Applying for ACA coverage? Know the ropes (between income levels).

Topics covered in this article

In case you missed it during a frenzied election season, the annual open enrollment period for ACA marketplace plans (which are  ACA-compliant health coverage) in 2023 kicked off on November 1. You may also have missed that last year, the American Rescue Plan Act made coverage in private plans sold in the ACA marketplace far more affordable than it used to be, and that the improved premium subsidies will continue at least through 2025, thanks to the Inflation Reduction Act passed in August 2022.

If you’re a citizen or legally present noncitizen, are under 65, can’t get health coverage through your employer or your spouse’s employer, and are not on disability Medicare, you really should check out what’s available to you in the ACA exchanges. HealthCare.gov, the federal exchange that serves 33 states, reports that four out of five people who enroll can find a plan for $10 per month or less (though many will choose a plan that costs more).

Your income matters when it comes to health plan selection

While you may be pleasantly surprised by what the ACA exchanges have to offer, it’s best not to be too surprised. That is, it’s important to go in with some awareness of what you’re likely to get at different income levels.

The most basic rule is, the higher your income, the more you’ll pay for coverage, ranging from zero in the lowest income brackets (for Medicaid or free private-plan coverage) to 8.5% of household income for a benchmark Silver plan if your income is well above average.

Before you shop, it’s good to absorb two rules of the road:

  1. Small differences in projected income can have a large impact on available benefits.
  2. The income you report is an estimate for the coming year – and so for many people, there’s some built-in wiggle room.

The poet Robert Frost said that writing poetry without rhyming was like playing tennis without a net. Applying for ACA coverage without knowing the income levels at which benefits change is like playing tennis without any lines. And when you don’t see the lines, it’s easy to hit the ball out.

Rule 1: Know some key income break points

In the ACA application, your estimate of your gross (before-tax) household income for the coming year will place you in one of several income brackets, defined as a percentage of the federal poverty level (FPL). (The ACA application slightly modifies the “Adjusted Gross Income” you see on your annual tax form.) How much you’ll pay – and in some cases, the kind of coverage available to you – depends on what bracket you’re in. Let’s look at some key “break points” where benefits shift.

100% FPL – the minimum income required to qualify for private plan coverage in 11 states

  • $13,590 per year for a single person
  • $18,310 for a two-person household,
  • $23,030 for a family of three
  • $27,750 for a family of four

It’s a cruel reality that in 11 states* – Alabama, Florida, Georgia, Kansas, Mississippi, North Carolina, South Carolina, South Dakota, Tennessee, Texas, and Wyoming – most adults who estimate household income below the 100% FPL threshold get no help from the government in obtaining health coverage.

As first drafted, the ACA made Medicaid available to most adults with an income below 138% FPL. In 2012, however, the Supreme Court ruled that the federal government couldn’t force states to expand Medicaid eligibility in that way. The states listed above have refused to date to go along, and in those states, most adults with incomes below 100% FPL get no help paying for any kind of coverage. (In the November election, South Dakota voted by referendum to adopt the expansion, and Medicaid enrollment under the ACA eligibility rules will begin there in July 2024.)

In a drafting inconsistency that turned out to be lucky, the ACA pegged the minimum income for subsidy eligibility in the marketplace at 100% FPL rather than 138% FPL. So, in states that have not expanded Medicaid, having an income of at least 100% FPL moves you out of the “no help” territory.

As discussed in more detail below, a low income is often an uncertain income, and applicants in the “nonexpansion” states with income likely to be anywhere near the 100% FPL threshold should leave no stone unturned to get a good-faith estimate of next year’s income over the eligibility threshold. Knowing the threshold is the key first step – especially since marketplace coverage with low out-of-pocket costs is available for free to applicants with income in the 100-150% FPL range.

138% FPL – the upper income threshold for Medicaid in most states

  • $1,563 per month for a single person
  • $2,106 for a two-person household
  • $2,648 for a family of three
  • $3,191 for a family of four

In the 38 states** that have enacted the ACA’s Medicaid expansion, most citizens and legally present noncitizens*** with income below 138% FPL qualify for Medicaid. That makes them ineligible for marketplace coverage.

Medicaid eligibility is determined on a monthly basis, which means (in expansion states) that if your income drops suddenly – after a job loss, for example – and isn’t likely to recover soon, you become eligible.

For most people near this income level, Medicaid is a good option, as there’s almost never a premium (a few states charge a small one at the top of the income bracket) and out-of-pocket costs range from zero to minimal.

Some people with income near the Medicaid eligibility threshold may prefer marketplace coverage, however – which, in some markets at least, allows for a wider choice of doctors and hospitals. While out-of-pocket costs are higher in the marketplace’s private plans than in Medicaid, they are comparatively low in Silver plans at low incomes, thanks to a secondary subsidy called cost sharing reduction (CSR) that attaches to Silver plans for lower income enrollees (more on CSR below). And the two cheapest Silver plans in each region are free to enrollees with income up to 150% FPL.

Since marketplace eligibility and subsidy level is calculated on an annual income basis, an applicant who’s suffered a sudden loss of income may qualify for Medicaid by citing current monthly income – or for marketplace coverage by estimating annual income. The HealthCare.gov application enables the latter when current monthly income is low (or high), providing a section in which you can estimate total annual income and/or a total for the coming year that may be different from income in the current year.

There is one particular case in which an applicant might want to stay out of Medicaid. In more than 20 expansion states, any Medicaid enrollee who is over age 55 is potentially subject to Medicaid Estate Recovery upon their death. If the deceased enrollee owns any significant assets, the state may seek to recover from their estate the value of the services that Medicaid covered, or, if the state contracted with a Medicaid managed care organization, all of the money that the state paid to that organization to administer the person’s coverage.

Once again, knowledge of a key income threshold may in some cases give cause to steer toward one side or the other of it.

200% FPL – the maximum income at which strong Cost Sharing Reduction (CSR) enriches benefits.

  • $27,180 per year for a single person
  • $36,620 for a family of two
  • $46,060 for a family of three
  • $55,500 for a family of four

(Note that these income limits are applicable for 2023 coverage; they rise annually.) At incomes up to 200% FPL, cost sharing reduction – which attaches only to Silver plans – raises the value of a Silver plan to a roughly Platinum level (a bit above Platinum at income up to 150% FPL, a bit below at 150-200% FPL). Above the 200% FPL threshold, the value of CSR drops off sharply, and it’s not available at all at incomes above 250% FPL.

