $7,000 range. But for many of those eligible for free Bronze plans, Silver – and in some cases Gold plans – are available at very low cost or even no cost at all.

For solo enrollees in the 150-200% FPL income range (topping out at $25,520), benchmark Silver (with strong CSR)  can’t cost more than $43 per month. In many cases, the cheapest Silver plan costs considerably less than the benchmark.

And in about 20% of all U.S. counties, the cheapest Gold plan is cheaper than the cheapest Silver. That’s a valuable discount at incomes above 200% FPL, where CSR, which attaches only to Silver plans, is weak (in the 200-250% FPL income range) or not available (at incomes above 250% FPL).

Biden administration opens the doors and sounds the horn

Prior to the American Rescue Plan’s passage – beginning on February 15 – the Biden administration opened an emergency special enrollment period (SEP), extending until August 15 in the 36 states that use the federal ACA exchange, HealthCare.gov.

The 15 state-run exchanges (including Washington, D.C.) followed suit, though the terms and length of the state SEPs vary somewhat. (See SEP deadlines for each exchange here.) The SEP offered by HealthCare.gov and in most states is akin to the annual open enrollment period: anyone who lacks insurance can enroll. Normally, a person seeking coverage outside of open enrollment has to apply for a personal SEP and document a qualifying “life change,” such as loss of employer-sponsored insurance.

After the ARP’s passage, HealthCare.gov further opened the SEP to enable current enrollees to switch plans – for example, to upgrade from Bronze to Silver in light of the enriched subsidies. The Center for Medicare and Medicaid Services (CMS) also earmarked $50 million to advertise the SEP.

The upgraded subsidies, retroactive to January 1, went live on HealthCare.gov on April 1, and on state-based marketplaces in subsequent weeks. All in all, doors to coverage for the uninsured were flung significantly wider this spring – and remain open.

Many consumers are capitalizing on the SEP and ARP

The emergency SEP and upgraded subsidies are having an impact. On May 6, CMS announced that new plan selections from February 15 through April 30 in 36 HealthCare.gov states was just shy of  940,000 – almost quadruple enrollment in the same period in 2019, the last “normal” year. (In 2020, the pandemic also stimulated increased enrollment, totaling 391,000 in the same time period.) A large percentage of new enrollees were apparently low-income and accessing free or near-free Silver plans with strong CSR, as the median deductible for new enrollees was just $50.

As of June 5, SEP enrollment in HealthCare.gov states had topped 1 million, and marketplace coverage is now at an all-time high.  Including the 15 state-based marketplaces raises the SEP enrollment total this spring to 1.5 million, according to Charles Gaba’s estimate. The percentage of subsidy-eligible potential enrollees who actually do enroll may now be closer to 60% than the roughly 50% that KFF estimates indicate in 2020.  How might enrollment be boosted further?

But millions still aren’t on board

Despite the substantial gains achieved in recent months, some 10 million of the still-uninsured are likely eligible for marketplace subsidies, and another 6 to 7 million eligible for Medicaid, according to KFF estimates.

Since the ACA’s programs were first implemented in 2014, many of the uninsured have claimed that they found coverage unaffordable, While some may have balked at subsidized premiums and available plans’ out-of-pocket costs, a lack of knowledge about what’s on offer has always been a major factor. In 2020, only 32% of people surveyed by KFF knew that the ACA was still law.

The Trump administration didn’t make it easier for consumers, cutting federal funding for enrollment assistance by nonprofit “navigators” by 84%, from a peak of $63 million in 2016 to $10 million by 2018, and cutting advertising by 90%. Navigator organizations, established by the ACA to be nerve centers in a constellation of nonprofit assistor groups, have operated on shoestrings since fall 2017, cutting back on outreach events, offices throughout their states, and in-person as opposed to phone or video assistance.

The Biden administration threw a quick $2.5 million to navigators this spring – which doesn’t go far – and has allocated $80 million for navigators in the 36 states using HealthCare.gov for 2022.  (Navigator funding is drawn from user fees charged to participating insurers, so the 15 states that run their own exchanges have their own funding base for enrollment assistance). A KFF analysis suggests that the $80 million allocation for 2022 may be too modest: Trump administration underspending of the user fee revenue has left some $1.2 billion available to the Biden administration to boost enrollment efforts.

