The Biden Administration remains dedicated to expanding access and lowering costs for millions of Americans, through expanding marketplaces, adding Medicare/Medicaid reforms, and mandating that insurers cover preventive services free of charge.
If you’re shopping for new coverage this year, be aware that premium subsidies exist to assist people. Here are five things you should keep in mind when looking for plans.
1. ACA Subsidies
Consumers earning up to 400% of FPL will become eligible for Affordable Care Act subsidies that reduce the cost of their benchmark plan, using tax credits based on the second lowest-cost silver plan in their area and including generous cost-sharing subsidies that reduce deductibles, copays and coinsurance significantly.
Alice can expect that her expected contribution for 2023 is expected to be approximately 2% of her income ($2,780/year). That amounts to roughly $44/month.
Enhance Marketplace Subsidies were first implemented through the American Rescue Plan and extended by the Inflation Reduction Act in March 2021, greatly lowering marketplace coverage costs for consumers who qualify for subsidies.
These enhancements will remain in place through 2025. Furthermore, the family glitch that rendered some families ineligible for marketplace subsidies was resolved in fall 2022, so many more families should become eligible in 2023 for these benefits. They can then use their ACA subsidies to purchase bronze, silver or gold plans on the marketplace.
2. Enhanced Subsidies
Over the past two years, the Biden Administration has committed millions to enrollment assistance and marketing activities for uninsured people eligible for marketplace plans with costs under 8.5% of income in 2023. Furthermore, these plans come equipped with cost-sharing subsidies that drastically lower deductibles.
AHIP and Kaiser Family Foundation both noted that discontinuing enhanced subsidies would have caused considerable chaos leading up to November 1. Without them, marketplace rates in 2023 would likely have skyrocketed and led directly to higher fees in 2023.
This year’s extended subsidies will also make it easier for consumers to actively shop for new plans during open enrollment period. Historically, millions of low-income enrollees missed out on marketplace subsidies because their employers offered affordable coverage; to address this problem the IRA extended its enhanced subsidy policy and eliminated the “subsidy cliff” at 400% FPL as well as providing access to low-cost silver plans with generous cost sharing reductions.
3. Expiration of Enhanced Subsidies
Joe Manchin recently proposed an extension that could keep premium subsidies alive through 2025 as part of a budget package aimed at lowering drug prices.
This extension is essential to avoiding significant insurance rate increases for the 2023 open enrollment period and would ensure consumers will gain access to cost sharing reductions that help cover deductibles and copays in silver plans.
Without these modifications, the Affordable Care Act’s subsidy cliff could reemerge. Consumers with income exceeding 400 percent of poverty (approximately $50,000 for an individual or $110,000 for families) would face full price for marketplace coverage; but the Inflation Reduction Act’s extension will prevent this from occurring and also maintain Covered California enrollee affordability levels; losing enhanced subsidies would render marketplace coverage less accessible to low-income households.
4. Enhanced Subsidies in 2023
Enhancements to marketplace subsidies enacted first under ARPA and extended by the Inflation Reduction Act will continue through 2023 plan year. Premium tax credits provide cost savings to enrollees despite having different income levels; those with the highest incomes benefit greatly.
By providing additional subsidies, everyone purchasing marketplace plans won’t pay more than 8.5% of their household income (calculated according to the ACA) for a benchmark plan. This ensures there won’t be an abrupt subsidy “cliff”, giving people purchasing marketplace coverage stability when making their decision.
The IRA tackles marketplace subsidies through reconciliation, which avoids Senate filibusters for budget bills. Passage of this bill should be a top priority of Senate Democrats, particularly Sen. Joe Manchin of West Virginia who helped broker the market stabilization deal negotiated in recent negotiations. Reconciliation would also prevent significant marketplace rate increases that might otherwise trigger subsidy cliff, potentially keeping market rates stable while encouraging healthy enrollment during 2023 open enrollment period.
