costs of coverage – Maddox Insurance Agency

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

July 8, 2021/in American Rescue Plan, Blog, costs of coverage /by wpmaddoxins

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.

How to get your health insurance subsidy if you’ve been unemployed

June 30, 2021/in Blog, costs of coverage, premium assistance tax credits, premium subsidies /by wpmaddoxins

Most of the American Rescue Plan’s (ARP) additional premium subsidies have been available since April, and an estimated 1.65 million people have enrolled in health plans through the exchange (marketplace) during the COVID-related special enrollment period that’s been ongoing since February.

But a major provision of the law will take effect on July 1, when HealthCare.gov makes additional subsidies available to people who have received unemployment compensation this year.

DC and 14 states run their own exchanges, and some of them had already activated the additional unemployment-based subsidies in May or June. But in the 36 states that use HealthCare.gov, as well as some of the state-based exchanges, the additional subsidies will become available this Thursday, July 1.

Here’s what you need to know about these additional unemployment-based subsidies:

The subsidies apply to both premiums and out-of-pocket costs

The unemployment-based subsidies are two-fold:

They provide full premium subsidies, which means they fully cover the cost of the benchmark plan (second-lowest-cost Silver plan) in your area.
They provide the most robust level of cost-sharing reductions, which means they’ll boost the benefits of any Silver-level plan so that it’s better than a Platinum plan.

Who is eligible for unemployment-based subsidies?

The unemployment-based subsidies are available to anyone who has received or been approved to receive unemployment compensation at any time this year. (If you’re eligible to receive unemployment compensation but haven’t applied or haven’t been approved to receive it, you’re not eligible for the additional health insurance subsidies.)

Eligibility for the unemployment-based subsidies includes people whose income is under the federal poverty level, as long as they’re not eligible for Medicaid. (If a person is eligible for Medicaid or CHIP, they aren’t eligible for subsidies in the exchange; nothing has changed about that.) People with income under the poverty level are normally not eligible for subsidies, which means there’s a coverage gap in the states that have refused to accept federal funding to expand Medicaid. But a person who would otherwise be in the coverage gap can receive a full premium subsidy and full cost-sharing reductions in 2021, if they receive unemployment compensation at any time during the year.

CMS has confirmed that the full premium subsidies are only available if it’s a taxpayer who is receiving the unemployment compensation. If it’s a dependent who is receiving it, the household is eligible for the cost-sharing reductions (assuming the household is otherwise also eligible for premium tax credits), but not the full premium subsidies.

Even if you only received unemployment compensation for one week of 2021, you’re potentially eligible for the enhanced subsidies for the entire year. But subsidy eligibility would end if and when you become eligible for employer-sponsored health coverage (that’s considered affordable and provides minimum value), or premium-free Medicare Part A.

The ARP has not fixed the family glitch, so family members would also lose access to any subsidies in the exchange if they become eligible for employer-sponsored coverage that’s considered affordable for the employee.

How to claim the extra subsidies

HealthCare.gov will not be able to automatically update these subsidies (although that’s something that may become available later on), so you’ll need to log back into your account and update your application to activate the subsidies. You can do this through HealthCare.gov, or through an enhanced direct enrollment entity if you use one.

Some of the state-run exchanges are automatically applying the additional subsidies to accounts where applicants indicated that they’re receiving unemployment compensation this year. But if you’re in a state that runs its own exchange, it’s in your best interest to log back into your account to confirm that you’re receiving all of the benefits for which you’re eligible.

If you enroll or update your account between July 1 and July 31, your new subsidies will take effect August 1. The COVID-related special enrollment period continues through August 15 in most states, but enrollments or updates completed in August won’t take effect until September.

If you’ve already got coverage through the exchange but you don’t update your application to start receiving the additional unemployment-based subsidies, you’ll be able to claim the premium subsidy on your 2021 tax return. However, there is no way to claim cost-sharing reductions after the fact. So it’s important to make sure you’re enrolled in a Silver plan as soon as possible, if you want to take advantage of that benefit.