Promising strategies to boost enrollment

Going forward, further innovation might boost marketplace enrollment. Maryland, which has a state-based marketplace, has pioneered an enrollment jump-start tied to tax filing, whereby the uninsured whose reported income and insurance status indicate they are eligible for subsidized coverage can check a box on their tax return and receive information about their likely eligibility for “free or low cost coverage.” Colorado will debut a similar program next year.

On a national level, aligning the annual open enrollment period with tax filing season and porting information on the tax return to a marketplace application could streamline the enrollment process. Tax preparers could be a powerful resource to encourage enrollment and assist in the often complex application process. Integrating enrollment with tax preparation could also take some of the diceyness out of the income estimate that determines subsidy size.

Switching the OE period would entail a messy transition, as plans not resetting on January 1 as in the past would create problems with deductibles and out-of-pocket caps. An alternative would be to mirror Maryland and offer the uninsured an easy-to-obtain SEP at tax time.

The ARP hasn’t helped everyone

It should be acknowledged that the ARP did not ease the plight of poor and near-poor uninsured people in the 12 states that to date have refused to enact the ACA Medicaid expansion (or, in the case of Wisconsin, enact a more limited expansion). As first enacted, the ACA offered Medicaid to all citizens and most legally present non-citizens whose household income was below 138% FPL.  In 2012, the Supreme Court made that expansion optional for states.

In states that refused to expand eligibility – including high-population states Texas and Florida – most adult residents with incomes below 100% FPL are eligible neither for Medicaid nor for marketplace subsidies. The ARP provided new financial enticements for the holdout states to implement the expansion, but offered no immediate relief to an estimate 2 million people in this “coverage gap.”

The ARP also did not fix the “family glitch,” which puts health coverage out of reach for several million Americans. If an employee has access to a comprehensive employer-sponsored health plan that meets the ACA affordability standard for single coverage, the other family members are not eligible for subsidies in the exchange — regardless of how much they have to pay to join the employer-sponsored plan.

Bottom line

While more remains to be done to make affordable coverage more universally available, comprehensive and easy to obtain, it’s fair to say that most Americans who lack coverage at present can find a health plan (marketplace or Medicaid) that’s worth having at a price they can afford.  If you are uninsured, check out your options on HealthCare.gov or your state exchange or use this site’s free quote tool. You can also get a subsidy estimate by using this ACA subsidy calculator.

More likely than not, you will be pleasantly surprised.

Andrew Sprung is a freelance writer who blogs about politics and healthcare policy at xpostfactoid. His articles about the Affordable Care Act have appeared in publications including The American Prospect, Health Affairs, The Atlantic and The New Republic. He is the winner of the National Institute of Health Care Management’s 2016 Digital Media Award. He holds a Ph.D. in English literature from the University of Rochester.

The post ARP puts more ‘affordable’ in the Affordable Care Act appeared first on healthinsurance.org.

Are accumulators making you think twice about switching health plans?

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For millions of Americans who don’t have access to employer-sponsored or government-run health insurance, the American Rescue Plan (ARP) does a lot to make health coverage more affordable this year. Premium subsidies are larger, and more people will qualify for premium-free plans, including anyone receiving unemployment compensation at any point in 2021.

If you’re currently uninsured or enrolled in something like a short-term plan or health care sharing ministry plan and you’ve become eligible for premium subsidies as a result of the ARP, it’s likely an obvious choice to enroll in a plan through the marketplace in your state as soon as possible. And there’s a COVID/ARP enrollment window that continues through August 15 in most states, making it easy to enroll in a new plan and take advantage of the new subsidies.

But if you’re already enrolled in an ACA-compliant plan, or even a grandmothered or grandfathered major medical plan, you’ll have to decide whether you want to make a plan change during the COVID/ARP enrollment window. And depending on the circumstances, it might not be an easy decision.

Are out-of-pocket costs you’ve paid making you think twice?

Unlike plan changes made during open enrollment, plan changes made during the COVID/ARP enrollment window will take effect mid-year. And for people who have already paid some or all of their deductible and out-of-pocket costs this year, that adds an extra layer of complication to the switch-or-not decision.

Normally, the general rule of thumb is that if you switch to a new plan mid-year, you’re going to be starting over at $0 on the new plan’s deductible and out-of-pocket expenses. (These are called accumulators, since it’s a running total of the expenses you’ve accumulated toward your out-of-pocket maximum). For someone whose accumulators have already amounted to a sizable sum of money this year, having to start over at $0 in the middle of the year could be a deal-breaker.

Are ARP’s higher subsidies worth it?