At incomes below 200% FPL, CSR makes a big difference in the out-of-pocket costs you’re exposed to. In 2022, deductibles in CSR-enhanced plans average just $146 for people with income up to 150% FPL, and $756 for those with incomes in the 150-200% FPL range. That’s well below the average deductible for Gold plans ($1,600) and in a different universe from Bronze plans ($7,051).

Perhaps more to the point for our “know your thresholds” mantra, Silver plan deductibles take a major jump at the 200% FPL threshold, to an average of $3,215 for enrollees with income in the 200-250% FPL range.

Equally important is the annual cap on maximum out-of-pocket (MOOP) costs that attaches to plans at different metal levels – and, for Silver plans, at different income levels. Up to 200% FPL, the highest allowable MOOP for Silver plans in 2023 is $3,000. In 2022, MOOP in Silver plans averages $1,208 at incomes up to 150% FPL and $2,591 in the 150-200% FPL range. Again, there’s a big jump at the 200% FPL threshold, to an average of $6,436 at the weakest CSR level.

The median MOOP in 2022 for Gold plans is $7,500, according to the Commonwealth Fund, and $8,500 for Silver with no CSR (close to this year’s maximum allowable, $8,700). Bronze MOOP is comparable to Silver.

Bottom line: Affordable marketplace coverage is far more comprehensive for a single person estimating an income of $27,000 per year – a little under 200% FPL – than for the same person estimating an income of $28,000. The strong CSR available at incomes up to 200% FPL is really valuable.

Rule 2: How income estimates affect eligibility

During the ACA’s annual open enrollment period (Nov. 1 – Jan. 15 in HealthCare.gov states), benefits for the coming year are based on an estimate of future gross (pre-tax) income, modified in some cases by deductions. Those who qualify for a special enrollment period outside of open enrollment also estimate their income for the year in progress.

The estimate may be straightforward adults with one stable job and a fixed salary. For others, including most low-income people, the estimate may involve considerable uncertainty – and therefore allow for wiggle room. That’s the case if you’re paid by the hour, and/or rely in large part on tips, or work more than one job, or are partly or wholly self-employed.

If you underestimate your income and take your full subsidy, in the form of an advance premium tax credit (APTC) used to pay your premiums as they are billed (you can opt to take only a portion of it in advance for this purpose), you will owe the difference between the APTC you received and the APTC to which you prove to have been entitled at tax time in the year following (early 2024 for 2023 coverage). CSR will not be clawed back after the fact. The exchange may reduce your APTC and CSR going forward, however, if outside data sources – such as a regular paycheck – indicate that your income is higher than estimated.

What if you’re hovering near the 100% FPL threshold in a nonexpansion state, or near the 138% FPL threshold in an expansion state and you don’t want Medicaid? There is no downside to a good-faith estimate that errs on the optimistic side. If you live alone and estimate your 2023 gross income at $14,000 (a little over 100% FPL), and eventually, your tax return shows it to have been, say, $12,000, your subsidies will not be clawed back (unless the estimate is made with “intentional or reckless disregard for the facts”).

And while you may be asked as part of the application process to document your income, your estimate will not be disallowed if outside data sources indicate that your real income is lower than estimated. See this post for more tips on making sure that you’re fully accounting for all allowable income sources.

Your income estimate must be made in good faith. But if you have good cause to be genuinely uncertain how much you earn, you are fully within your rights to use your knowledge of the ACA’s income break points to your advantage.

* * *

* One nonexpansion state – Wisconsin – offers Medicaid to adults with income up to 100% FPL, as opposed to the 138% FPL threshold in expansion states. Wisconsin therefore has no “coverage gap” – those who lack affordable access to other insurance are eligible either for Medicaid (up to 100% FPL) or subsidized marketplace coverage (over 100% FPL).

** Alaska and Hawaii have different FPLs, viewable on pages 3-6 here.

*** Washington, D.C. extends Medicaid eligibility to 215% FPL. New York and Minnesota run Basic Health Programs – Medicaid-like low-cost programs – for residents with income in the 138-200% FPL range, as well as for legally present noncitizens who are time-barred from Medicaid eligibility. Connecticut extends Medicaid eligibility to parents with incomes up to 160% FPL.

**** Legally present noncitizens who have been in the U.S. for less than five years are ineligible for Medicaid, but eligible for free Silver marketplace coverage if their income is in the 0-150% FPL range.

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.

How I sought to stop worrying and love a Bronze plan

Key takeaways

For many of the 155 million Americans who get their health insurance through an employer, the employer-sponsored plan feels like a security blanket. Look closely, as circumstances may well force you to, and the blanket may be full of holes. Tales of woe from patients who need intense care are plentiful – involving prior authorization hurdles, outright coverage denials for needed care or drugs, and until recently, surprise bills from out-of-network doctors or providers at in-network facilities (Congress at last banned most such billing in the No Surprises Act, effective January 1 of this year). High and rising deductibles, out-of-pocket maximums, and premiums also cause financial hardship for millions of mostly low-income workers.

Still, for the majority of employer plan enrollees whose plans cover about 85% of medical costs while the employer foots the lion’s share of the premium, the health insurance they have is not much of a worry. And people fear losing it.

That was my situation until this spring. While I am self-employed, my wife Cindy has worked at the same hospital for 25 years, which has provided family insurance. In that time we’ve been blessed with pretty good health, and when we’ve needed care, we’ve obtained it without significant hassle, including an operation to remove half my thyroid back in 2004.

Over the years our share of the premium crept up slowly, then jumped from about $200 a month to about $400 in 2016 when Cindy cut back her weekly work hours from 36 to 30 so she could help take care of her 90-something father. It’s now at about $450/month, which is manageable.

Into an ACA marketplace enhanced by the American Rescue Plan

But change comes. Cindy is retiring this month, a little shy of her 64th birthday. The Affordable Care Act was supposed to make this feasible – and since March of last year, when the American Rescue Plan provided a major boost to premium subsidies in the ACA’s health insurance marketplace, the ACA has a far more credible claim than previously to reducing “job lock.”

The ARP subsidy boosts only extend through 2022. Democrats in Congress have intended to extend them further, but with their Build Back Better legislation long stalled, extension now is far from certain.