You might need to switch plans to get the full benefit

You can get the additional premium subsidies applied to any metal-level plan, although your subsidy can never be more than the cost of your plan. So if you’re enrolled in a plan that’s less expensive than the benchmark plan, you might find that you’re able to upgrade to a better plan without paying any additional premium.

But you can only get the enhanced cost-sharing reductions if you’re enrolled in a Silver plan. So if you currently have a Bronze or Gold plan, you might choose to switch to a Silver plan to get the full benefits available under the ARP.

Although switching to a new plan mid-year usually means starting over with a new deductible and out-of-pocket maximum, many states and insurers are allowing enrollees to keep their accumulated out-of-pocket costs, as long as they switch to a new plan from the same insurer.

What you’ll pay each month

The unemployment-based subsidies will cover the full cost of the benchmark plan. So you’ll have access to two Silver plans that have no premium, and you’ll likely have access to a variety of Bronze plans — and possibly some Gold plans — that have no premium.

If you pick a plan that’s more expensive than the benchmark plan, including the higher-cost Silver plans, you’ll pay at least some premium each month.

If you’re in a state that has additional state-mandated benefits that aren’t covered by premium subsidies, you may find that you have to pay at least a dollar or two each month in premiums, regardless of which plan you select.

What you’ll pay when you need medical care

If you enroll in a Silver plan, you’ll get the full benefits of the unemployment-based subsidies, meaning that you’ll have fairly low out-of-pocket costs if you need medical care later this year. Any Silver plan you choose will have a maximum out-of-pocket of no more than $2,850 in 2021, and it’s common to see these plans with deductibles that range from $0 to $500. Copays for office visits and many prescriptions also tend to be fairly low.

If you choose a non-Silver plan, the normal cost-sharing will apply. No matter what plan you select, your out-of-pocket maximum for in-network care won’t exceed $8,550 this year, but the specifics of the coverage will vary considerably from one plan to another.

How big will your subsidy be?

You can use our subsidy calculator to see the subsidy amount that will be available to you. For people receiving unemployment compensation, the exchange will disregard any income above 139% of the poverty level for 2021.

The 2020 poverty level numbers are used to determine subsidy eligibility for 2021, so you can find the poverty level for your household size, multiply it by 1.39, and enter that number into the subsidy calculator. And if you need help finding a plan, our direct enrollment entity can provide assistance.

The post How to get your health insurance subsidy if you’ve been unemployed appeared first on healthinsurance.org.

American Rescue Plan drives health insurance costs down for ‘young invincibles’

March 25, 2021/in American Rescue Plan Act, Blog, costs of coverage, health insurance premiums /by wpmaddoxins

For generations, one of the transition points for young adults has been the process of leaving their parents’ health insurance and enrolling in their own coverage (assuming they were fortunate enough to be covered under a parent’s health plan in the first place).

The Affordable Care Act (ACA) ushered in some important changes that made coverage much more accessible for young adults, including the provision that allows them to remain on a parent’s health plan until age 26. Now, the American Rescue Plan (ARP) is making coverage even more affordable, albeit temporarily.

For 2021 and 2022, the ARP provides enhanced premium subsidies (aka premium tax credits). And in most cases, those who are receiving unemployment compensation at any point in 2021 are eligible for premium-free coverage that includes robust cost-sharing reductions.

By the time they need to secure their own coverage, some young adults already have access to their own employer’s health plan. But what if you don’t? Maybe you’re working for a small business that doesn’t offer coverage, or striving to fulfill your entrepreneurial dreams, or working multiple part-time jobs. Let’s take a look at your options for obtaining your own health coverage, and the points you should consider when you’re working through this process:

Individual-market plans more affordable than ever

Purchasing an individual plan in the marketplace has always been an option for young adults, and the ACA ensures that coverage is guaranteed-issue, regardless of a person’s medical history (that is, you can’t be denied coverage or charged a higher premium due to a pre-existing medical condition). The ACA also created premium subsidies that make coverage more affordable than it would otherwise be. But the ARP has increased the size of those subsidies for 2021 and 2022.

