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

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

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

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

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

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

The unemployment-based subsidies are two-fold:

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

Who is eligible for unemployment-based subsidies?

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

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

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

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

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

How to claim the extra subsidies

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

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

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

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

You might need to switch plans to get the full benefit

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

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

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

What you’ll pay each month

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

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

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

What you’ll pay when you need medical care

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

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

How big will your subsidy be?

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

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

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

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

Are accumulators making you think twice about switching health plans?

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

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

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

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

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

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

Are ARP’s higher subsidies worth it?

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

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

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

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

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

Which states are helping with accumulators?

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

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

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

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

In some states, rules are slightly more complicated

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

States where the official word is that ‘it depends’

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

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

States where the official word is that accumulators will not transfer

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

What if my state’s not listed?

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

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

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

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

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

To switch or not to switch?

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

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

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

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

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

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

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What to expect when you’re expecting health insurance premium subsidies

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If you buy your own health insurance – or don’t have health insurance at all – you might have been pleased to hear that the American Rescue Plan (ARP) has increased premium subsidies for 2021 and made them available to more people.

But receiving those premium tax credits isn’t necessarily automatic: when and how you get them depends on where you live and other factors, including whether you’re already enrolled in a marketplace plan and whether you’re receiving unemployment compensation at any point in 2021.

The early bird gets the premium subsidy

Although the current COVID/ARP enrollment window extends through August 15 in most states, it’s in your best interest to enroll as soon as possible in order to maximize the number of months you get the extra subsidies.

If you’re receiving unemployment compensation at any point in 2021, the American Rescue Plan gives you access to substantial premium subsidies and full cost-sharing reductions. That means you’ll be eligible for a Silver plan that’s upgraded to better-than-platinum benefits, and you won’t have to pay any monthly premiums. But in most states, this benefit isn’t yet available. (Note that in some states, you may still have to pay a dollar or two, even for the lowest-cost Silver plans. And it’s worth noting that even if you’re eligible for a premium-free Silver plan, you might find that you prefer to upgrade to a Silver plan that has at least a nominal premium in trade for a more extensive provider network.)

Regardless, you’ll still want to enroll – or change your plan – as soon as possible so that when subsidies are available, you’ll receive credit for them.

Your state’s marketplace affects how and when you receive your subsidies

For starters, you should be aware that when it comes to how the ARP’s extra subsidies are being handled, there’s one process in the states that use HealthCare.gov, and 15 slightly different approaches in the other states. Thirty-six states use HealthCare.gov as their marketplace, while Washington, DC and the other 14 states operate their own state-run marketplaces (Covered California, New York State of Health, Your Health Idaho, etc.).

How and when will you receive your premium subsidy in a HealthCare.gov state?

If you’re in a state that uses HealthCare.gov, your additional subsidies will not be automatically added to your account, even if you already have financial information on file with the marketplace. You’ll need to log back into your account and follow the instructions to get your subsidy amount updated. (You can do this directly through HealthCare.gov or through an enhanced direct enrollment entity if you use one – or your broker or agent can help you sort it out). Once the new subsidy is determined, you can choose to either apply it to your current plan or pick a different plan.

If you’re uninsured or enrolled in an off-exchange plan, you can switch to the marketplace anytime between now and August 15. But the sooner you enroll, the sooner you’ll start receiving subsidies.

HealthCare.gov rolled out most of the ARP’s new subsidies as of April 1, but CMS has said it will be July before the enhanced subsidies are available to people who receive unemployment compensation in 2021.

It’s important to understand that regardless of the reason for the additional premium subsidy (including unemployment compensation), the subsidy itself is retroactive to January 1, 2021 in every state, as long as you’ve had coverage through the marketplace for the whole year. So even if your enhanced subsidy due to unemployment compensation doesn’t take effect until August, you’ll be able to claim the rest of it when you file your 2021 tax return. However, the full cost-sharing reductions for people who receive unemployment compensation in 2021 can only be provided in real-time, and won’t take effect until the marketplace can process them, starting this summer.

How will premium subsidies be treated in states that run their own marketplaces?

In the District of Columbia and the other 14 states, the deadlines, subsidy availability dates, and even eligibility rules differ from state to state. In most of these states, the current special enrollment window is functioning like an open enrollment period, with people allowed to newly enroll or switch plans – though there are some exceptions, detailed below. And in contrast to HealthCare.gov, nearly all of the state-run exchanges will be automatically updating subsidy amounts for current enrollees over the next several weeks, as long as the enrollee has financial information on file with the exchange.

Here’s a summary of what each state with a state-run marketplace is doing:

California

  • Residents can enroll in an ACA-compliant plan through December 31.
  • Subsidies are currently available for most people, but subsidy eligibility based on unemployment compensation won’t be available until July or August.
  • For current enrollees, subsidies will be automatically updated in May.

Colorado

  • Residents can enroll in an ACA-compliant plan through August 15.
  • Subsidies will not be automatically updated, but are currently available for both new and existing enrollees. The process will be more streamlined by mid-May.

Connecticut:

  • Residents can enroll in an ACA-compliant plan between May 1 and August 15.
  • Subsidies will be available to most people starting May 1, although subsidy eligibility based on unemployment compensation will be available by July.
  • Subsidies will be automatically updated by July, for current enrollees who don’t manually update their accounts before then.

District of Columbia:

  • Residents can enroll in an ACA-compliant plan any time through the end of the pandemic emergency period.
  • Extra subsidies are currently available to anyone eligible, including people who are eligible due to unemployment compensation in 2021.
  • Subsidies will be automatically updated in May, for current enrollees who don’t manually update their accounts before then.
  • For people who have been enrolled through the marketplace since January, the full amount of the additional premium subsidy will be spread across the remaining months of 2021 (as opposed to having to wait to claim the subsidy for the first few months of 2021 on their tax returns).

Idaho:

  • Residents can enroll in an ACA-compliant plan through April 30.
  • Updated subsidies are currently available, and have been automatically updated for existing enrollees who had already provided financial information to the exchange.
  • Current enrollees can change plans, but only to another plan offered by the same insurance company (unless they have a qualifying event).

Maryland:

  • Residents can enroll in an ACA-compliant plan through August 15.
  • Updated subsidies are currently available, and will be automatically added to existing accounts as of May, for enrollees who have opted to receive the maximum available subsidy.
  • Current enrollees with bronze or catastrophic plans can upgrade their coverage; current enrollees with Silver plans can switch to a more expensive Silver plan.

