The American Rescue Plan, signed into law by President Biden on March 11 of this year, included major boosts towards the affordability of health plans sold in the ACA marketplace for people of incomes.
Effective through 2022 and likely to make permanent by pending legislation, the ARP improvements to affordability were as follows:
- A benchmark Silver plan (the second least expensive Silver plan) with strong cost sharing reduction (CSR) subsidies became free to enrollees with household income as much as 150% from the Federal Poverty Level (FPL) and costs a maximum of 2% of income for enrollees with income as much as 200% FPL. That's a maximum of $43 per month for a single person with an salary of $25,520.
- The previous income cap on subsidy eligibility was removed, so that no one who lacks use of affordable coverage elsewhere (i.e., from a company) has to pay a lot more than 8.5% of revenue for any benchmark Silver plan (less at lower incomes). The eliminated cap was 400% FPL ($51,040 for an individual, $104,880 for any family of four), plus some households with income well above that much cla now qualify for subsidies.
- The percentage of income necessary to buy a benchmark Silver plan was reduced at all income levels.
- Anyone who received any unemployment insurance income during 2022 was entitled to free high-CSR Silver coverage. (Note that the pending legislation requires this subsidy enhancement to be extended by a number of years, although not necessarily made permanent.)
Our 2022 Open Enrollment Guide: All you need to know to enroll in an affordable individual-market health plan.
Preceding and then coinciding with one of these major subsidy boosts, the Biden administration had opened an emergency Special Enrollment Period (SEP) running from February 15 through August 15 in the 36 states which use the federal ACA exchange, HealthCare.gov.
The SEP, implemented to help Americans get covered throughout the pandemic, functioned like a second open enrollment period: anybody who lacked access to affordable coverage from other sources (e.g., employers) could sign up for a marketplace plan. The 15 state-based exchanges also opened emergency SEPs, with somewhat different durations and types of conditions, summarized here.
ARP prompted an enrollment surge throughout the 2022 SEP
The enhanced subsidies were posted on HealthCare.gov on April 1, and in the state-run exchanges within a couple weeks of that date. Existing enrollees were encouraged to update their information and obtain the new subsidies credited, and were permitted to switch plans when they chose.
Americans responded with a major surge in new enrollment and enrollment upgrades. From February 15 through August 15:
- More than 2.8 million people enrolled in new coverage of health. Of recent enrollees, 91% qualified for premium subsidies.
- Of new enrollees, 44% obtained coverage for under $10 monthly. Most of these enrollees (41% in HealthCare.gov states) received free coverage using the highest degree of CSR. As a result, the median deductible fell from $750 in 2022 to $50 this year – and therefore half of enrollees obtained a plan with a deductible at or below that level (many of them in high-CSR Silver plans).
- The average premium paid by new consumers during the SEP (Feb. 15 – Aug. 15) fell 30%, from $117 in 2022 to $81 in 2022.
- Marketplace enrollment in August 2022, at 12.Two million, was 15% greater than in August 2022, the previous August high, and 22% over the pre-pandemic August high (see p. 14 here) recorded in 2022.
- More than 200,000 new and existing enrollees qualified for free high-CSR Silver plans because they had received unemployment insurance income in 2022.
Savings were also dramatic for existing marketplace enrollees:
- 8 million existing enrollees reduced the premiums on their existing plans or obtained new plans after ARP implementation.
- Existing enrollees reduced their premiums by 50%, or by $67 monthly, on average.
My premium went down how much?
To obtain a sense of the extent to which the ARP reduced enrollee costs (or encouraged people who might previously have considered coverage too expensive to enroll), think about these examples:
- In November 2022, a 40-year-old in Miami by having an income of $24,000 each year would have paid $115 per month for that most affordable available Silver plan, with a $1,500 deductible, and $119 per month for that second-cheapest Silver plan, with a $0 deductible. Thanks to the ARP, those plans would now cost this person $26 and $30 monthly, respectively.
- In November 2022, a set of 60-year-olds in Dallas, Texas by having an salary of $70,000 – slightly within the income cap for premium subsidies, which the ARP eliminated – would have had to pay $1,669 monthly for the cheapest Gold plan, having a $2,300 deductible (Gold plans are less costly than Silver Plans in Dallas), or $1,228 for the cheapest Bronze plan, with an $8,550 deductible.