Previously, healthy young people with limited income sometimes found themselves having to make a tough choice between a plan with a very low (or free) premium and very high out-of-pocket costs, versus a plan with more manageable out-of-pocket costs but a not-insignificant monthly premium. In some circumstances, the new subsidy structure under the ARP helps to eliminate this tough decision by reducing premiums for the more robust coverage.

How much can ‘young invincibles’ save on coverage?

The exact amount of a buyer’s subsidy will depend on how old they are and where they live. But some examples will help to illustrate how the ARP’s subsidy enhancements make coverage more affordable and allow young people to enroll in more robust health plans:

Let’s say you’re about to turn 26, you live in Chicago, and you expect to earn $18,000 this year working at two part-time jobs – neither of which offer health insurance benefits. You’re losing coverage under your parents’ health plan at the end of June, and need to get your own plan in place for July.

According to HealthCare.gov’s plan comparison tool, the benchmark plan in that area has a full-price cost of about $277/month for a 26-year-old.
Under the normal rules (ie, before the American Rescue Plan), the after-subsidy amount for the benchmark plan would be about $54/month. (That’s 3.59% of the person’s $18,000 income. Here’s the math on how that’s all determined.)
Under the American Rescue Plan, that policy is free at this income level. Zero premium. It’s got a $200 deductible, $5 copays for primary care visits and generic drugs, and an $800 out-of-pocket maximum. These robust benefits are thanks to the built-in cost-sharing reductions. (Note that this option –a $0 premium plan with robust cost-sharing reductions – is also available if you’re receiving unemployment compensation in 2021, regardless of your total income.)

Those cost-sharing reductions are always available. But without the American Rescue Plan, a healthy 26-year-old might have been tempted to get one of the less-expensive Bronze plans. (In this particular case, one plan was available for under $2/month, and others were available for under $30/month.) But those come with deductibles of at least $7,400, and out-of-pocket maximums of $8,550. (Cost-sharing reductions are only available on Silver plans. The benchmark plan is always a Silver plan, and its price is used to determine the amount of a person’s subsidy.)

A young, healthy person with a limited income might have enrolled in that $2/month plan because the premiums fit their budget. But they would likely have struggled to pay the out-of-pocket costs if they experienced a significant medical event during the year. Thanks to the expanded premium subsidies created by the ARP, there’s no longer a tough decision to make, since the benchmark plan, with robust cost-sharing reductions, has a $0 premium for people with income up to 150% of the federal poverty level (for a single person, that’s $19,140 in 2021).

Although the dollar amounts of the ARP’s subsidy increases are larger for older people (because their pre-subsidy premiums are so much higher), it’s really significant that the new law helps to make it easier for “young invincibles” with limited incomes to enroll in plans with cost-sharing reductions. The Bronze plans that come with much higher out-of-pocket costs won’t be such an appealing alternative when Silver plans are made much more affordable – or free, as in the case we just looked at.

What about young people with higher incomes?

But what if you’re a young person with an income that’s too high for cost-sharing reductions? The American Rescue Plan still makes coverage more affordable, and makes it easier to afford a better-quality plan. Let’s say our 26-year-old in Chicago is earning $40,000 in 2021 – about 313% of the federal poverty level.

The benchmark plan is still $277/month without any premium subsidies.
Without the American Rescue Plan, no subsidies are available for this person at this income level (despite the fact that their income is under 400% of the poverty level). The benchmark plan is $277/month and the cheapest available plan is $215/month (it’s a Bronze plan with a $7,400 deductible, $60 primary care copays, and an out-of-pocket cap of $8,550).
Under the American Rescue Plan, this person would be eligible for a premium subsidy that would reduce the cost of the benchmark (Silver) plan to $211/month (because the percentage of income that people are expected to spend on the benchmark plan has been reduced). The lowest-cost plan would drop to about $149/month.