Massachusetts:

  • Residents can enroll in an ACA-compliant plan through July 23.
  • Updated subsidies are currently available, and will be automatically updated for existing subsidized enrollees as of May. Enrollees who are newly eligible for subsidies will be able to access them in May, for June coverage.
  • As soon as possible, enrollees who have received any unemployment compensation in 2021 will become eligible for ConnectorCare Plan Type 2A, which has no monthly premiums and low out-of-pocket costs.

Minnesota:

  • Residents can enroll in an ACA-compliant plan through July 16.
  • Updated subsidies are currently available, and MNsure will automatically update existing enrollees’ subsidy amounts if they have financial information on file.
  • MNsure’s current enrollment window is only available to people who are uninsured or enrolled in a plan outside the exchange (it’s necessary to transition to the exchange in order to get premium subsidies). Current MNsure enrollees cannot use this window to switch plans unless they have a qualifying event. Minnesota and Vermont are currently the only states in the country with this restriction (Vermont plans to allow people to change plans in July).

Nevada:

  • Residents can enroll in an ACA-compliant plan through August 15.
  • Updated subsidies are currently available, and Nevada Health Link will start automatically updating existing enrollees’ subsidy amounts in June.

New Jersey:

  • Residents can enroll in an ACA-compliant plan through December 31.
  • As of May, New Jersey is expanding its state-funded subsidies to include enrollees with household income up to 600% of the poverty level (this was previously capped at 400% of the poverty level)
  • Updated subsidies are currently available. Existing enrollees can follow these steps to update their account, and new enrollees can follow these steps.
  • The exchange will automatically update subsidy amounts this summer, for existing enrollees who haven’t yet taken action to update their subsidies.

New York:

  • Residents can enroll in an ACA-compliant plan through December 31.
  • Updated subsidies are currently available. This video shows how existing enrollees can update their subsidy amounts. New subsidy amounts will automatically be applied to eligible enrollees’ accounts as of June, if they haven’t taken action by then.

Pennsylvania:

  •  Residents can enroll in an ACA-compliant plan through August 15.
  • Updated subsidies are currently available. Pennie will apply them automatically by June, for existing enrollees who haven’t taken action to update their accounts by then.

Rhode Island:

  • Residents can enroll in an ACA-compliant plan through August 15.
  • HealthSourceRI has already automatically updated subsidy amounts for current enrollees with income up to 400% of the poverty level (ie, people who were already receiving subsidies are now receiving larger subsidies).
  • For people with income above 400% of the poverty level, as well as people who are receiving unemployment compensation in 2021, the new subsidy amounts will be updated in June.

Vermont:

  • Residents can enroll in an ACA-compliant plan through May 14.
  • For now, Vermont’s marketplace is encouraging people who are uninsured or enrolled off-exchange to sign up for coverage through the marketplace as soon as possible.
  • People who are receiving unemployment compensation are encouraged to call Vermont’s marketplace in order to begin the process of receiving additional subsidies.
  • This summer, people will be able to log back into their accounts and update their subsidy amounts.
  • Vermont, like Minnesota, is currently limiting the COVID/ARP-related enrollment window to people who are uninsured and people who have off-exchange coverage and need to transition to the exchange. A plan change for current on-exchange enrollees requires a qualifying event. But Vermont Health Connect confirmed that they plan to allow existing enrollees to make plan changes in July.

Washington:

  • Residents can enroll in an ACA-compliant plan through August 15.
  • The additional subsidy amounts will be available by early May. Washington’s marketplace will automatically update existing enrollees’ accounts so that the new premium amounts take effect in June.
  • People who enroll before May will not see the new subsidy amounts when they enroll, but their subsidies will be updated in May as long as they provide financial information to the marketplace when they enroll.
  • Enrollees who do not currently receive tax credits may want to switch plans once they start receiving tax credits. They can log back into their account after May 15 to pick a different plan, as long as it’s offered by their current insurance company.

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

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How the COVID relief law will rescue marketplace plan buyers

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Stressed about having to pay back some or all of the premium subsidy that was paid on your behalf last year? You’re in luck: Under the American Rescue Plan Act (H.R. 1319) – passed by Congress on March 10 and expected to be signed into law by President Biden on March 12 – excess premium subsidies for 2020 do not have to be repaid to the Internal Revenue Service.

This is a one-time provision that’s being granted as part of the federal government’s massive COVID relief measure – which is also significantly increasing premiums subsidies for 2021 and 2022 – and it will come as a great relief to many of the Americans who enrolled in individual and family health plans through the health insurance marketplace /exchange last year.

Although the Affordable Care Act’s premium tax credits (premium subsidies) make health insurance affordable for millions of people, they can be a bit complicated. Unlike other tax credits, they’re available to be used up front, paid directly to your health insurance company throughout the year. (This is called APTC – advance premium tax credit – since it’s paid in advance.)

You can always opt to pay full price for a plan purchased through the exchange and then claim the whole premium tax credit on your tax return, but hardly anyone does that. Instead, most people provide the marketplace with a projection of what they think their income will be for the year, and their estimated premium tax credit is then sent to their insurer throughout the year, reducing the amount they have to pay in premiums.

The catch is that it all has to be reconciled with the IRS when policyholders file their tax returns. Depending on the circumstances, the IRS might give you additional money at that point (if your subsidy was too small), or they might make you repay some or all of the subsidy that was paid on your behalf during the year.

How the law will head off a tax-time subsidy repayment crisis

This issue was shaping up to be particularly significant for the 2020 tax year. The combination of additional federal unemployment compensation and erratic employment made it more difficult than usual for people to accurately project their income for 2020. And, as is always the case, folks whose income ended up over 400% of the federal poverty level were facing the prospect of paying back their entire premium subsidy to the IRS – repayments which could be in the thousands or even tens of thousands of dollars, depending on the circumstances.

An income boost that pushed a household over the 400% federal poverty level threshold might have happened because a person received more unemployment benefits than they expected, or because they got a new job later in the year that put their total income above the subsidy eligibility threshold. In normal years, this would mean the entire subsidy has to be repaid, regardless of how low policyholders’ income was during the months they were receiving a premium subsidy through the marketplace.

And even for people whose income stayed under 400 percent of the poverty level, there was the possibility of having to repay as much as $2,700 in excess premium subsidies, depending on the actual income and tax filing status.