The ARP reduced the percentage of income required to buy a benchmark Silver plan (the second cheapest Silver plan in each area) at every income level, and it removed the notorious income cap on subsidies. Before the ARP’s enactment in March 2021, people whose family income exceeded 400% of the Federal Poverty Level – currently $51,520 for an individual, $106,000 for a family of four – were ineligible for premium subsidies. Since premiums rise with age – -at age 64, they’re triple what a 21 year-old pays – paying full freight was especially challenging for 60-somethings like Cindy and me. At our age, unsubsidized benchmark premiums are typically $700-800 per month – each – and more in some states (that’s also about what COBRA would cost us).

Now, thanks to the ARP, for anyone at any income level who lacks affordable access to other insurance, a benchmark plan costs no more than 8.5% of income, and much less at lower incomes (in fact, benchmark coverage is free up to 150% FPL). The measure that determines premium subsidies is modified adjusted gross income or MAGI – basically the AGI familiar to tax filers, with a handful of additional income sources (e.g., tax exempt interest) counted.

Thanks to the ARP subsidy boost, with a large payment to my individual 401k reducing our MAGI, Cindy and I can get a benchmark Silver plan for about $400 per month. And unlike in many states, here in New Jersey the plans offered by the dominant marketplace insurers have decent provider networks.

Choices in the New Jersey marketplace
for one 60-something couple*
Health plan Monthly premium (after subsidy) Deductible: single person OOP max: single person
Lowest-cost Bronze (HSA) – AmeriHealth $10 $6,000 $7,050
Lowest-cost Bronze (no HSA) – Horizon BC $255 $3,000 $8,700
Lowest-cost Silver – AmeriHealth $293 $2,500 $8,700
Benchmark (second-lowest cost) Silver – Horizon $404 $2,500 $8,700
* Plans actively considered. Premiums are net of subsidy. Single-person deductibles and OOP maxes are double for the couple.

What plan to buy? Comfort vs. math

Still, I am entering this individual insurance with some trepidation. Here’s why.

For years I’ve been closely observing and writing about the Affordable Care Act, on my blog, here at healthinsurance.org, and in various other publications. Brokers and other experts have drummed one salient fact into my head: For shoppers in the ACA marketplace with income over 200% FPL ($25,760 for an individual, $53,000 for a family of four), Bronze-level plans usually make the most economic sense. Bronze plans are the cheapest of four metal levels, and Bronze deductibles average over $7,000 for an individual, $14,000 for a family.

The picture is different for people with income under 200% FPL. Below that threshold, secondary cost-sharing reduction subsidies, available only with Silver plans and at no extra cost to the enrollee, reduce out-of-pocket costs to levels below those of the average employer-sponsored plans, making Silver the best choice for most low-income enrollees. CSR, which is strongest at the lowest incomes, reduces deductibles to an average below $150 at incomes up to 150% FPL and below $700 at an income in the 150-200% FPL. CSR weakens to near-insignificance at 200% FPL and phases out entirely at 250% FPL. While less than a third the population lives in households with income below 200% FPL, more than half of ACA marketplace enrollees do.

At higher incomes, Silver plan deductibles average more than $4,700, though in many plans a number of services, including doctor visits, are not subject to the deductible. That’s considerably lower than the Bronze average (over $7,000) – but generally not enough to justify the difference in premiums. That’s especially true because the annual out-of-pocket (OOP) maximum in Silver plans without CSR (that is, all Silver plans for people with income above 250% FPL) is generally not significantly below the Bronze plan OOP max. Both are usually north of $7,000 for an individual and often near or at the highest allowable, $8,700 per person.

Because premiums rise with age, the field tilts further toward Bronze plans for older enrollees. As the premium for a benchmark Silver plan rises, so does the subsidy, since all enrollees with the same income pay the same premium (a fixed percentage of income) for the benchmark plan. As the premium rises, so does the “spread” between the benchmark premium and cheaper plans. While my wife and I would pay $400 a month for benchmark Silver, we can get the cheapest Bronze plan on the market (from the same insurer) for about $10 per month.

Another consideration? HSAs

Still another factor points us toward that cheaper Bronze plan: it’s a so-called high deductible health plan (HDHP) that can be linked to a tax-sheltered health savings account (HSA). These plans, which are mostly Bronze-level, conform to special IRS rules. One is that they cannot exempt any services other than the free preventive screenings mandated by the ACA from the deductible ($6,000 per person in the Bronze plan we are likely to enroll in). That increases my anxiety: we’ll be paying cash for virtually all the medical care we access, unless we get ill or injured enough to hit the deductible. At the same time, HSA-linked plans, by statute, have lower out-of-pocket maximums than most Bronze or Silver plans, topping out at $7,050 per individual. That’s better than the two cheapest Silver plans, which both have OOP maxes of $8,700 per person. Finally, HSA contributions – up to $7,300 for Cindy and me – also reduce MAGI, and so the premium we will pay, as well as our taxes.

With the HSA contribution figured in (I left it out of my income estimate), the Bronze HSA plan we’ve settled on will probably ultimately be available for zero premium. The single-person maximum exposure, $7,050, is not much higher than what we pay in premiums in our employer-sponsored plans (about $5,400 annually) – or than what we’d pay for the benchmark Silver plan, which has a higher OOP max ($17,400 for two, vs. $14,100 for the HSA Bronze).

The cheapest Silver plan available would cost us about $300 per month, with a per-person deductible of $2,500. If both of us turn out to need a lot of medical care but not too much – say, $6,000 each – we could conceivably pay less on net under that plan, which pays 60% of most costs after the deductible is met, up to the OOP cap. But the odds of that are small. And again, if one of us needs tens of thousands of dollars in care – not unusual in U.S. medicine – we’ll pay less under the Bronze HDHP plan.

Psychological factors: it’s not cheaper if it kills you

The chief argument against a high deductible Bronze plan is psychological, but real. Some years ago, Dr. Ashish Jha, currently the Biden administration’s COVID-19 policy coordinator, tried a personal family experiment – enrolling in a high-deductible plan – and wrote up the results. Jha suffers from supraventricular tachycardia, a condition that makes his heart race periodically. One morning, he woke up with his heart racing, and it persisted for about a half hour. He knew that going to the ER would cost him thousands; he also knew that he would advise a patient to go. Instead he rode it out, and his heart calmed down. “I was lucky — I had rolled the dice and things had worked out,” Jha writes.