The take-away here? Buying your own health insurance is much more affordable in 2021 and 2022 than it would normally be. Depending on your income, you might be eligible for robust health coverage with $0 premiums, or you might be eligible for premium subsidies even if you weren’t prior to the American Rescue Plan.

Switching to your own plan: Things to keep in mind

If you’re switching to your own self-purchased health insurance plan after having coverage under a parent’s health plan, there are several things to be aware of as you make this change, particularly if your previous health coverage was offered by an employer:

You may have far more plan options than you and your family are used to having. If your parents’ plan is offered by an employer, it’s likely one of only a few options from which they can choose each year. But when you’re shopping for your own coverage in the individual market, you might see dozens of available plans. If the plan selection process feels overwhelming, here are some considerations to keep in mind as you go about picking a plan.
There might not be any PPO options. PPOs, which provide some coverage for out-of-network services and also tend to have broader provider networks, are widely available in the employer-sponsored market. But they tend to be much less available in the individual market. When you’re shopping for your own coverage, you’re more likely to encounter plans that only cover care received in-network. This makes it particularly important to understand what doctors and facilities are in-network before you enroll.
The provider network might be very different, even if the health insurance company is the same one you had before. For example, your parents’ plan might be provided or administered by Anthem Blue Cross Blue Shield, and you might decide to enroll in a marketplace plan offered by the same insurer. But most insurers have different provider networks for their individual and group health plans, so you’ll want to double-check to see if your medical providers are in-network with the plans you’re considering.

Low income? Medicaid may be an option

If you’re in Washington, DC or one of the 36 states (soon to be 38) where Medicaid eligibility was expanded as a result of the ACA, you might find that you’re eligible for Medicaid. For a single person in the continental U.S., Medicaid eligibility extends to an annual income of $17,774 in 2021. (It’s higher in Alaska and Hawaii, and DC also has a higher eligibility limit, allowing people to enroll in Medicaid with an income as high as $25,760.)

Medicaid eligibility is also based on current monthly income, meaning you won’t need to project your total annual income the way you do for premium subsidy eligibility. In a state that has expanded Medicaid eligibility under the ACA, a single individual can qualify for Medicaid with a monthly income of up to $1,482 in 2021. So if you’re going through a time period when your income is lower than normal, Medicaid can be a great safety net.

In most cases, Medicaid has no monthly premiums, and out-of-pocket costs are generally much lower than they would be with a private insurance plan.

In Minnesota and New York, Basic Health Program coverage is also available. These plans have modest premiums and provide robust health coverage. They’re available to people who earn too much for Medicaid but no more than 200% of the poverty level (which amounts to $25,520 for a single person in 2021).

COBRA: Access remains unchanged, but might be expensive

If you’re aging off your parents’ health plan, COBRA or mini-COBRA (state continuation coverage) might be available. This can be a good option if you’re able to afford it, as it allows you to keep the same coverage you already have for up to 18 additional months. You won’t have to start over with a new plan’s deductible and out-of-pocket maximum, nor will you need to worry about switching to a different provider network or selecting a plan with a different covered drug list.

The American Rescue Plan provides a one-time six-month federal subsidy that pays 100% of COBRA premiums, but this is only available to people who are eligible for COBRA due to an involuntary job loss of involuntary reduction in hours, and it’s only available through September 2020.

Aging off a parent’s health plan is a qualifying event that will allow you to continue your coverage via COBRA (assuming it’s available), but it’s not an event that will trigger the COBRA subsidy. (The details for in ARP Section 9501(a)(1)(B)(i), which references other existing statutes, all of which pertain to people who lose their jobs or have their hours reduced; the legislation notes that this must be involuntary in order to trigger the subsidies).