Provision applies only to the 2020 tax year

But thanks to the American Rescue Plan Act, no marketplace plan buyer will have to worry about repaying excess premium subsidies for 2020. If your subsidy amount was too small, you can still claim the additional amount that you’re owed when you file your taxes. But if your subsidy ended up being too large – even if your income ended up exceeding 400% of the poverty level – you won’t owe any of it back to the IRS.

This is a one-time provision for the 2020 tax year only. So it’s still important to project your income for this year as accurately as possible, and keep the exchange updated if your income changes later this year.

How will the provision apply if you’ve already filed your taxes?

It’s not yet clear exactly how the IRS will handle excess premium tax credits for people who filed their 2020 tax returns earlier this year and already repaid some or all of their premium tax credit for 2020. Amended tax returns can always be used to make a change, but the IRS may provide other ways of recouping this money in guidance or FAQs issued in the near future. (We’ll update this if and when the IRS issues guidance and clarification.)

It’s also not yet clear how quickly tax software will reflect the fact that excess premium subsidies for 2020 do not have to be repaid. Karen Pollitz, a Senior Fellow at Kaiser Family Foundation, notes that “the forms and tax software already provide for repayment, so it will take a while to straighten all this out. And it will probably be very confusing for people who file their tax returns over the next four to five weeks.”

You’ll want to check with your tax preparer or call your tax software company to see if they have any guidance for you. The tax filing deadline is April 15, 2021, but it’s also possible to request an extension if you need it, giving you until October 15 to file your return.

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

The post How the COVID relief law will rescue marketplace plan buyers appeared first on healthinsurance.org.

How the American Rescue Plan Act would boost marketplace premium subsidies

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Key takeaways

Last weekend, the House of Representatives passed the American Rescue Plan Act of 2021 (H.R. 1319), an economic stimulus package designed to provide relief from the impact of COVID-19 on Americans. The bill has the support of the majority of Americans – including those registered as Republicans and Independents.

H.R. 1319 is now under consideration in the Senate, so we don’t yet know exactly what will be included in the final legislation. But the health insurance provisions in the House version of the legislation are unchanged from what the House Ways and Means Committee had initially proposed, and have not been sticking points for the bill thus far.

Several provisions in H.R. 1319 are designed to make health coverage more accessible and affordable. Today we’re taking a look at how the legislation would change the ACA’s premium subsidy structure for 2021 and 2022, and the impact that would have on the premiums that Americans pay for individual and family health coverage.

Help for 12 million marketplace enrollees, plus more who will newly enroll

If you’re among the 12 million people who purchase ACA-compliant coverage in the health insurance marketplaces, your coverage is likely to become more affordable under H.R. 1319.

What’s more, the Congressional Budget Office estimates that an additional 1.7 million people – most of whom are currently uninsured – would enroll in health plans through the marketplaces in 2022 as a result of the enhanced premium subsidies.

No one would pay more than 8.5% of their income for the benchmark plan

Some opponents of the legislation have criticized its premium subsidy enhancements as a handout to wealthy Americans. But that’s only because the legislation is designed to remedy the subsidy cliff – which can result in some households paying as much as half of their annual income for health insurance premiums. It’s a situation that’s obviously neither realistic nor sustainable for policyholders.

The Affordable Care Act (ACA) only provides premium tax credits (aka premium subsidies) if a household’s ACA-specific modified adjusted gross income doesn’t exceed 400 percent of the federal poverty level. For 2021 coverage in the continental U.S., that’s about $51,000 for a single person and $104,800 for a family of four. Depending on where you live, that might be a comfortable income – but not if you have to spend 20, 30, 40 or even 50 percent of that income on health insurance.

H.R. 1319’s adjustment to the premium tax credit guidelines would temporarily – for this year and next year – eliminate the income cap for premium subsidies. That means that – regardless of income – no one would have to pay more than 8.5 percent of their household income for the benchmark plan (the second-lowest-cost Silver plan available in the exchange in a given area).

Under this approach, subsidies would phase out gradually as income increases. Plan buyers would not be eligible for a subsidy if the benchmark plan’s full price wouldn’t be more than 8.5 percent of the household’s income. But in some areas of the country – and particularly for older applicants, who can be charged as much as three times the premiums young adults pay – premium subsidy eligibility could end up extending well above 400 percent of the poverty level.

In addition to addressing the subsidy cliff, H.R. 1319 also enhances premium subsidies for marketplace buyers who are already subsidy-eligible. The subsidies would get larger across the board, making after-subsidy premiums more affordable for most enrollees. At every income level, the legislation would reduce the percentage of income that people are expected to pay for the benchmark plan, which would result in larger subsidies.

Larger subsidies? Here are a few examples.

How much larger? It would depend on location, income, and age. Let’s take a look at some examples.

We’ll consider applicants with various income levels and ages in three locations: Albuquerque, New Mexico – where premiums are among the nation’s lowest; Jackson, Mississippi – where premiums are close to the national average; and Cheyenne, Wyoming – where premiums are among the nation’s highest.

In each location, we’ll see how things would play out for a 25-year-old, a 60-year-old, and a family of four (45-year-old parents, and kids who are 13 and 10), all at varying income levels.

American Rescue Plan Act impact on health insurance subsidiesYou can see the full comparison in this spreadsheet. (Current premiums were obtained via HealthCare.gov’s browsing tool. Premiums under H.R. 1319 were calculated using the proposed applicable percentage table in Section 9661(a) and the methodology outlined here, which would be unchanged under the new legislation.)

In most cases, you’ll notice that the subsidy amount is larger under H.R. 1319, resulting in a lower benchmark premium and also a lower price for the lowest-cost plan available to that applicant (or more plans available with no premium at all). This is because the new legislation specifically reduces the percentage of income that people have to pay for the benchmark plan. That, in turn, drives up the subsidy amounts that are necessary to reduce the benchmark premium. And since premium subsidies can be applied to any metal-level plan, it also results in a lower cost for the other available plans (or more premium-free plans, depending on the circumstances).

As you consider these numbers, note that if the current subsidy amount is $0, either the benchmark plan is already considered affordable for that person, or their income is over 400 percent of the poverty level and subsidies are simply not available. If the subsidy amount is $0 under the H.R. 1319 scenario, it means that the benchmark plan would not cost more than 8.5 percent of the applicant’s income.