Cindy and I are both 63. That’s a bad age to be loathe to go to the ER – or to hesitate to get an unfamiliar twinge somewhere in our bodies checked out. Perhaps having money sequestered in an HSA will reduce the psychological resistance – those funds are dedicated to medical fees. But it’s still real money: if we don’t spend it, we can roll it into our retirement funds when we reach Medicare age. Being willing to spend it still requires a psychological adjustment.

If a Silver plan for $300 per month were our only choice, I’d probably be reasonably content. The prospect of paying next to nothing for an HDHP Bronze plan makes me nervous. But it’s hard to escape the math.

Assessing the ACA marketplace

Two things are notable about the private plans subsidized by the ACA as enhanced by the ARP. First, for almost all comers, plans with an affordable premium are available – in fact, Bronze plans with zero premium, or close to it, are available pretty high up the income ladder, especially for older adults. Second, out-of-pocket costs are high. At incomes over 200% FPL, it’s hard to avoid out-of-pocket maximums below $7,000 for an individual and $14,000 for a couple or family.

Why are out-of-pocket costs in these subsidized plans so high? Several reasons. First, American healthcare is just expensive – we pay almost triple the OECD average per capita, while using less care per capita than the OECD average. Second, to avoid all-out opposition to health reform from the healthcare industry (and in a failed attempt to win Republican buy-in), the Democrats who created the Affordable Care Act created a marketplace of private plans, paying commercial rates to providers – which average about twice Medicare rates for hospital payments and perhaps 130-160% of Medicare for physicians. Finally, healthcare scholars advising the ACA’s drafters believed that subjecting enrollees to high out-of-pocket costs – giving them ‘skin in the game” – was an effective way to reduce unnecessary care and so control costs (an idea substantially discredited by multiple studies indicating that enrollees faced with high out-of-pocket costs skip necessary as well as unnecessary care).

My wife and I are entering what two or three decades ago might have been understood as a moderate or even mainstream Republican health insurance utopia. We are paying close to nothing in premiums, and we are massively incentivized to save a huge chunk of our income in tax-sheltered accounts to keep it that way. The federal government is kicking in $1400 a month. We are on the hook for up to $14,100 in out-of-pocket expenses. If we’re healthy and don’t come near that threshold, we’ll pay cash for every medical service we access except for free preventive screenings.

I am very glad that the ACA was enacted and that Republicans failed to repeal it in 2017. (My personal welfare aside, the ACA’s core programs saved the country from a surge in the uninsured population during the pandemic.) As Cindy and I enter our life’s final quarter (or third, if we’re actuarially lucky), I’m grateful that affordable coverage is available in the hold-your-breath-till-Medicare years that will shield us from costs that could seriously impact our long-term financial health.

I can imagine a simpler and more cost-effective system – one that pays uniform rates to healthcare providers and offers a very short menu of affordable choices with low out-of-pocket costs to all Americans. But given the health system we have, and current political realities, my personal ask is more immediate and plausible: extend the ARP subsidy boosts. They’ve given the ACA a credible claim to live up to its name.

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.

ACA sign-ups hit all-time high – with a month of open enrollment remaining

Key takeaways

The Biden administration announced last week that enrollment in ACA marketplace plans had reached an all-time high of 13.6 million* as of December 15, with a month still to go in the open enrollment period (OEP) for 2022 in most states.

That’s an increase of about 2 million (17%) over enrollment as of the same date last year, according to Charles Gaba’s estimate, and well above the previous high of 12.7 million recorded as of the end of open enrollment for 2016, which lasted until January 31 in most states. When OEP ends this coming January, enrollment in marketplace plans will exceed 14 million.

92% of marketplace enrollees in HealthCare.gov states received health insurance subsidies

In the 33 states using the federal exchange, HealthCare.gov (for which the federal government provides more detailed statistics than in the 18 state-based exchanges), almost all enrollees (92%) received premium tax credits (subsidies) to help pay for coverage – including 400,000 who would not have qualified for subsidies prior to passage in March of this year of the American Rescue Plan (ARP). That bill not only increased premium subsidies at every income level through 2022, but also removed the previous income cap on subsidies, which was 400% of the federal poverty level (FPL) ($51,520 per year for an individual and $106,000 for a family of four). In 2022, no enrollee who lacks access to other affordable insurance pays more than 8.5% of income for a benchmark Silver plan (the second cheapest Silver plan in each area), and most pay far less.

The enrollment increase is tribute to the huge boost in affordability created by the ARP subsidies. A benchmark Silver plan with strong Cost Sharing Reduction (CSR, attached to Silver plans for low-income enrollees) is now free at incomes up to 150%FPL ($19,320 for an individual, $39,750 for a family of four in 2022) and costs no more than 2% of income ($43/month for an individual) at incomes up to 200% FPL. The percentage of income required for the benchmark Silver plan  was reduced at higher incomes as well.  The ARP also provided free high-CSR Silver coverage to anyone who received any unemployment insurance income in 2021.

The American Rescue Plan boosted enrollment throughout 2021 and into 2022

The enrollment gains during OEP build on the enrollment surge triggered by the emergency special enrollment period (SEP) opened by the Biden administration on February 15 of this year, which ran through August 15 in the 33 states using HealthCare.gov, and for varying periods in the 15 states that ran their own exchanges in 2021. (There are now 18 state-based exchanges, as Kentucky, Maine and New Mexico launched new ones for 2022.)

The ARP subsidies came online in April (or May in a few state marketplaces). From February to August, 2.8 million people enrolled during the SEP, and total enrollment increased by 900,000 on net from February to August (as people also disenrolled every month, and many enrollees doubtless regained employer-sponsored coverage during a period of rapid job growth).

In addition, once the ARP subsidy increases went into effect, 8 million existing enrollees saw their premiums reduced by an average of 50%, from $134 to $67 per month. Enrollees’ premiums in 2022 should be similar to those of the SEP.

Enrollment growth was concentrated in states that have not expanded Medicaid

Enrollment increases during open enrollment – as during the SEP and the OEP for 2021 – were heavily concentrated in states that have not enacted the ACA expansion of Medicaid eligibility. There were 14 such states during most of the SEP and 12 during the (still current) OEP, as Oklahoma belatedly enacted the Medicaid expansion starting in July of this year, and Missouri in October.