So depending on the circumstances, it may make more sense to switch to an individual plan in the marketplace.

Student health plans: Most are compliant with the ACA

If you’re in school and eligible for a student health plan, this might be an affordable and convenient option. Thanks to the ACA, nearly all student health plans are much more robust than they used to be, and provide coverage that follows all of the same rules that apply to individual market plans.

Check with your school to see if coverage is offered, and if so, whether it’s compliant with the ACA (some self-insured student health plans have opted to avoid ACA-compliance; if your school offers one of these plans, make sure you understand what types of medical care might not be covered under the plan).

If you do have an option to enroll in a high-quality student health plan, you’ll want to compare that with the other available options, including self-purchased individual market coverage, or remaining on a parent’s plan if you’re under 26 and that option is available to you.

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Five ways the American Rescue Plan might slash your health insurance costs

March 18, 2021/in COBRA, costs of coverage, health insurance premiums, premium tax credit /by wpmaddoxins

If you’re among the millions of Americans who are uninsured or who buy their own health insurance in the individual market, the American Rescue Plan (ARP) has just significantly changed the rules – and changed them in a way that likely improve your access to affordable comprehensive health insurance.

Thanks to the legislation – signed last week by President Biden – premium subsidies are larger and available to more people in 2021 and 2022. Many people who are receiving unemployment compensation in 2021 can now qualify for premium-free health insurance that provides robust benefits. And people who received excess premium subsidies in 2020 do not have to repay that money to the IRS when they file their 2020 tax return.

These improvements – although temporary and part of a massive bill designed to help the country recover from the COVID pandemic – will make it much easier for people to afford high-quality health insurance. But they’ve also generated a great deal of questions and confusion, especially among people who wonder whether they need to reconsider the plan choice they already made for 2021.

And the timing of these changes coincides neatly with a COVID-related enrollment period available nationwide. In most states, it continues through May 15, and in most states it’s an opportunity for people to newly enroll or switch from one plan to another, with coverage that takes effect the month after you enroll.

Should you use this window to enroll or make a plan change now that the ARP has been enacted? It depends, although you’ll definitely want to at least take another look at your coverage options. Here are some of the most common scenarios – and questions that people should be asking about them – right now:

1. You’re enrolled in an off-exchange ACA-compliant plan

Off-exchange plans are essentially the same as on-exchange plans, but people purchase them directly from the insurance company instead of going through the health insurance marketplace. If you know for sure that you’re not eligible for a premium subsidy, it’s fine to be enrolled off-exchange. But if you might be subsidy-eligible, the only way to get that subsidy – either upfront or claimed later on your tax return – is to enroll through the exchange.

Thanks to the American Rescue Plan, applicants with household incomes above 400% of the federal poverty level – who were previously ineligible for a subsidy – may find that they now qualify for a subsidy. And depending on where they live and how old they are, the subsidy could be substantial.

If you’re enrolled off-exchange, it’s definitely in your best interest to check out the on-exchange options and see if you’d qualify for a subsidy under the new rules.

If you’re in a state that uses HealthCare.gov, the new subsidies and premium amounts will be available for browsing as of April 1. (The 15 state-run marketplaces are working on this as well, and will display the new subsidy amounts as soon as possible.) But CMS has clarified that people should still enroll by the end of March in order to have coverage April 1, and then come back to the marketplace after the beginning of April to activate the new subsidies. (Applications submitted before April 1 will only have the current, pre-ARP subsidies built-in, although enrollees would then still be able to collect the full subsidy amount when they file their 2021 tax returns).

If you’re enrolled off-exchange and planning to switch to the on-exchange version of your current plan, your insurer might be willing to transition any accumulated out-of-pocket expenses you may have incurred thus-far this year. But this is not required; you’ll want to reach out to your insurer to see if this is something they’d allow.

Depending on where you live and the plan you’ve selected, the same plan (with the same medical provider network) may or may not be available on-exchange. And if you’re switching to a different policy on-exchange, your out-of-pocket spending will reset to $0 on the new plan.