As you can see, the additional subsidies would be widely available, but would be more substantial for people who are currently paying the highest premiums. Under the current rules, it may not be realistic for our Wyoming family to pay more than $30,000 in annual premiums (enrolling in the benchmark plan, with premiums in excess of $2,500 per month). The American Rescue Plan Act would bring their annual premiums for the benchmark plan down to under $10,000, which is much more manageable.

The legislation is not, however, a giveaway to wealthy Americans. If that family earned $500,000, they still wouldn’t get a premium subsidy under H.R. 1319, because even at $2,528/month, the full-price cost of the benchmark plan would only amount to 6 percent of their income. Unlike Medicare and the tax breaks for employer-sponsored health insurance, financial assistance with individual market health insurance would not extend to the wealthiest applicants.

By capping premiums at 8.5 percent of income, H.R. 1319 provides targeted premium assistance only where it’s needed. And by enhancing the existing premium subsidies, the legislation makes it easier for people at all income levels to afford health coverage.

Premium enhancements would be retroactive but also temporary

Assuming these premium subsidy enhancements are approved by the Senate, they’ll be retroactive to the start of 2021. Current enrollees will be able to start claiming any applicable extra subsidy immediately, or they can wait and claim it on their 2021 tax return. The additional premium subsidies would also be available for 2022, but would no longer be available as of 2023 unless additional legislation is enacted to extend them.

And there’s currently a special enrollment period – which continues through May 15 in most states – during which people can sign up for coverage if they haven’t already. In most states, this window can also be used by people who already have coverage and wish to change their plan, so this is definitely a good time to reconsider your health insurance coverage and make sure you’re taking advantage of the benefits that are available to you.

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

The post How the American Rescue Plan Act would boost marketplace premium subsidies appeared first on healthinsurance.org.

How the American Rescue Plan Act will boost marketplace premium subsidies

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Key takeaways

Edit: The Senate passed H.R.1319 on March 6, and the House passed the bill again on March 10. President Biden signed it into law on March 11. CMS published some initial information for marketplace enrollees on March 12.

Last weekend, the House of Representatives passed the American Rescue Plan Act of 2021 (H.R. 1319), an economic stimulus package designed to provide relief from the impact of COVID-19 on Americans. The bill has the support of the majority of Americans – including those registered as Republicans and Independents.

H.R. 1319 is now under consideration in the Senate, so we don’t yet know exactly what will be included in the final legislation. But the health insurance provisions in the House version of the legislation are unchanged from what the House Ways and Means Committee had initially proposed, and have not been sticking points for the bill thus far.

Several provisions in H.R. 1319 are designed to make health coverage more accessible and affordable. Today we’re taking a look at how the legislation would change the ACA’s premium subsidy structure for 2021 and 2022, and the impact that would have on the premiums that Americans pay for individual and family health coverage.

Help for 12 million marketplace enrollees, plus more who will newly enroll

If you’re among the 12 million people who purchase ACA-compliant coverage in the health insurance marketplaces, your coverage is likely to become more affordable under H.R. 1319.

What’s more, the Congressional Budget Office estimates that an additional 1.7 million people – most of whom are currently uninsured – would enroll in health plans through the marketplaces in 2022 as a result of the enhanced premium subsidies.

No one would pay more than 8.5% of their income for the benchmark plan

Some opponents of the legislation have criticized its premium subsidy enhancements as a handout to wealthy Americans. But that’s only because the legislation is designed to remedy the subsidy cliff – which can result in some households paying as much as half of their annual income for health insurance premiums. It’s a situation that’s obviously neither realistic nor sustainable for policyholders.

The Affordable Care Act (ACA) only provides premium tax credits (aka premium subsidies) if a household’s ACA-specific modified adjusted gross income doesn’t exceed 400 percent of the federal poverty level. For 2021 coverage in the continental U.S., that’s about $51,000 for a single person and $104,800 for a family of four. Depending on where you live, that might be a comfortable income – but not if you have to spend 20, 30, 40 or even 50 percent of that income on health insurance.

H.R. 1319’s adjustment to the premium tax credit guidelines would temporarily – for this year and next year – eliminate the income cap for premium subsidies. That means that – regardless of income – no one would have to pay more than 8.5 percent of their household income for the benchmark plan (the second-lowest-cost Silver plan available in the exchange in a given area).

Under this approach, subsidies would phase out gradually as income increases. Plan buyers would not be eligible for a subsidy if the benchmark plan’s full price wouldn’t be more than 8.5 percent of the household’s income. But in some areas of the country – and particularly for older applicants, who can be charged as much as three times the premiums young adults pay – premium subsidy eligibility could end up extending well above 400 percent of the poverty level.

In addition to addressing the subsidy cliff, H.R. 1319 also enhances premium subsidies for marketplace buyers who are already subsidy-eligible. The subsidies would get larger across the board, making after-subsidy premiums more affordable for most enrollees. At every income level, the legislation would reduce the percentage of income that people are expected to pay for the benchmark plan, which would result in larger subsidies.

Larger subsidies? Here are a few examples.

How much larger? It would depend on location, income, and age. Let’s take a look at some examples.

We’ll consider applicants with various income levels and ages in three locations: Albuquerque, New Mexico – where premiums are among the nation’s lowest; Jackson, Mississippi – where premiums are close to the national average; and Cheyenne, Wyoming – where premiums are among the nation’s highest.

In each location, we’ll see how things would play out for a 25-year-old, a 60-year-old, and a family of four (45-year-old parents, and kids who are 13 and 10), all at varying income levels.

American Rescue Plan Act impact on health insurance subsidiesYou can see the full comparison in this spreadsheet. (Current premiums were obtained via HealthCare.gov’s browsing tool. Premiums under H.R. 1319 were calculated using the proposed applicable percentage table in Section 9661(a) and the methodology outlined here, which would be unchanged under the new legislation.)

In most cases, you’ll notice that the subsidy amount is larger under H.R. 1319, resulting in a lower benchmark premium and also a lower price for the lowest-cost plan available to that applicant (or more plans available with no premium at all). This is because the new legislation specifically reduces the percentage of income that people have to pay for the benchmark plan. That, in turn, drives up the subsidy amounts that are necessary to reduce the benchmark premium. And since premium subsidies can be applied to any metal-level plan, it also results in a lower cost for the other available plans (or more premium-free plans, depending on the circumstances).

As you consider these numbers, note that if the current subsidy amount is $0, either the benchmark plan is already considered affordable for that person, or their income is over 400 percent of the poverty level and subsidies are simply not available. If the subsidy amount is $0 under the H.R. 1319 scenario, it means that the benchmark plan would not cost more than 8.5 percent of the applicant’s income.