But 2021 is not a normal year. The ARP has made significant changes to subsidy amounts and eligibility, and a lot of people will find that switching plans enables them to best take advantage of the enhanced subsidies. For example:

  • A person who previously enrolled off-exchange in order to take advantage of the “silver switch” approach to cost-sharing reduction funding, and who is now eligible for a premium subsidy in the exchange.
  • A person who enrolled in a bronze plan during open enrollment but is now eligible for a $0 premium or low-premium Silver or Gold plan (depending on location) due to income or unemployment compensation.
  • A person who was eligible for cost-sharing reductions but selected a bronze or gold plan during open enrollment because the silver plans were too expensive, but who can now afford the silver plan due to the extra subsidies (cost-sharing reductions are only available on silver plans)

If you switch plans, will you have to start over at zero?

The good news is that many states, state-run marketplaces, and insurers have taken action to ensure that accumulators will transfer to a new plan. (In virtually all cases, this does have to be a new plan with the same insurer — if you switch to a different insurance company, you’ll almost certainly have to start over at $0 on your accumulators.)

HealthCare.gov is the exchange/marketplace that’s used in 36 states. Its official position is that “any consumer who selects a new plan may have their accumulators, such as deductibles, reset to zero.” But insurance commissioners in some of those states have stepped in to require insurers to transfer accumulators, and in other states, all of the insurers have voluntarily agreed to do so. Washington, DC, and 14 states have state-run marketplaces, and several of them have announced that insurers will transfer accumulators.

Which states are helping with accumulators?

We’ve combed through communications from state-run marketplaces and state insurance commissioners to see which ones have issued guidance on this. But regardless of where you live, your best bet is to reach out to your insurance company before you make a plan change. Find out exactly how they’re handling accumulators during this enrollment window, and if they are transferring accumulators to new plans, make sure that you adhere to whatever requirements they may have in place.

That said, here’s what we found in terms of how states and state-run marketplaces are addressing accumulators and mid-year plan changes in 2021.

States where all accumulators will transfer as long as your old and new plans are offered by the same insurance company

  • Colorado
  • District of Columbia – The marketplace has confirmed that all accumulators will transfer.
  • Idaho – Idaho only allowed people to switch to a plan offered by their current insurer, unless they had a qualifying event. Note that Idaho’s COVID/ARP enrollment window ended April 30, which is much earlier than the rest of the country.
  • Maryland – Plan changes are limited to upgrades, but the marketplace confirmed that accumulators will transfer.
  • Michigan – Deductibles will transfer, although some insurers will only allow this if you’re upgrading your plan. (Two insurers are allowing deductible transfers even if you’re switching from a different insurer’s plan.)
  • Minnesota – Minnesota is currently not allowing marketplace enrollees to switch plans during the COVID/ARP enrollment window, although this may change within the next several weeks. So for now, the accumulator transfers only apply to people switching from an off-exchange plan to an on-exchange plan. All four of the insurers that offer both on-exchange and off-exchange plans have agreed to transfer accumulators to the on-exchange plans.
  • New Mexico
  • New York
  • Tennessee
  • Vermont – Like Minnesota, Vermont is currently only allowing people to switch from off-exchange (full-cost individual direct enrollment) to on-exchange plans. Accumulators will transfer for those plan changes.
  • West Virginia — The WV Office of the Insurance Commissioner confirmed that both insurers are transferring accumulators, with the exception of a transfer between an HSA-qualified plan and a non-HSA-qualified plan (mainly due to IRS regulations for how HSA-qualified plans must handle out-of-pocket costs).
  • Wisconsin – Covering Wisconsin, a nonprofit enrollment assistance organization, notes that accumulators will not transfer if people select a plan from a different insurer, which is to be expected.

In some states, rules are slightly more complicated

  • Alaska – Deductibles will reset to $0 if a policyholder is switching from off-exchange to on-exchange (or vice-versa), but will not reset if the move is from one exchange plan to another, with the same insurer.
  • California – The marketplace has confirmed that insurers will transfer accumulators for plan holders switching from an off-exchange plan to an on-exchange plan or from one exchange plan to another, as long as they stay with the same insurance company and the same type of managed care plan (ie, HMO to HMO, or PPO to PPO).
  • New Jersey – Deductibles will transfer, possibly even to a new insurer (which is fairly unique; we aren’t aware of this elsewhere, other than the two Michigan insurers that are offering it). But additional out-of-pocket spending will not transfer to the new plan.