So switching to an on-exchange plan is not necessarily the best option for everyone – it will depend on plan availability, provider networks, how much you’ve spent out-of-pocket already this year, and how much your premium subsidy will be if you enroll in a plan through the exchange.

2. You’re enrolled in a health plan that’s not ACA-compliant

Right now, you may have coverage through a short-term health insurance plan, a health care sharing ministry plan, a fixed indemnity plan, a direct primary care membership, a Farm Bureau plan, or a grandmothered or grandfathered health plan. Chances are, you’ve chosen this option because the monthly premiums fit into your budget, and ACA-compliant health coverage did not – at least as of the last time you checked. But it’s time to check again.

Healthy people with income above 400% of the poverty level have long been drawn to these alternative types of coverage, as have some people with incomes a little under 400% of the poverty level who only qualified for fairly small premium subsidies. But for 2021 and 2022, as a result of the ARP, the subsidies are much larger and there’s no longer a subsidy cliff.

So before the current COVID-related enrollment window ends (May 15 in most states), you’ll want to check out your marketplace options. You might be pleasantly surprised to see that you can get comprehensive ACA-compliant health insurance – at least for this year and next year – at a much lower premium than you might have seen the last time you checked. (Again, note that if you’re browsing plan options before April 1 in most states, you won’t yet be able to see the more robust premium subsidies. But you’ll still be able to claim them on your 2021 tax return for any months in 2021 that you were enrolled.)

3. You’re enrolled in a Bronze plan through the exchange

If you’re currently enrolled in a Bronze plan through the exchange, you may have picked it because the premiums were lower than Silver, Gold or Platinum coverage options. Your Bronze plan may have been entirely free after your subsidy was applied.

You’ll still have a low (or free) premium under the ARP, but it’s in your best interest to actively compare it to the other available options during the current COVID-related enrollment period. You may find that you can now qualify for a very low-cost – or maybe free – Silver plan, which would have more robust benefits than your Bronze plan. This is especially true if you’re eligible for cost-sharing reductions (CSR), as these are essentially a free upgrade on your health coverage benefits. (CSR benefits are available in 2021 to a single individual earning up to $31,900, and to a family of four earning up to $65,500. These amounts are higher in Alaska and Hawaii.)

Before you make a plan switch, however, you’ll want to pay attention to the maximum out-of-pocket limits for the plans at a higher metal level. If you’re not eligible for CSR (ie, your income is above 250% of the poverty level), you might find that the available Silver plans have out-of-pocket limits that are similar to what you have with your Bronze plan. Depending on how you anticipate using your plan during the year, it may or may not make sense to pay a higher premium to upgrade your coverage.

If you anticipate high claims costs that will result in hitting the out-of-pocket maximum regardless of what plan you have, you might not come out ahead with an upgraded plan, once you account for your total out-of-pocket costs and premiums. But if you rarely have medical needs, the upgraded plan might save you money via a lower deductible and lower copays for things like office visits and prescription drugs.

As always, take all of the factors into consideration: Total premiums, out-of-pocket maximum, and how the plan might cover your medical costs if you don’t expect to meet that out-of-pocket maximum during the year.

If you picked a Bronze plan because you wanted to contribute to a health savings account (HSA) and needed to enroll in an HSA-qualified high-deductible health plan (HDHP), it’s worth checking to see if there are any HDHPs available in your area at a higher metal level. While it’s common to see Bronze HDHPs, there are also Silver and even Gold HDHPs in many areas. With the new subsidies created by the ARP, you might find that you can still maintain your HSA eligibility while also having a health plan with lower out-of-pocket costs that doesn’t cost you too much more in monthly premiums.

4. You’ve lost, or will soon lose, your job — and your health coverage

If you recently lost or will soon lose your job – and your health insurance – you’ve got some decisions to make. You might have access to COBRA or state continuation coverage (mini-COBRA), and you’ll also have access to a special enrollment period during which you can sign up for an individual/family health plan.