As you can see, the additional subsidies would be widely available, but would be more substantial for people who are currently paying the highest premiums. Under the current rules, it may not be realistic for our Wyoming family to pay more than $30,000 in annual premiums (enrolling in the benchmark plan, with premiums in excess of $2,500 per month). The American Rescue Plan Act would bring their annual premiums for the benchmark plan down to under $10,000, which is much more manageable.

The legislation is not, however, a giveaway to wealthy Americans. If that family earned $500,000, they still wouldn’t get a premium subsidy under H.R. 1319, because even at $2,528/month, the full-price cost of the benchmark plan would only amount to 6 percent of their income. Unlike Medicare and the tax breaks for employer-sponsored health insurance, financial assistance with individual market health insurance would not extend to the wealthiest applicants.

By capping premiums at 8.5 percent of income, H.R. 1319 provides targeted premium assistance only where it’s needed. And by enhancing the existing premium subsidies, the legislation makes it easier for people at all income levels to afford health coverage.

Premium enhancements would be retroactive but also temporary

Assuming these premium subsidy enhancements are approved by the Senate, they’ll be retroactive to the start of 2021. Current enrollees will be able to start claiming any applicable extra subsidy immediately, or they can wait and claim it on their 2021 tax return. The additional premium subsidies would also be available for 2022, but would no longer be available as of 2023 unless additional legislation is enacted to extend them.

And there’s currently a special enrollment period – which continues through May 15 in most states – during which people can sign up for coverage if they haven’t already. In most states, this window can also be used by people who already have coverage and wish to change their plan, so this is definitely a good time to reconsider your health insurance coverage and make sure you’re taking advantage of the benefits that are available to you.

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

The post How the American Rescue Plan Act will boost marketplace premium subsidies appeared first on healthinsurance.org.

The Scoop: health insurance news – February 3, 2021

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In this edition

Special enrollment periods underway (or soon to be underway) in most states

White House

An executive order signed by President Biden has authorized a COVID-related special enrollment period on HealthCare.gov. The SEP will run from February 15 to May 15.

Last week, the Biden administration announced a special enrollment period for HealthCare.gov, which will run from February 15 to May 15. This window will allow anyone eligible to use the marketplace to enroll or make a plan change, without needing a qualifying event.

The SEP applies in the 36 states that use HealthCare.gov, but 12 of the other 15 state-run exchanges have also announced similar enrollment windows — some of which are already underway:

These state-run exchanges are taking a mixed approach to this enrollment window, with some allowing anyone to enroll, and others limiting it to only people who are currently uninsured. There are only three other states that run their own exchange platforms but have not yet announced COVID-related special enrollment periods: Connecticut, Idaho, and Vermont.

House, Senate legislation would make ACA premium subsidies more generous

Democrats in Congress have long been considering various proposals to enhance the ACA’s premium subsidies and make more robust coverage more affordable. Last month, Rep. Lauren Underwood (D-Ill.) introduced the Health Care Affordability Act (H.R. 369) and Sen. Mark Warner (D-Va.) introduced the Health Care Improvement Act of 2021. Both bills include the basic health care provisions that President Biden has proposed as part of his American Recovery Plan.

One of the most important aspects of these pieces of legislation is a fundamental change in the formula for calculating premium subsidies. Under these bills, the subsidies would become more generous, allowing more Americans to purchase coverage with minimal or zero premiums, and capping premiums at no more than 8.5 percent of income, regardless of a household’s income. At ACA Signups, Charles Gaba has created graphics that will help you visualize after-subsidy premiums as a percentage of income under the status quo versus H.R. 369, as well as a previous piece of federal legislation and California’s state-based subsidy system.

Maryland legislation would create young-adult subsidy pilot program

A bill (H.B. 780) introduced last week in Maryland calls for the state to create a pilot program that would provide state-funded premium subsidies to young adults with fairly low incomes. The legislation calls for the state to use $10,000,000 per year in 2022 and 2023 to provide additional premium assistance to people between the ages of 18 and 41, with incomes between 133 percent and 140 percent of the poverty level.

The ACA already provides federal premium subsidies for people at this income level, but the subsidies aren’t as strong for young people as they are for older enrollees. The pilot program would be designed to make net premiums more affordable and boost enrollment for this demographic.

Minnesota legislation calls for transition to HealthCare.gov

Minnesota H.F. 536 – introduced on Monday – calls for the state to transition away from MNsure as of 2022 and start utilizing HealthCare.gov instead. The measure is not likely to pass in the Minnesota House, given the Democratic majority in that chamber and the lawmakers’ general support for MNsure.

In 2017, former Gov. Mark Dayton vetoed a bill that would have transitioned the state to HealthCare.gov, and MNsure has continued to be a successful state-run exchange ever since.

Over the first few years the exchanges were in operation, several states shifted from their own enrollment platforms to HealthCare.gov (although Idaho took the opposite approach, switching from HealthCare.gov to their own platform as of the 2015 plan year). But the opposite trend has been ongoing for the last couple of years, with Nevada, Pennsylvania, and New Jersey all switching away from HealthCare.gov and operating their own exchange platforms, and other states planning to follow suit over the next few years. (You can see a full timeline of all the changes here.)

Minnesota bill would require more robust coverage of outpatient mental health treatment

Minnesota H.F. 415 and S.F. 377 – both introduced last week – would require major medical plans regulated by the state of Minnesota (ie, individual and fully-insured group plans, but not self-insured group plans) to cover a member’s first four outpatient mental health visits each year with cost-sharing that doesn’t exceed $25 per visit.

There’s no mention of an exclusion for HSA-qualified high-deductible health plans (HDHP), but that would need to be added to the legislation in order to allow HSA-compliant plans to continue to be available in Minnesota. IRS rules do not allow HDHPs to pay for services like mental health care until the member has met their deductible.

Washington legislation would create state-based premium subsidies

Washington state’s Cascade Care program, including standardized plans and public option plans, is underway this year. But part of the original 2019 Cascade Care legislation called for the state to develop a plan to provide state-based premium subsidies to people earning up to 500 percent of the poverty level.

Legislation to get the ball rolling on that did not advance in last year’s session, but a new bill was introduced last week with a similar intent. S.B. 5377 calls for the state to provide premium subsidies to people with income up to 500 percent of the poverty level (and possibly a cost-sharing assistance program), as long as they’re enrolled in the lowest-cost Bronze, Silver, or Gold standardized plan available in their area. Washington’s exchange conducted a detailed analysis of various approaches to state-based premium subsidy programs last year; their report includes a recommendation that the state-funded premium subsidies be provided as a fixed-dollar amount.

