The Affordable Care Act offers subsidies to offset the cost of health insurance in the Marketplace, capping how much the individuals who sign up on the ACA Marketplace pay at a certain percent of their income. These subsidies work on a sliding scale, with those whose incomes are just above poverty level receiving the most generous of subsidies. For years, those with incomes just over four times the federal poverty level were not eligible for subsidies under the ACA until recently, and even a small increase in income could mean they would have to pay full price — what is now being coined as the “subsidy cliff”.
That was the case until the American Rescue Plan Act (ARPA) expanded subsidy eligibility — you may have heard us talk about this in length last year. The American Rescue Plan Act temporarily did away with the ACA’s subsidy cliff, in addition to increasing subsidies for lower-income people who were already eligible for some help with premiums.
Right now, Congress is considering either extending these enhanced subsidies or making them permanent at an estimated cost of about $22 billion per year. If the ARPA subsidies do expire, as they are set to at the end of this year, people with incomes over four times the poverty level would no longer qualify for subsidies and would have to pay full price for insurance coverage.
On average across the U.S., a 40-year-old with an income just over four times the poverty level ($51,520 per year for individuals buying coverage in 2022), will see their premium payments increase from 8.5% of their income to about 10% of their income if ARPA subsidies expire. The typical 40-year-old would go from having subsidized monthly payments of $365 to an unsubsidized $438, or an increase in their premium payment of about 20% simply due to the loss of subsidies. That’s before accounting for any increase in the unsubsidized premium from 2022 to 2023.
If health insurance subsidies do expire, premium payments will increase across the board for all 13 million subsidized Marketplace enrollees, and the approx. one million of those with income four times above the poverty level will face a double hit — not only will many of them lose subsidies, but they will also have to start paying for any increase in the unsubsidized premium beyond that.
What we believer are the future of health insurance subsidies….
What does that mean for you? We believe that subsidies will be extended, however not the generous degree they are currently. Of course, Congress could change their minds and if subsidies are gone, trust that we at Florida Healthcare Insurance are on top of it! We recognize that such an increase in premium payments can be unaffordable, and we know how important it is to keep your health coverage and not drop it. We recommend you give us a call — in just a few minutes we can give you various options and determine exactly how we can save you the most on your health insurance.
Our expert agents offer superior customer service and we can secure the insurance you need to protect the future of you and your family! Remember, your health is your greatest investment! Our agents here at Florida Healthcare Insurance are ready with anything that comes up. Looking for more information and/or a quote? Give us a call at (954) 282-6891 today!