Under ARP Section 9501, the government will cover the full premium costs for COBRA or mini-COBRA from April 1 through September 30, 2021. (Note that this is not available if you voluntarily left your job.)

If you were laid off (or experienced an involuntary reduction in hours that resulted in a loss of health coverage) any time in the last 18 months and were COBRA-eligible but either declined it or later terminated it, you can opt back into COBRA in order to take advantage of the new subsidy. However, the subsidy does not extend your initial COBRA termination date, which is still, in most cases, 18 months after your COBRA would have begun if you had opted in from the start. So if you were first eligible for COBRA on October 1, 2019, your COBRA and your COBRA subsidy will end on April 30, 2021 (ie, 18 months later). This also applies to state continuation plans, which are often shorter in length than COBRA

If you’re receiving unemployment compensation at any point this year, you’ll also be eligible for a $0 premium Silver plan in the marketplace, with the most robust level of cost-sharing reductions. (CMS has clarified that it might take a while to get the details of this programmed into HealthCare.gov, but enrollees will be able to log back into their accounts later in the year to activate the larger subsidies, and there’s always the option to just claim them on your tax return after the end of the year.)

So should you take the fully subsidized COBRA coverage or the fully subsidized marketplace plan? It depends, but there are several factors to consider:

If you elect COBRA, what’s your plan for the final quarter of the year? Would you be able to pay full price once the government subsidy ends?
We don’t yet have federal guidance on whether the end of the government-funded COBRA subsidies will trigger a special enrollment period for marketplace plans, although we assume that it will. (The end of employer subsidies for COBRA does trigger a special enrollment period.) But assuming it does, would you want to switch to a marketplace plan at that point?
If you’ve incurred out-of-pocket costs under your employer’s plan thus far in 2021, COBRA might be the better choice, as you won’t have to start over on the out-of-pocket costs for a new plan. But you’ll still want to consider what you’ll do after September, and whether it will be more cost-effective to pay full price for COBRA for the final months of the year, or start over with a new plan at that point.
If you opt to switch to a marketplace plan, pay close attention to the provider networks and covered drug lists. Even if the marketplace plan is issued by the same insurance company that provides or administers your employer’s plan, the benefits and provider network might be quite different on the individual/family plan.

If you’re already enrolled in a marketplace plan and you’re receiving or have received unemployment compensation this year, you’ll want to take a close look at your coverage options. If you’re currently enrolled in a Bronze plan, be sure to check out the $0 premium Silver plan with robust cost-sharing reductions that may be available to you under the ARP, due to your unemployment compensation in 2021.

5. You’re already enrolled in the marketplace and happy with your plan

About 15% of current marketplace enrollees pay full price for their coverage, usually because they earn more than 400% of the poverty level and thus aren’t subsidy-eligible. But if you’re in this group, you may be eligible for a subsidy under the ARP.

Millions of other marketplace enrollees are receiving premium subsidies, and although their available subsidy amounts are likely to be larger under the ARP, they may not want to make any changes to their coverage.

If you’re already enrolled in a marketplace plan and certain that your current plan is the best option for your circumstances, you don’t need to do anything at all. If you qualify for an additional premium subsidy amount, it will be retroactive to January 2021 and you’ll be able to claim it when you file your 2021 taxes.

But you may want to log back into your marketplace account and claim your new or additional subsidy amount, so that it can be paid to your insurer on your behalf each month for the rest of 2021.

If you’re in a state that uses HealthCare.gov, CMS has confirmed that the premium subsidy amounts will not automatically update (the 15 state-run marketplaces will have their own protocols for how this is handled). So you’ll need to return to the marketplace to provide proof of your income (if you’re currently enrolled in a full-price plan and never gave your income details to the marketplace) or reselect your current plan and trigger the new subsidies.

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