S.B. 5377 also addresses some aspects of the state’s existing public option program, including participation requirements for hospitals and surgical facilities, as well as a reduction in the reimbursement rate for hospitals (currently set at 160 percent of Medicare rates, but it would decline to 135 percent of Medicare rates under S.B. 5377, leading to lower premiums for enrollees).

Mississippi and Kentucky consider extending postpartum Medicaid coverage

Mississippi lawmakers are considering S.B. 2799, which would make a variety of changes to the state’s Medicaid program, including an extension of postpartum Medicaid coverage. Under current rules, a woman in Mississippi who qualifies for Medicaid due to pregnancy is eligible for 60 days of postpartum Medicaid coverage after the baby is born, but S.B. 2799 would extend that to 12 months (during the COVID pandemic, postpartum Medicaid coverage does not terminate after 60 days, due to the current rules that prevent states from terminating Medicaid coverage for any enrollees unless they move out of the state or request a coverage termination). Medicaid covers nearly two-thirds of all births in Mississippi — the highest proportion in the nation.

The Kentucky House Democratic Women’s Caucus has created a plan they’re calling the Kentucky Maternal and Infant Health Project, comprised of 21 proposed bills that would address a wide range of issues. Among them is a measure that would extend postpartum Medicaid coverage from 60 days to 12 months. The proposal also calls for pregnancy to be considered a qualifying event, which is currently only the case in New York, Connecticut, and DC.

Montana legislative committee advances bill to prohibit abortion coverage for on-exchange plans

Last week we told you about legislation in Arizona, Texas, and Virginia that would remove state rules that prohibit abortion coverage on health plans that are sold in the exchange/marketplace in those states. Montana lawmakers are considering the opposite approach, however, with H.B. 229. The bill, which was approved by the House Judiciary Committee last week, would prohibit abortion coverage on plans sold in the Montana exchange. The only exception would be in cases where the mother’s life is in danger.

Montana is currently one of a minority of states where there is no ban on abortion coverage for on-exchange plans, and at least one insurer does offer plans that include abortion coverage.

More states consider bills that would cap out-of-pocket costs for insulin

Last year, several states enacted legislation to cap consumers’ out-of-pocket costs for insulin. Other states are considering similar bills this year, including Montana ($35/month cap), Tennessee ($100/month cap), New Jersey ($50/month cap), and New York ($30/month cap; New York already passed a bill last year that limits out-of-pocket costs for insulin, but the cap is $100. The new legislation would reduce that to $30 instead).

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 Scoop: health insurance news – February 3, 2021 appeared first on healthinsurance.org.

The Scoop: health insurance news – January 20, 2021

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In this edition

President Biden’s American Recovery Plan calls for additional premium subsidies and COBRA subsidies

Newly inaugurated President Joe Biden outlined his American Recovery Plan last week, and it includes some important provisions aimed at improving access to health coverage. The wide-ranging $1.9 trillion proposal, which would have to be approved by Congress, calls for premium tax credits to be increased “to lower or eliminate health insurance premiums” and to cap any enrollee’s after-subsidy premium at no more than 8.5 percent of their income. This second provision would primarily help people with income near or a little above 400 percent of the poverty level, and could make a substantial difference in the affordability of coverage for some households that currently have to pay full-price for their coverage — sometimes amounting to well over a quarter of their income.

The plan also calls for government subsidies of COBRA premiums through the end of September 2021. In 2009, the American Recovery and Reinvestment Act provided COBRA subsidies, which could serve as a model for how a new round of COBRA subsidies might work.

Biden’s American Recovery Plan encompasses far more than just health coverage. But if you’re curious about how health care reform might proceed under the new administration and the new Congress, check out this two-part series from Andrew Sprung, this piece from Charles Gaba, and this piece from Katie Keith.

Open enrollment ends Saturday in Massachusetts and Rhode Island

Open enrollment for 2021 health coverage is still ongoing in five states and Washington, DC (plus a COVID-related special enrollment period for uninsured residents in Maryland). But the enrollment window ends this Saturday, January 23, in Massachusetts and Rhode Island. After Saturday, residents in those states will need a qualifying event in order to enroll or make changes to their 2021 coverage.

As of this week, confirmed marketplace enrollment totals for 2021 coverage have surpassed 11.6 million nationwide.

Partial 2022 health insurance rules finalized by outgoing Trump administration

Last fall, the Trump administration published the proposed Notice of Benefit and Payment Parameters for 2022. This annual rulemaking document is wide-ranging and typically addresses a variety of issues related to the health insurance exchanges, special enrollment periods, risk adjustment, etc. At the time, we summarized several of the proposed rule changes that were most likely to directly affect people with individual market health plans.

Last week, the Trump administration announced that it was finalizing some aspects of the proposal — including the most controversial ones — but that the rest of the proposed rule changes would be finalized in an additional rule that will be issued “at a later date.” That will be under the Biden administration, which is also likely to delay the rule the Trump administration finalized last week (currently slated to take effect March 15) and reissue a new proposed rule, with a new comment period.

A total of 542 comments were submitted to CMS regarding the proposed rule changes for 2022. The comments that pertain to the rule changes that CMS finalized last week are summarized in the final rule, along with the responses from CMS. Notably:

  • Although CMS noted that “nearly all commenters on this rulemaking cautioned about potential harmful impacts to consumers” of allowing states to abandon their exchanges and rely entirely on brokers, agents, and insurers for health plan enrollment, the proposed rule change that would allow this was finalized. There would still be a role for an official exchange website in states that choose this option, but it would be minimal. And there are ongoing concerns that a switch to relying on brokers, agents, and insurers, instead of exchanges, will make it harder for Medicaid-eligible enrollees to understand the assistance and coverage that’s available to them.
  • The Trump administration’s 2018 guidance on 1332 waivers, which sharply relaxed the “guardrails” that apply to these waivers, is being officially incorporated into federal regulations.
  • The fee that insurers pay HealthCare.gov (and pass on to consumers via premiums) will be reduced in 2022. In states that rely fully on HealthCare.gov, it will be 2.25 percent of premiums; in states that run their own exchanges but use HealthCare.gov for enrollment, it will be 1.75 percent of premiums (down from a current 3 percent and 2.5 percent, respectively).

