It is worth it for both uninsured and insured individuals to determine that how marketplace subsidies could provide better health coverage at lower premiums. This is vital, especially when the American Rescue Plan has significantly changed the rules with the hope to improve their access to comprehensive affordable health insurance. In the second week of March, President Biden signed legislation according to which premium subsidies are now more and available to increase the number of people in 2021 and 2022. All those people receiving unemployment compensation in 2021 can qualify for premium-free health insurance offering comprehensive benefits. Even people who received extra premium subsidies in 2020 now don’t have to repay the money to the IRS while filing their 2020 tax return.
These temporary improvements are a part of a bill that is designed to allow people to recover from the pandemic by making it easier for them to afford top-quality health insurance. This law has created a lot of confusion among people who seriously doubt the plan choice they made for the 2021 plan year. These changes have come at a time when there is a COVID-related special enrollment period available all through the country. The special enrollment period that runs through May 15, allows uninsured people to enroll or insured people an option to switch from one plan to another, with coverage taking effect after the enrollment month. Now with the ARP enacted, Individuals are in doubt that whether they should use this special enrollment window to enroll or make changes in their plans? However, it depends from person to person, but people should certainly at least give another look at their coverage options. Common Scenarios that People should be Aware.
Individuals enrolled in an Off-exchange ACA-compliant Plan
Off-exchange plans are similar to on-exchange plans, with the only difference being that these plans can be directly purchased from the insurance carriers instead of purchasing through the health insurance marketplace. It is absolutely fine to obtain an off-exchange plan if individuals are sure that they are not eligible for a premium subsidy. Individuals who are eligible for subsidy can avail of the subsidy amount only by enrolling through the exchange.
As per the American Rescue Plan, individuals having a household income above 400% of the federal poverty level, who previously were ineligible, may now qualify for a subsidy. Depending upon their age and the area in which they live, their subsidy amount could vary. Thus, individuals enrolled in off-exchange plans should certainly make use of the SEP to check if they qualify for a subsidy as per the new rules.
People residing in a state that uses HealthCare.gov can browse the premium and new subsidies amount from April 1, and even the state-run marketplaces will soon provide the new subsidy amounts. However, people who wish to have coverage from April 1 should enroll in a health plan by the end of March, as per the CMS. CMS clarified that people can later come back in April to the marketplace to activate the new subsidies.
Individuals who are enrolled in an off-exchange plan and wish to switch to an on-exchange version of their current plan, then their carriers may transition any accumulated out-of-pocket expenses they may have incurred this year. However, this is not required and individuals have to consult with their insurers to check about the out-of-pocket expenses. It is not necessary for individuals to obtain the same plan, because the same plan may or may not be available on-exchange. If individuals are switching to a different on-exchange plan then their out-of-pocket spending will set to $0 on the new plan.
Thus, switching to an on-exchange plan is not necessarily the ideal option for all, as it greatly depends on different factors like plan availability, healthcare provider network, the amount individuals have already spent on out-of-pocket expenses this year, and the premium subsidy amount they will receive on enrolling through the exchange.
Enrolled in Non-ACA-compliant Plan
Till now it was observed that health people having income above the 400% of the poverty level were mostly inclined toward the alternative type of coverage like a short-term plan, a fixed indemnity plan, a direct primary care membership, or a grandmothered or grandfathered health plan mainly because of the affordable monthly premium. However, after the American Rescue Plan, the subsidies are much more and there is no longer a subsidy cliff for the years 2021 and 2022. Therefore, before this SEP ends on May 15, individuals should check out their marketplace options, as chances are that they might be surprised to see that they can get comprehensive ACA-compliant health plans for this year and next year at a much lower premium compared to earlier times.
Individuals Enrolled in a Bronze Plan through the Exchange
Individuals often pick a bronze plan through the exchange because the premiums are low compared to Silver and Gold plans and some individuals may also get a Bronze plan free after applying the subsidy. Under the American Rescue Plan, individuals may still have a bronze plan at affordable cost, but they should actively compare other options available during the COVID-related SEP. Individuals may find that they can now qualify for a low-cost or may be free Silver plan offering more robust health benefits compared to their Bronze plan. This might prove true for individuals who are eligible for cost-sharing reductions, as these are free upgrades on their health coverage benefits. In the year 2021 CSR benefits are available to a single individual earning up to $31,900 and a family of four earning up to $65,500.
Before switching a plan, individuals should also pay attention to the maximum out-of-pocket limits for the higher metal-tier plans. Individuals, who are not eligible for cost-sharing reductions, will find that out-of-pocket limits of the Silver plans are the same as the out-of-pocket limits of their Bronze plan. Thus, paying a higher premium to upgrade their coverage will make sense depending on how individuals anticipate using their health plan during the year.
Individuals who expect high claims cost that will hit the out-of-pocket maximum regardless of the plan they have, individuals may not come out with an upgraded plan, if they account for their total out-of-pocket costs and premiums. However, if individuals rarely have healthcare needs then upgrading the health plan will save them money through lower deductibles and the lower copay for prescription drugs and office visits.
Individuals who have lost or Will Soon Lose Job as well as Health Coverage
Individuals who have lost or on the verge of losing their job and their health coverage may have access to COBRA or state continuation coverage, and these individuals will also have access to a special enrollment period when they can sign up for an individual and family health plan. Under the American Rescue Plan, the monthly premium costs for COBRA or mini-COBRA will be covered by the government from April 1 through September 30, 2021. Though, this will not be for individuals who have voluntarily left their jobs. However, individuals who were laid off any time in the last 18 months and were eligible for COBRA but either declined it or later terminated it can now opt for COBRA to take advantage of this new subsidy. Individual’s initial COBRA terminated date will not be extended by the subsidy, which is mostly 18 months after their COBRA would have started if they had opted for it from the beginning.
Individuals who were receiving unemployment compensation during any time this year will also be eligible for a $0 premium Silver plan along with the most robust level of cost-sharing reductions. The details of these subsidies are currently not updated at HealthCare.gov but enrollees do have the option to claim the subsidy amount on their tax return after the end of the year. Thus, individuals need to carefully decide whether they should go for fully subsidized COBRA coverage or a fully subsidized marketplace plan.
Individuals Happily Enrolled in the Marketplace Plan
Individuals who earn more than 400% of the poverty level are not eligible for the subsidy and hence they need to pay full price for their coverage. Around 15% of the current marketplace enrollees belong to this category. Now, individuals who belong to this group may be eligible for a subsidy under the American Rescue Plan.
Quite a large number of marketplace enrollees who are receiving premium subsidies are likely to receive larger subsidy amounts under the ARP and they might not want to make any changes in their health coverage. Thus, individuals who are already enrolled in a plan and find their plans best for them should not do anything at all. However, if they qualify for an additional premium subsidy, then it will be retroactive to January 2021 and they will be able to claim while filing their 2021 taxes. Individuals need to log into their account and claim their new subsidy amount so that it is paid to their carrier on their behalf each month for the remaining month of the year 2021.
CMS has confirmed that in the state that uses HealthCare.gov, the premium subsidy amount will not automatically update. Hence, individuals will have to return to the marketplace to provide their income proof or they can again select their current plans and activate the new subsidies.