Under the American Rescue Plan Act, marketplace enrollment soared. Marketplace enrollment increased about 21% and this was largely due to the expanded and increased eligibility for premium tax credits. The fate of those premium tax credits was set to be decided this year. And under the Inflation Reduction Act, it has been, more or less.
Inflation Reduction Act
Under the Inflation Reduction Act, the expanded and increased premium tax credit eligibility for marketplace plans have been extended through the end of 2025. This will give beneficiaries some much desired breathing room. The possible extension will likely be revisited in the coming years.
When enrolling in a marketplace plan, you may be eligible for a premium tax credit. This is a tax credit which is paid upfront and reflected as a discounted monthly premium. The amount and your eligibility are determined by your income and household size.
In the past, those who made over 400% of the FPL for their household size would be ineligible for a premium tax credit. So, a single person who made more than $51,520 would fall prey to the subsidy cliff.
Subsidy Cliff
The subsidy cliff was a term used to describe those who basically fell abruptly off the precipice of eligibility for a subsidy. So, if you were a single person right on the cusp and you suddenly made an extra $100 dollars, you could suddenly find yourself ineligible for a premium tax credit. You might have larger monthly premiums or a pretty hefty bill come tax time.
Under the ARPA, the amount of the premium tax credits was also drastically increased. Many people were able to get quality plans for $10/month.
So, now that these conditions have been extended through 2025, you can expect your monthly premiums to remain largely unchanged. Without this extension, payments would have been, on average, 53% higher!
Medicaid
Additionally, with the end of the public health emergency in October, many who have been able to keep their Medicaid coverage will now need to seek alternatives. These expanded premium tax credits will certainly bridge the financial gaps for those no longer eligible for Medicaid.
For states that use healthcare.gov, open enrollment is Nov. 1-Jan. 15. If your state uses a different marketplace, their dates may differ slightly, so check out healthcare.gov for more information. Please don’t wait until the end of open enrollment to make this very important decision.
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.