Many of the proposed rule changes are still under consideration and were not finalized last week, including the premium adjustment percentage (which would affect maximum out-of-pocket amounts and the affordability threshold for catastrophic plan eligibility), special enrollment periods when employer COBRA subsidies cease or a person loses eligibility for premium subsidies, and a rule change that would permanently allow insurers to issue MLR rebates earlier in the year.

At Health Affairs, Katie Keith has an excellent in-depth analysis of the partial final rule.

Lawsuit filed to block Georgia’s plan to eliminate its health insurance exchange

Last fall, the Trump administration approved Georgia’s 1332 waiver proposal to transition away from HealthCare.gov and instead utilize a system that relies on brokers, agents, and insurers to get people enrolled, without a centralized exchange (the finalized rule change that allows a similar approach nationwide is very reminiscent of Georgia’s 1332 waiver).

Last week, Planned Parenthood Southeast and Feminist Women’s Health Center filed a lawsuit against HHS, CMS, the Department of the Treasury, and their respective leaders, alleging that the waiver was unlawfully approved and should be vacated. Democracy Forward, which is representing the plaintiffs in the case, explained that Georgia’s 1332 waiver “will do immense damage to Georgia’s health insurance market, force Georgians to shop for insurance through private brokers and insurance companies, lead more residents to enroll in junk plans, and increase premiums.”

Bills introduced in Virginia to eliminate state ban on abortion coverage under marketplace plans; study impact of mandating coverage for infertility

Virginia is one of 26 states where health insurance plans sold in the marketplace/exchange are not allowed to provide coverage for abortions. (Virginia’s ban includes exceptions for abortion coverage in cases of rape, incest, or the mother’s life being in danger.) Legislation was introduced last week in Virginia’s Senate that would eliminate this ban, allowing insurers to offer abortion coverage if they choose to do so.

Legislation has also been introduced in Virginia that would direct the Virginia Health Insurance Reform Commission to conduct a study on the impacts of requiring health insurance plans in the state to cover infertility treatment. There are currently 19 states that mandate at least some coverage for infertility treatment.

Legislation introduced in Maryland and Rhode Island to create universal healthcare commissions

Legislation was introduced in Maryland last week that calls for the state to create a Commission on Universal Health Care. The Commission would be tasked with developing a plan for the state to establish a single-payer universal coverage system by 2024.

Legislation was also introduced in Rhode Island last week that calls for the creation of a special legislative commission that would study how the state might go about implementing a single-payer Medicare-for-All type of health coverage program in Rhode Island.

Legislation introduced in Missouri to create a Medicaid work requirement

Missouri has not yet expanded Medicaid eligibility under the ACA, but that will change this summer, thanks to a ballot initiative that voters in the state passed last year. Legislation was introduced this month in Missouri’s Senate that calls for a Medicaid work requirement in the state, effective as of January 2022. Under the terms of the bill, non-exempt Medicaid enrollees would have to work (or participate in various other community engagement activities, including volunteering, school, job training, etc.) at least 80 hours per week in order to maintain eligibility for Medicaid.

The Trump administration approved numerous work requirement waivers over the last few years, but due to lawsuits and the COVID pandemic, none are currently in effect. And the Biden administration is very unlikely to approve any additional waivers, meaning that Missouri’s legislation is likely a non-starter for the time being, even if it’s enacted.

Uncompensated care funding in Florida and Texas extended through 2030

Last Friday, the Trump administration renewed 1115 waivers in Texas and Florida, both of which are now valid through mid-2030. These waivers are for Medicaid managed care, and also provide federal funding for uncompensated care – which is more of a problem in states like Texas and Florida, due to their failure to expand Medicaid and the resulting coverage gap for low-income residents.

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 Scoop: health insurance news – January 20, 2021 appeared first on healthinsurance.org.

My wife and I each make about $40,000 a year. If we file our taxes separately, can we each qualify for an exchange subsidy?

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Q.  My wife and I each make about $40,000/year.  If we file our taxes separately, can we each qualify for an exchange subsidy?

Obamacare subsidy calculator

Use our calculator to estimate how much you could save on your ACA-compliant health insurance premiums.

A.  No. The guidelines for eligibility are determined by total household income and the number of people in the household. For a single individual purchasing coverage with a 2021 effective date, the 400 percent mark is $51,040 in annual income (this is based on 2020 poverty level numbers, as the prior year’s numbers are always used). For two people, it’s $68,960. This makes sense, as it’s less expensive for two people to maintain one household than to maintain two separate households.  Taxpayers whose filing status is married filing separately are explicitly ineligible to receive subsidies in the exchange, regardless of their income. (See this IRS publication for more details).

Premium subsidies have to be reconciled on your tax return, using Form 8962. If you receive a premium subsidy during the year and then end up using the married filing separately status, the full amount of the subsidy that was paid on your behalf would have to be repaid to the IRS with your tax return.

In March 2014, the IRS issued a special rule with regards to married people who are unable to file a joint return because of domestic abuse. If a taxpayer files as married filing separately, premium tax credits are still available as long as (1.) the spouses are not living together, (2.) the taxpayer is unable to file a joint return because of domestic violence, and (3.) the taxpayer indicates this information on his or her tax return.

For everyone else, the rules are clear that married couples must file a joint tax return in order to qualify for subsidies in the exchanges.

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 My wife and I each make about $40,000 a year. If we file our taxes separately, can we each qualify for an exchange subsidy? appeared first on healthinsurance.org.

What happens if my income changes and my premium subsidy is too big? Will I have to repay it?

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Q: What happens if my income changes and my premium subsidy is too big? Will I have to repay it?

Obamacare subsidy calculator

Use our calculator to estimate how much you could save on your ACA-compliant health insurance premiums.

A: Monthly premium subsidy amounts (ie, the advance premium tax credit – APTC – that’s paid to your insurer each month to offset the cost of your premium) are estimated based on prior-year income and projections for the year ahead, but the actual premium tax credit amount to which you’re entitled depends on your actual income in the year that you’re getting subsidized health insurance coverage.

If recipients end up earning more than anticipated, they could have to pay back some of the subsidy. This can catch people off guard, especially since the tax credits are paid directly to the insurance carriers each month, but if overpaid, they must be returned by the insureds themselves.

The issue of reconciling APTCs was explained in a 2013 IRS publication (see the final column on page 30383, continued on page 30384) which clearly explains that they do expect people to pay back subsidies that are in excess of the actual amount for which the household qualifies.

