Under the American Rescue Plan Act, eligibility for premium tax credits for marketplace plans expanded. Many who were ineligible for premium tax credits before, became eligible. Premium tax credits are just tax credits paid out upfront which are reflected in discounted monthly premiums.
Additionally, the size the the premium tax credits available drastically increased. Many people were able to get quality plans for less than $10 per month.
Unfortunately, these premium tax credits expired as of June 2022. The discount will continue through the end of the year, but unless the government decides to extend these tax credits, premiums will increase significantly for most people.
Premium Increase
The average premium is set to increase by 53% based on the revocation of these additional tax credits. That is a significant increase.
This can have multiple negative effects. Of course, this will put a major strain on most’ people’s finances which should not be understated. But additionally, many people will simply opt out of health insurance. This will increase the risk pool and, as a result, insurance carriers are likely to increase premiums.
It’s recently been reported that insurance premiums, irrespective of premium tax credit availability will increase about 10%. This is to account for the potential heightened risk pool, increasing health care costs largely due to Covid and of course, inflation.
Premium Stabilization
There are some factors that could work to stabilize healthcare costs somewhat. For a period of time, Medicaid reassessments were frozen. Those who utilize Medicaid must meet certain strict financial criteria. If their income or assets exceed a certain level, they are no longer eligible for Medicaid. While the reassessments were frozen, many who would have become ineligible for Medicaid were able to keep their coverage. Now, it is possible that millions will turn to the marketplace for health insurance instead. A larger pool of enrollees could reduce monthly premiums.
Finally, many families have been kept out of the marketplace due to the family glitch. Ordinarily individuals who are eligible for insurance through their employer are ineligible for premium tax credits for marketplace plans unless a group plan is deemed unaffordable. Unfortunately this doesn’t apply to families. Often a premium for an individual is “affordable” but adding dependents causes premiums to skyrocket. This is the family glitch. Fixing this, as is proposed, would help many families to enroll in more reasonably priced marketplace plans. Again, a larger pool of beneficiaries helps to lower monthly premiums.
Other Options
This projections aren’t very positive as of right now. Hopefully steps will be taken to ensure access to more affordable healthcare. However, there are some alternatives you should be aware of and steps you can take.
First, if at all possible, you can try to lower your MAGI to make yourself eligible for a premium tax credit. Speak with a broker and possibly work with an accountant. They may have suggestions for you. If you are able to enroll in a HDHP with HSA you may be able to lower your MAGI to where you are eligible.
You can also look into catastrophic coverage plans through the marketplace. These can be a great money saving option if you are under 30. If you are over 30, you may be able to apply for a hardship exemption. These can ensure that your basic needs are met and you still have protections from major medical bills.
Similarly, you can look into short term medical plans. These are highly customizable private insurance plans. A young healthy person can often access a plan for less than $100 per month. However, not all benefits are covered and they are not available in all states. They may not be ideal based on your specific needs, but they are another option to consider.
If you have a family, your children may also be eligible for CHIP which is the Children’s Health Insurance Program. For more on CHIP and Medicaid, check out Medicaid.gov.
If you need assistance, please contact us at 888-918-0518. Our services are 100% FREE!
Jesse Smedley is the Principal Broker for iHealthBrokers and the founder, president, and CEO of Smedley Insurance Group, Inc. and iHealthBrokers.com. Since the inception of SIG in 2007, Jesse has been dedicated to helping people save money on their health insurance by providing them with resources to educate themselves on all their health insurance options, both under age 65 and Medicare beneficiaries. He is featured in many publications as well as writes regularly for expert columns regarding health insurance and Medicare.