In non-expansion states, eligibility for ACA premium subsidies begins at 100% FPL, while in states that have enacted the expansion, marketplace subsidy eligibility begins at 138% FPL, and Medicaid is available below that threshold. In non-expansion states, the marketplace is the only route to coverage for most low-income adults, and those who report incomes below 100% FPL mostly get no help at all – they are in the notorious coverage gap. In those states, about 40% of marketplace enrollees have incomes below 138% FPL – that is, they would be enrolled in Medicaid if their states enacted the expansion.

During OEP, these 12 non-expansion states account for 81% of the enrollment gains in the 33 HealthCare.gov states, and about two-thirds of enrollment gains in all states. The table below also shows gains over a two-year period, encompassing the effects of the COVID-19 pandemic.

Total plan selections in non-expansion states**
Dec. 15 open enrollment snapshots 2020-2022
State 2020 2021 2022 Increase 2021-2022 % increase 2021-2022 Increase 2020-2022 % increase 2020-2022
Alabama 159,820 168,399 205,407 37,008 22.0% 45,587 28.5%
Florida 1,912,394 2,115,424 2,592,906 477,482 22.6% 680,512 35.6%
Georgia 464,041 541,641 653,999 139,358 27.1% 189,958 40.9%
Kansas 85,880 88,497 102,573 14,076 15.9% 16,693 19.4%
Mississippi 98,868 110,519 132,432 21,913 19.8% 33,564 33.9%
North Carolina 505,159 536,270 638,309 102,039 19.0% 133,150 26.4%
South Carolina 215,331 230,033 282,882 52,849 23.0% 67,551 31.4%
South Dakota 29,330 31,283 39,292 8,009 25.6% 9,962 34.0%
Tennessee 200,723 211,474 257,778 46,304 21.9% 57,055 28.4%
Texas 1,117,882 1,284,524 1,711,204 426,680 33.2% 593,322 53.1%
Wisconsin 196,594 192,183 205,991 13,808 7.2% 9,397 4.8%
Wyoming 24,665 26,684 33,035 6,351 23.8% 8,370 33.9%
Non-expansion states 5,010,687 5,509,931 6,855,808 1,345,877 24.4% 1,845,121 36.8%
All HC.gov states 7,533,936 8,053,842 9,724,251 1,670,409 20.7% 2,190,315 29.1%

In the 39 states that have enacted the ACA Medicaid expansion (21 on HealthCare.gov and 18 running their own exchanges), far fewer enrollees are eligible for free Silver coverage. In expansion states, eligibility for marketplace subsidies begins at an income of 138% FPL, as people below that threshold are eligible for Medicaid. Nevertheless, enrollment growth in non-expansion states during the current OEP is substantial, increasing by about 755,000 year-over-year, or 13%.

The marketplace has been a pandemic ‘safety net’

The marketplace has been a bulwark against uninsurance during the pandemic, among low-income people especially and in the non-expansion states in particular. As shown in the chart above, enrollment in these 11 states increased by 1.8 million from Dec. 15, 2019 to Dec. 15, 2021 – a 37% increase. For all states, the two-year increase is in the neighborhood of 25% and will approach 3 million (from 11.4 million in OEP for 2020 to above 14 million when OEP for 2022 ends in January). That’s in addition to an increase of more than 12 million in Medicaid enrollment during the pandemic.

While millions of Americans lost jobs when the pandemic struck, and millions fewer are employed today than in February 2020, the uninsured rate did not increase during 2020, according to government surveys, and may even prove to have downticked during 2021 or 2022 when the data comes in.

While the government has not yet published detailed statistics as to who has enrolled during the current OEP, they did do so in the final enrollment report for the emergency SEP. During the emergency SEP, out of 2.8 million new enrollees, 2.1 million were in the 33 HealthCare.gov states. In those states, 41% of enrollees obtained Silver plans with the highest level of CSR, which means that they had incomes under 150% FPL (or received unemployment income) and so received free coverage in plans with an actuarial value of 94% – far above the norm for employer-sponsored plans.

The median deductible obtained in HealthCare.gov states was $50, which makes sense, as 54% of enrollees obtained Silver plans with strong CSR, raising the plan’s actuarial value to either 94% (at incomes up to 150% FPL) or to 87% (at incomes between 150% and 200% FPL). Two-thirds of enrollees in HealthCare.gov states paid less than $50 per month for coverage, and 37% obtained coverage for free.

At higher incomes, as noted above, 400,000 enrollees who received subsidies in HealthCare.gov states would not have been subsidy-eligible before the ARP lifted the income cap on subsidies (previously 400% FPL). The same is also doubtless true for several hundred thousand enrollees in state-based marketplaces. The SBEs account for a bit less than a third of all enrollment, but in those states, all of which have expanded Medicaid, the percentage of enrollees with income over 400% FPL is almost twice that of the HealthCare.gov states (12% versus 7% during the emergency SEP).

ARP: a patch for the coverage gap?

The strong enrollment growth in non-expansion states – an increase of 37% in two years – indicates that during the pandemic, some low-income people in those states found their way out of the coverage gap (caused by the lack of government help available to most adults with incomes below 100% FPL).  In March 2020, the CARES Act (H.R.748) provided supplementary uninsurance income of $600 per week for up to four months to a wide range of people who had lost income during the pandemic, likely pushing many incomes over 100% FPL. In 2021, anyone who received any unemployment income qualified for free Silver coverage, and during the emergency SEP, 84,000 new enrollees took advantage of this provision (along with 124,000 existing enrollees). That emergency provision is not in effect in 2022, however.

Marketplace subsidies are based on an estimate of future income. For low-income people in particular, who are often paid by the hour, work uncertain schedules, depend on tips, or are self-employed, income can be difficult to project. The desire to be insured during the pandemic may have spurred some applicants to make sure their estimates cleared the 100% FPL threshold. (Enrollment assisters and brokers can help applicants deploy every resource to meet this goal.)

For OEP 2022, the Biden administration raised funding for nonprofit enrollment assistance in HealthCare.gov states to record levels, enough to train and certify more than 1,500 enrollment navigators. This past spring, in compliance with a court order, the exchanges stopped requiring low-income applicants who estimated income  over 100% FPL to provide documentation if the government’s “trusted sources” of information indicated an  income below the threshold.

