The Affordable Care Act offers subsidies to offset the cost of health insurance in the Marketplace. These subsidies cap how much new Marketplace individuals pay at a certain percent of their income. It works on a sliding scale; individuals with income just above the poverty level would receive 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. Even a small increase in income could mean they would have to pay full price — what is now being coined as the “subsidy cliff”.
The “subsidy cliff” has hung around 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 has temporarily removed the ACA’s subsidy cliff and increased subsidies for lower-income people who were already eligible for some help with premiums.
Right now, Congress is considering whether or not to extend the enhanced subsidies or make them permanent. The estimated cost would be about $22 billion per year. If the ARPA subsidies do expire, people with incomes over four times the poverty level will no longer qualify for subsidies and will have to pay full price for insurance coverage.
If subsidies were to expire, an individual with income just over four times the poverty level could see their premium payments increase from 8.5% to 10% of their income. (Note: the poverty level is $51,520 per yer for individuals who bought coverage in 2022). The typical 40-year-old will go from having subsidized monthly payments of $365 to an unsubsidized $438. Simply due to subsidy loss, the premium payment increases to 20%. That’s all before accounting for any increase in the unsubsidized premium from 2022 to 2023!
If health insurance subsidies do expire, premium payments would increase for all 13 million subsidized Marketplace enrollees. Additionally, approximately one million of those with income four times above the poverty level will face a double hit. This means they will not only lose subsidies, but will also have to start paying for any increase in the unsubsidized premium beyond that.
The Future of Health Insurance Subsidies
What does this mean for you? We believe subsidies will be extended, however not to 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 could be unaffordable, and we know how important it is to keep your health coverage and not drop it. 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 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!