Now, this couple can choose to pay $393 monthly for the Gold plan (which includes free visits to the doctor and generic drug prescriptions, neither subject to the deductible), or consider two free Bronze plans with deductibles over $8,000, a $2/month Bronze plan with a $6,100 deductible, along with other options. A BlueCross Silver plan readily available for $420 monthly might also be in the mix, if, say, the provider network is preferable.
Which states saw the largest gains in new enrollees?
The new enrollment surge – and also the savings – was particularly strong in twelve states which had not enacted the ACA Medicaid expansion as of June 2022. Because of their failure to grow Medicaid, these states have a “coverage gap” for those who earn too little to qualify for marketplace coverage (under 100% FPL, or $12,760 for a person in 2022) but mostly also don't qualify for Medicaid because of their states' restrictive Medicaid eligibility. (That excludes Wisconsin, that has not enacted the ACA expansion but grants Medicaid eligibility to adults with income up to 100% FPL. Oklahoma, which expanded Medicaid starting in July 2022, and Missouri, that will begin covering new Medicaid expansion enrollees in October, are included.)
These twelve states – Alabama, Florida, Georgia, Kansas, Missouri, Mississippi, North Carolina, Oklahoma, South Carolina, South dakota, Tennessee, Texas and Wyoming – accounted for 1.55 million new enrollees during the SEP, or 55% of all new enrollees nationally.
In the non-expansion states, eligibility for marketplace subsidies begins at 100% FPL, instead of 138% FPL in Medicaid expansion states, where adults below that threshold qualify for Medicaid. Accordingly, during these states, about 50 % of enrollees qualified for free high-CSR coverage, reporting incomes between 100% and 150% FPL. In these states, enrollment as of August 2022 (6.0 million) was 44% above enrollment in August 2022, the final pre-pandemic year (4.2 million).
More than Two million people in non-expansion states are estimated to become stuck in the coverage gap – ineligible for both Medicaid as well as for ACA premium subsidies. For people during these states, reporting earnings just beneath or simply above 100% FPL ($12,760 for an individual, $26,200 for any family of four) may be the difference between receiving no help whatsoever and achieving access to free Silver coverage with high CSR and low out-of-pocket costs.
It's vital that you keep in mind that the applying for marketplace coverage requires earnings estimate – and lots of people, unaware of the minimum income requirement, underestimate their potential income. For tips about how to be sure you leave nothing unturned in seeking help paying for coverage, see this post.
What do these numbers mean for 2022 open enrollment?
As open enrollment for 2022 approaches (it begins on November 1), the subsidies enhanced by the ARP remain in place for 2022. As Congress hashes out new investments for future years inside a pending budget bill, the pressure is intense to keep this good thing moving in long term.
As of now, with the sad exception of these stuck in the coverage gap in states that still won't enact the ACA Medicaid expansion, any citizen or legally present noncitizen who lacks use of other kinds of affordable coverage will be able to find it available on the market. If you need coverage, be sure to take a look at your options on HealthCare.gov or your state exchange.
The word that ACA marketplace plans tend to be more affordable than ever has not yet reached many of the people who need coverage and be eligible for a premium subsidies. The Kaiser Family Foundation estimated in May that just about 11 million uninsured everyone was subsidy-eligible. ACA enrollment assisters consistently are convinced that lots of people who are entitled to coverage do not know what's on offer.
The Biden administration is trying to change that: after many years of radical cuts in federal funds for enrollment assistance, the administration this year has allocated a record $80 million to fund nonprofit enrollment “navigator” groups faced with outreach as well as enrollment assistance. The Urban Institute forecast that if the ARP subsidies are made permanent – solidifying the perception that really affordable coverage is here to remain – enrollment would increase by a lot more than 5 million in 2022.
The emergency SEP provided an increase start, boosting coverage as of August more than 1.5 million above the August 2022 level. Inside a fraught and complex legislative session, Congress will most likely – though not certainly – do its part and extend the subsidies beyond 2022. There may be room for enrollment to operate higher in the open enrollment season that begins on November 1.
Andrew Sprung is really a freelance writer who blogs about politics and healthcare policy at xpostfactoid. His articles about the Affordable Care Act have appeared on the net including The American Prospect, Health Affairs, The Atlantic, and The New Republic. He's the winner from the National Institute of Healthcare Management's 2022 Digital Media Award. He holds a Ph.D. in English literature from the University of Rochester.