Comparatively weak enrollment growth in Wisconsin may support the hypothesis that under pressure of the pandemic, some enrollees in other non-expansion states are climbing out of the coverage gap. Alone among non-expansion states, Wisconsin has no coverage gap, as the state provides Medicaid to adults with incomes up to 100% FPL (rather than up to the 138% FPL threshold required by the ACA Medicaid expansion, which offers enhanced federal funding to participating states). In Wisconsin, those whose income falls below the 100% FPL marketplace eligibility threshold have access to free coverage. Wisconsin is the only non-expansion state that did not experience double-digit enrollment growth in OEP 2022 or from 2020-2022.

The future of increased subsidies is unclear

The American Rescue Plan was conceived as emergency pandemic relief, and its increased subsidies run only through 2022. President Biden’s Build Back Better bill, which passed in the House of Representatives but is currently stalled in the Senate, would extend the ARP subsidies through 2025 or possibly further.

The large increase in enrollment this year should add pressure on Congress to extend the improved subsidies into future years. Consumer response to the increased subsidies has proved immediate and dramatic. The ARP subsidy boosts brought the Affordable Care Act much closer than previously to living up to the promise of “affordable” care expressed in its name. Going backwards on that promise should not be seen as a politically viable or ethical path.

* * *

* Another million people are enrolled in Basic Health Programs established under the ACA by Minnesota and New York – low-cost, Medicaid-like programs for state residents with incomes under 200% FPL. Enrollment in these programs is on track to increase by 13% this year, according to Charles Gaba’s estimate.

** HealthCare.gov all-state totals are for the 33 states using the federal exchange this year. Source: Charles Gaba, OE snapshots as of mid-December, 2021-22, 2020-2021; see also CMS end-of-OEP snapshots for 2020, 2021, 2022

 

 

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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How the Build Back Better legislation might affect your coverage

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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Why your ACA premium might be going up for 2022

Key takeaways

As has been the case for the last few years, average individual and family health insurance rate changes for 2022 are mostly modest. The nationwide average increase is about 3.5%, and there are new insurers joining the marketplaces in the majority of the states.

That all sounds like great news, but the reality is a bit more complex. The modest average rate changes apply to full-price plans, but most marketplace enrollees do not pay full price. And although new insurers bring added competition, their entry could also mean a sharp reduction in premium subsidy amounts, depending on how the new insurer prices its plans.

So despite the headlines about small average rate changes, the rate change for your specific plan might be nowhere near that average. But that doesn’t necessarily mean you have to swallow a large increase.

What affects fluctuations in what you pay for insurance premiums?

The annual premium changes that grab headlines and that factor into state and federal averages are for full-price premiums. But very few marketplace/exchange enrollees pay full price. Most receive premium tax credits (subsidies), which means that their rate changes will also depend on how much their subsidy amount fluctuates from one year to the next.

ACA tax credits are set so that the enrollee pays a fixed percentage of income for the benchmark plan – the second-cheapest Silver plan in their area. When the unsubsidized benchmark plan premium changes from year-to-year, so does the size of the tax credit. If a discount insurer enters the market, your tax credit may shrink. That doesn’t matter if you choose the benchmark plan, but it may make other plans more expensive.

The averages also lump each insurer’s plans together, so although an insurer might have an average rate change of 5%, it could have a range of -10% to +20% across all of its plans.

And average rate changes also don’t account for the fact that rates increase with age. Even if your health plan has no annual rate changes at all for any of its plans, your pre-subsidy price will still be higher in the coming year simply because you’re a year older (if you receive subsidies, the subsidies will increase to keep pace with the age-related premium increases).

Anatomy of a drastic increase in premium payment

Let’s consider Monique, who is 36 years old, lives in Lincoln, Nebraska, and has an annual income of $35,000. This year, she’s enrolled in a Silver EPO plan from Medica (Medica with CHI Health Silver Copay) that has a $4,800 deductible, $45 copays for primary care visits, and an $8,150 cap on out-of-pocket costs. She pays no monthly premiums at all, because the full-price cost of the plan in 2021 is $504/month (based on her being 35 when she enrolled in that plan), and she’s eligible for a subsidy of $513/month.

Full-price premiums in Nebraska are increasing by more than the national average for 2022, with an average increase of a little less than 9%. But imagine Monique’s surprise when her renewal notice showed that her after-subsidy premium would be going from $0/month in 2021 to $226/month in 2022.

Why is her premium going up so much, when average full-price rate increases in Nebraska are in the single-digit range?

New health plan options can affect benchmark plans – and your subsidies

Nebraska is a good example of a place where there’s a lot more competition in 2022. Oscar and Ambetter have both joined the marketplace statewide, and the number of available plans has more than quadrupled. When Monique was shopping for plans last fall, she had a total of 22 options from which to choose. For 2022, however, she can pick from among 95 different plans.

In 2021, the benchmark plan (second-lowest-cost Silver plan) was offered by Medica and had a pre-subsidy price tag of $657/month. But for 2022, Ambetter offers the lowest-cost Silver plans in Lincoln, so they have taken over the benchmark spot. And the second-lowest-cost Silver plan for a 36-year-old now has a pre-subsidy premium of just $475.

So in Monique’s case, the cost of the benchmark plan has dropped by $182/month. And since subsidy amounts are based on the cost of the benchmark plan, Monique’s subsidy is also much smaller for 2022 – it doesn’t need to be as large in order to keep the cost of the benchmark plan at the level that’s considered affordable.

In addition, Medica has raised the base price of Monique’s plan from $504/month in 2021 to $560/month in 2022. That’s partially due to Monique’s increasing age, and partially due to the 10% overall average rate increase that Medica imposed for 2022.

The perfect storm for a large net rate increase?

That’s a perfect storm for a large net rate increase: The benchmark premium has dropped by $182/month while her health plan’s rate has increased by $56/month.

In 2021, Medica offered both the lowest-cost and second-lowest-cost Silver plan in Lincoln, and there was a significant difference in price between the two plans ($504/month for the lowest-cost, versus $657/month for the second-lowest-cost). Monique’s plan was the lowest-cost Silver option, and the large difference in premium between her plan and the benchmark plan explained why she was able to enroll in her plan with no premium at all. all. (A spread that big between the two cheapest Silver plans is unusual and creates a huge discount for the cheapest Silver plan when it happens.)

But that’s no longer the case for 2022. Ambetter has the four lowest-cost Silver plans in the area, and there’s only a $17 difference in price across all four of them. The two lowest-cost Silver plans are actually priced at exactly the same amount. As a result, the cheapest Silver plan that Monique can get for 2022 is going to be $141/month.