But the portion of an excess subsidy that must be repaid is capped for families with incomes up to 400 percent of federal poverty level (FPL). Details regarding the maximum amount that must be repaid, depending on income, are in the instructions for Form 8962, on Table 5 (Repayment Limitation). These amounts are adjusted annually, but for the 2020 tax year, the repayment caps range from $325 to $2,700, depending on your income and your tax filing status (single filer versus any other filing status). GOP lawmakers considered various proposals in 2017 that would have eliminated the repayment limitations, essentially requiring anyone who received excess APTC to pay back the full amount, regardless of income. But those proposals were not enacted.

There are some scenarios in which repayment caps do not apply:

  • If a person projected an income below 400 percent of the poverty level (and received premium subsidies during the year based on that projection) but then ends up with an actual income above 400 percent of the poverty level (ie, not eligible for subsidies), the entire subsidy amount that was paid on their behalf has to be repaid to the IRS.
  • If a person projected an income at or above 100 percent of the poverty level (and received premium subsidies) but then ends up with an income below the poverty level (ie, not eligible for subsidies), none of the subsidy has to be repaid. This is confirmed in the instructions for Form 8962, on page 8, in the section about Line 6 (Estimated household income at least 100% of the federal poverty line). But there are new rules as of 2019 that make it less likely for people with income below the poverty level to qualify for premium subsidies based on income projections that are above the poverty level. This is explained in more detail here.

Is there any help for me if I have to repay premium subsidies?

The IRS noted that they would “consider possible avenues of administrative relief” for tax filers who are struggling to pay back excess APTC, including such options as payment plans and the waiver of interest and penalties for people who must return subsidy over-payments. If you find yourself in a situation where you must pay back a significant amount of the premium subsidies you received during the prior year, contact the IRS to see if you can work out a favorable payment plan/interest arrangement.

It’s also worth noting that contributions to a pre-tax retirement account and/or a health savings account will reduce your ACA-specific modified adjusted gross income, which is what the IRS uses to determine your premium tax credit eligibility. If you had HSA-qualified health coverage during the year, you can make HSA contributions up until the tax filing deadline the following spring. And IRA contributions can also be made up until the tax filing deadline. You’ll want to talk with your tax advisor to see what makes the most sense given your specific circumstances, but you may find that some pre-tax savings end up making you eligible for a premium subsidy afterall, or reduce the amount that you’d otherwise have to repay.

The COVID pandemic caused widespread financial uncertainty and employment upheavals throughout much of 2020. Additional federal unemployment benefits were provided to millions of people, but there are concerns that the premium tax credit reconciliation could be particularly challenging during the 2021 tax filing season, with many people having to repay subsidies that were paid on their behalf during a time they were unemployed in 2020.

In December 2020, insurance commissioners from 11 states sent a letter to President-elect Biden, recommending various immediate and long-term actions designed to improve access to health coverage and care. One of the short-term recommendations is to provide relief from subsidy claw-backs for the 2020 tax year. Even in the best of times, it can be challenging to accurately project your income for the coming year, but the uncertainty caused by the COVID pandemic made this much more challenging than usual. So it’s possible that the Biden administration and/or Congress might be able to take action to provide some relief in this area, for at least the 2020 tax year.

What if you get employer-sponsored health insurance mid-year?

Most non-elderly Americans get their health coverage from an employer. Individual health insurance is great for filling in the gaps between jobs, but what happens if you start off the year without access to an affordable employer-sponsored health insurance plan, and then get a job mid-year that provides health coverage?

If a premium subsidy was paid on your behalf during the months you had individual market coverage, you may end up having to repay some or all of the subsidy when you file your tax return. It all depends on your total income for the year, including income from your new job. If your total income still ends up being in line with the estimate you provided when you applied for your subsidy, you won’t have to pay that money back. But if your actual income for the year ends up being substantially higher than you initially projected, you may end up having to repay some or all of that subsidy when you file your taxes.

It doesn’t matter that your income was lower when you were covered under the individual market plan. In the eyes of the IRS, annual income is annual income — it can be evenly distributed throughout the year, or come in the form of a windfall on December 31. (As noted above, insurance commissioners have urged the Biden administration to consider ways of providing relief on this issue for the 2020 tax year, given that it was even more challenging than normal to accurately project an annual income during the COVID panemic).

Once you become eligible for an affordable health insurance plan through your employer that provides minimum value, you’re no longer eligible for premium subsidies as of the month you become eligible for the employer’s plan. But premium tax credit reconciliation is done on a month-by-month basis, so as long as your total income for the year is still in the subsidy-eligible range, you’ll almost certainly still be eligible for at least some amount of subsidy for the months when you had a plan that you purchased through the exchange.

Finally, if you’re offered health insurance through an employer that you feel is too expensive based on the share you have to pay, you can’t just opt out, buy your own health plan, and attempt to snag a subsidy. The fact that an affordable plan (by IRS definitions) is available to you renders you ineligible for money toward your premiums. Unfortunately, the cost of obtaining family coverage is not taken into consideration when determining whether an employer-sponsored plan is affordable, which leaves some families stuck without a viable coverage option.

How many people have to repay premium subsidies?

For 2015 coverage, subsidies were reconciled when taxes were filed in early 2016. The IRS reported in early 2017 that about 3.3 million tax filers who received APTC in 2015 had to repay a portion of the subsidy when they filed their 2015 taxes; the average amount that had to be repaid was about $870, and 60 percent of people who had to pay back excess APTC still received a refund once the excess APTC was subtracted from their initial refund. [IRS data for premium tax credit reporting is available here; as of 2019, data had only been reported for the 2014 and 2015 tax years.]

But on the opposite end of the spectrum, about 2.4 million tax filers who were eligible for a premium tax credit ended up receiving all or some of it when they filed their return. These are people who either paid full price for their exchange plan in 2015 but ended up qualifying for a subsidy based on their 2015 income, or people who got an APTC that was less than the amount for which they ultimately qualified. The average amount of additional premium tax credit paid out on tax returns for 2015 was $670.

[The IRS noted that it was very uncommon for people to pay full price for their coverage and wait to claim their full refund on their return: 98 percent of the people who claimed a premium tax credit on their return had received at least some APTC during the year.]

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 What happens if my income changes and my premium subsidy is too big? Will I have to repay it? appeared first on healthinsurance.org.

 

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