States where the official word is that ‘it depends’

Several states have addressed accumulator transfers so that consumers know to be aware of them, but are leaving the decision up to the insurers. In these states (listed below), some or all of the insurers may be offering accumulator transfers, but consumers should definitely ask their insurer how this will work before making the decision to switch plans.

  • Connecticut
  • Massachusetts
  • Nevada
  • New Hampshire
  • Ohio
  • Montana
  • North Dakota — the ND Insurance Department is recommending that consumers reach out to their insurance company to see how this is being handled.
  • Pennsylvania
  • Rhode Island – There are two insurers that offer plans in Rhode Island’s marketplace; one has agreed to transfer accumulators and one has not, but the marketplace is still working to address this and it’s possible both insurers could end up allowing accumulators to transfer.
  • Washington

States where the official word is that accumulators will not transfer

Some states have fairly clearly indicated that insurers will not transfer accumulators if policyholders make a plan change. But even in these states, it’s still worth checking with a specific insurer to see what approach they’re taking, as some are still developing their approach during this unique time.

What if my state’s not listed?

Insurance departments in the rest of the states haven’t put out any official guidance or bulletins regarding accumulator transfers, although these may still be forthcoming as the COVID/ARP window progresses. Keep in mind that it will be July in most states before the ARP’s benefits are available for people receiving unemployment compensation in 2021, so this is still very much a work in progress and likely to evolve over time.

States that have not yet issued specific guidance or clarified insurers positions on accumulator transfers include:

  • Alabama
  • Arizona
  • Arkansas
  • Delaware
  • Florida
  • Georgia
  • Hawaii
  • Indiana
  • Iowa
  • Kansas
  • Kentucky
  • Louisiana
  • Maine
  • Mississippi
  • Missouri
  • Nebraska
  • North Carolina
  • Oklahoma
  • Oregon
  • South Carolina
  • South Dakota
  • Texas
  • Utah
  • Wyoming

If you’re in one of these states, your insurer may or may not be transferring accumulators when enrollees switch to a new plan in 2021. If you’ve had significant out-of-pocket medical spending so far this year, be sure to reach out to your insurer to see how they’re handling this. And if a representative tells you that accumulators will transfer, it’s a good idea to get confirmation in writing.

And if your insurer initially says no, keep asking over the coming days and weeks. We’ve seen some insurers start to offer accumulator transfers after initially stating that they didn’t plan to do so, and it’s possible that other insurers might follow suit.

To switch or not to switch?

So what should you do if you’ve already spent some money out-of-pocket this year, and you’re going to have to start over at $0 on a new plan?

Maybe you’re enrolled in a grandmothered or grandfathered plan and your insurer simply doesn’t offer plans for sale in the marketplace. Depending on where you live, this might also be the case if you have an ACA-compliant off-exchange plan, as not all off-exchange insurers sell plans in the exchange. And as noted above, it might also be the case even if you want to transfer from one ACA-compliant plan to another. (But check with both the insurer and the insurance department in your state before giving up on accumulator transfers in that situation.)

Really, it just comes down to the math: Will the amount you’re going to save due to premium tax credit (and possibly cost-sharing reductions, if you’re eligible for them and switching to a Silver plan) offset the loss you’ll take by having to start over at $0 on your deductible and out-of-pocket exposure? If you haven’t spent much this year, the answer is probably Yes. If you’ve already met your maximum out-of-pocket for the year, it’s probably going to be a tougher decision.

But don’t assume that it’s not worth your while. Depending on the circumstances (especially if you were previously impacted by the “subsidy cliff” and are newly eligible for subsidies), your new subsidies might be worth more than you’d be giving up by having to start over with new out-of-pocket costs.

And if you’re part of the way toward meeting your deductible on a Bronze plan and are newly eligible for a free or very low-cost Silver plan that includes cost-sharing reductions, you might find that the new plan ultimately saves you money in out-of-pocket costs for the rest of the year, even if your accumulators don’t transfer.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health insurance marketplace updates are regularly cited by media who cover health reform and by other health insurance experts.

The post Are accumulators making you think twice about switching health plans? appeared first on healthinsurance.org.

 

Maddox Insurance Agency

Insurance Agency in Memphis, Tennessee

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2151 Courtland Place | Memphis, TN 38104

Licensed in Tennessee, Mississippi & Arkansas

Contact

Phone: (901) 335-0154
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Lee.Maddox@maddoxinsured.com

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