The two plans at that price both have lower out-of-pocket costs than her current plan. (They’re capped at $6,450 and $6,100, versus $8,550, which is the new out-of-pocket limit that her existing plan will have in 2022.) But non-preventive office visits are only covered after the deductible is met, whereas her current plan has copays for office visits right from the start. (Certain preventive care is covered in full on all plans, without a need to pay any deductible or copays.)

You may not be stuck with that higher 2022 premium.

The good news for Monique is that she’s not stuck with her new $226/month premium. There are 15 Silver plans that are less expensive than that for 2022, and there are also 43 Bronze plans that are less expensive, including several that are under $50/month. Bronze plans do tend to have fairly high out-of-pocket costs. But Monique can select from among three Bronze plans offered by Bright Health that include pre-deductible coverage for things like primary care visits, outpatient mental health care, and urgent care visits, with monthly premiums that range from $18 to $42.

Although those Bright Health Plans do have deductibles that are higher than her current Medica plan, she might find that she comes out ahead on out-of-pocket costs due to the more robust pre-deductible coverage that they provide. And that might be especially true when she factors in the premium savings: A plan that costs $18/month will save her more than $200/month in premiums, compared with renewing her current plan.

The takeaway point here is to not panic if your plan’s premium is increasing by a lot more than you might have expected. Even if your rate is increasing significantly, you might find that there are other options available that will be a better fit for your budget.

The fact that there are more plans available in most areas of the country for 2022 can be a plus or a minus, depending on the circumstances. In Monique’s case, a new plan has taken over the benchmark spot and reduced her subsidy amount. But there are also dozens of other new plans in her area, many of which might be a perfect fit for her medical needs.

How to find solid replacement coverage with a lower net premium

In order to pick a plan, Monique will need to consider the whole picture, including total premium costs, expected out-of-pocket medical costs, and provider networks. If she takes any medications, she’ll need to compare the various plan options to see whether her drugs are covered and how much she can expect to pay at the pharmacy.

Although this article focuses on plans available in Lincoln, Nebraska, people in other parts of the country can be facing varying degrees of surprising net rate increases, even when overall full-price rate changes in their area are fairly modest.

In states that use HealthCare.gov, the average enrollee can select from among almost 108 plans for 2022, up from just 61 in 2021. Even if the benchmark plan in your area has remained unchanged, the influx of new plans might mean that there’s a better option available for you in 2022, and now’s your chance to switch your coverage. It’s never in your best interest to just let your plan auto-renew without considering the other options, and that’s especially true when there are so many new plans available.

In every community, there are brokers and Navigators who can help you understand what’s happening with your current plan, and consider whether a plan change might be in your best interest. For more information about selecting a plan during open – and open enrollment deadlines in your state – read our 2022 Guide to ACA Open Enrollment.

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

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.

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Congress boosted ACA subsidies. An enrollment surge followed.

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

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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Lost your job? Here’s how to keep your health insurance or find new coverage now.

Most Americans under the age of 65 get their health insurance from an employer. This makes life fairly simple as long as you have a job that provides solid health benefits: All you need to do is enroll when you’re eligible, and if your employer offers a few options from which to choose, pick the one that best fits your needs each year during your employer’s annual enrollment period.

But the downside to having health insurance linked to employment is that losing your job will also mean losing your health insurance, adding stress to an already stressful situation.

The good news is that you’ve got options — probably several, depending on the circumstances. Let’s take a look at what you need to know about health insurance if you’ve lost your job and are facing the loss of your employer-sponsored health coverage.

Can I enroll in self-purchased insurance as soon as I’ve lost my job?

If you’re losing your job-based health insurance, you do not have to wait for the fall open enrollment period to sign up for a new ACA-compliant plan.

Although the COVID-related special enrollment window for individual/family health plans has already ended in most states, you’ll qualify for your own special enrollment period due to the loss of your employer-sponsored health plan.

This will allow you to enroll in a plan through the marketplace/exchange and take advantage of the subsidies that are available (and bigger than ever, thanks to the American Rescue Plan), without having to wait until 2022 to get coverage.

If you enroll prior to your coverage loss, your new plan will take effect the first of the month after your old plan ends, which means you’ll have seamless coverage if your old plan is ending on the last day of the month.

Your special enrollment period also continues for 60 days after your coverage loss, although you’d have a gap in coverage if you wait and enroll after your old plan ends, since your new plan wouldn’t take effect retroactively.

If you’re in that situation, you might find that a short-term health plan is a good option for bridging the gap until your new plan takes effect. Short-term plans won’t cover pre-existing conditions and are not regulated by the Affordable Care Act (ACA). But they can provide fairly good coverage for unexpected medical needs during a temporary window when you’d otherwise be uninsured.

Be sure to check your options again during open enrollment

If you sign up for coverage now in your special enrollment period, keep in mind that you’ll still need to re-evaluate your coverage during the upcoming open enrollment period, which begins November 1. Even though you’re enrolling fairly late in 2021, your new plan will reset on January 1, with new pricing and possibly some coverage changes. There also might be new plans available in your area for 2022.

So your special enrollment period (tied to your coverage loss) will be your opportunity to find the best plan to fit your needs for the rest of this year. And if you’re still going to need self-purchased coverage in 2022, the upcoming open enrollment period will give you a chance to make sure you optimize your coverage for next year as well.

COBRA (or state continuation) versus self-purchased coverage

Depending on the size of your employer, COBRA might be offered to you. And even if your employer is too small for COBRA, you might have access to state continuation (“mini-COBRA”), depending on where you live. Either of these options will allow you to temporarily continue the coverage you already have, instead of switching to a new individual-market plan right away.

If COBRA or state continuation is available, your employer will notify you and give you information about what you’ll need to do to activate the coverage continuation and how long you can keep it.

Normally, you have to pay the full cost of COBRA or state continuation coverage, including the portion that your employer previously paid on your behalf — which was likely the bulk of the premiums. But until the end of September 2021 (so for just one more month), as part of the American Rescue Plan (ARP), the federal government will pay the full cost of COBRA or state continuation coverage for people who involuntarily lost their jobs.

For much of this year, the soon-to-end COBRA subsidy has changed the calculus that normally goes into the decision of whether to continue an employer-sponsored plan or switch to a self-purchased individual/family plan. But after the end of September, the normal decision-making process will again apply. And you’ll have a special enrollment period when the COBRA subsidy ends, which will allow you to transition to an individual/family plan at that point if you want to.

COBRA coverage vs individual-market health insurance

Here’s what to keep in mind when you’re deciding between COBRA and an individual-market health plan – either initially, or after the COBRA subsidy ends on September 30:

  • ACA marketplace subsidies are now available at all income levels, depending on the cost of coverage in your area (the American Rescue Plan eliminated the income cap for subsidy eligibility for 2021 and 2022). And the subsidies are substantial, covering the majority of the premium cost for the majority of marketplace enrollees. Unless your employer is continuing to subsidize your COBRA coverage after the federal subsidy expires, you’ll probably find that the monthly premiums are lower if you enroll in a plan through the marketplace, as opposed to continuing your employer-sponsored plan.
  • Have you already spent a significant amount of money on out-of-pocket costs under your employer-sponsored plan this year? You’ll almost certainly be starting over at $0 if you switch to an individual/family plan, even if it’s offered by the same insurer that provides your employer-sponsored coverage. Depending on the specifics of your situation, the money you’ve already paid for out-of-pocket medical expenses this year could offset the lower premiums you’re likely to see in the marketplace.
  • Do you have certain doctors or medical facilities you need to continue to use? You’ll want to carefully check the provider networks of the available individual/family plans to see if they’re in-network. And if there are specific medications that you need, you’ll want to be sure they’re on the formularies of the plans you’re considering.
  • Will you qualify for a premium subsidy if you switch to an individual/family plan? If you do qualify, you’ll need to shop in your exchange/marketplace, as subsidies are not available if you buy your plan directly from an insurance company. (You can call the number at the top of this page to be connected with a broker who can help you enroll in a plan through the exchange.) And again, as a result of the ARP, subsidies are larger and more widely available than usual; that will continue to be the case throughout 2022 as well.

Free health insurance if you collected unemployment in 2021

If you’re approved for even one week of unemployment compensation in 2021, you qualify for a premium subsidy that will fully cover the cost of the two lowest-cost Silver plans in the marketplace/exchange in your area, through the end of the year.

The subsidy will also likely cover the full cost of many of the Bronze plans, and possibly some of the Gold plans, depending on the pricing of plans where you live. This is a special subsidy rule created by the ARP, for 2021 only.

In addition to the subsidy that will allow you to get a free Silver plan, it will also ensure that any of the available Silver plans have full cost-sharing reductions.

What if my income is too low for subsidies?

In order to qualify for premium subsidies for a plan purchased in the marketplace, you must not be eligible for Medicaid, Medicare, or an employer-sponsored plan, and your income has to be at least 100% of the federal poverty level. (As noted above, for 2021 only, you’re eligible for subsidies if you receive unemployment compensation, regardless of your actual total income for the year, as long as you’re not eligible for Medicaid, Medicare, or an employer’s plan.)

In most states, the ACA’s expansion of Medicaid eligibility provides coverage to adults with household income up to 138% of the poverty level, with eligibility determined based on current monthly income. So if your income has suddenly dropped to $0, you’ll likely be eligible for Medicaid and could transition to Medicaid when your job-based coverage ends.

Unfortunately, there are still 11 states where most adults face a coverage gap if their household income is below the federal poverty level. They aren’t eligible for premium subsidies in the marketplace (unless they’ve received unemployment compensation in 2021 and can thus qualify for 2021 subsidies).

This is an unfortunate situation that those 11 states have created for their low-income residents. But there are strategies for avoiding the coverage gap if you’re in one of those states.

And keep in mind that subsidy eligibility in the marketplace is based on your household income for the whole year, even if your current monthly income is below the poverty level. So if you earned enough earlier in the year to be subsidy-eligible for 2021, you can enroll in a plan with subsidies based on that income, despite the fact that you might not earn anything else for the rest of the year.

When open enrollment begins in November, you’ll need to project your 2022 income as accurately as possible, if you’re still needing to purchase your own coverage for 2022. But for the rest of 2021, you can use the income you already earned this year to qualify for subsidies.

What if I’ll soon be eligible for Medicare?

There has been an increase recently in the number of people retiring in their late 50s or early 60s, before they’re eligible for Medicare. The ACA made this a more realistic option starting in 2014, thanks to premium subsidies and the elimination of medical underwriting.

And the ARP has boosted subsidies and made them more widely available for 2021 and 2022, making affordable coverage more accessible for early retirees. That’s especially true for those whose pre-retirement income might have made them ineligible for subsidies in the year they retired, due to the “subsidy cliff” (which has been eliminated by the ARP through the end of 2022).

So if you’re losing your job or choosing to leave it and you still have a few months or a few years before you’ll be 65 and eligible for Medicare, rest assured that you won’t have to go uninsured.

You’ll be able to sign up for a marketplace plan during your special enrollment period triggered by the loss of your employer-sponsored plan. And even if you earned a fairly robust income in the earlier part of the year, you might still qualify for premium subsidies to offset some of the cost of your new plan for the rest of 2021.

You’ll then be able to update your projected income for 2022 during the upcoming open enrollment period; your subsidies will adjust in January to reflect your 2022 income.

And marketplace plans are always purchased on a month-to-month basis, so you’ll be able to cancel your coverage when you eventually transition to Medicare, regardless of when that happens.

Don’t worry, get covered

The short story on all of this? Coverage is available, and obtaining your own health plan isn’t as complicated as it might seem at first glance, even if you’ve had employer-sponsored coverage all your life.

You can sign up outside of open enrollment if you’re losing your job-based insurance, and there’s a good chance you’ll qualify for financial assistance that will make your new plan affordable.

You can learn more about the marketplace in your state and the available plan options by selecting your state on this map. And there are zero-cost enrollment assisters – Navigators and brokers – available throughout the country to help you make sense of it all.

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.

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.

The post The COVID SEP ended in most states. The ARP is still making premiums more affordable. appeared first on healthinsurance.org.

 

Maddox Insurance Agency

Insurance Agency in Memphis, Tennessee

Main Office

2151 Courtland Place | Memphis, TN 38104

Licensed in Tennessee, Mississippi & Arkansas

Contact

Phone: (901) 335-0154
Fax: (901) 255-9141

Lee.Maddox@maddoxinsured.com

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