Open Enrollment begins November 1 for a January 1 effective date. Chances are, you are wondering what will happen to premiums. Here is the not-so-good news: Because the industry can now base premiums on two years of real claims history, premiums will likely go up. The good news: The Affordable Care Act (ACA) provides for subsidies in the form of tax credits to make paying for health insurance easier and to encourage enrollment.
Who Qualifies for Subsidies? People who cannot get affordable insurance from employers or the private insurance marketplace and who meet certain income thresholds can get premium subsidies and help with out-of-pocket expenses for insurance offered thru the health insurance exchanges.
To be eligible, a person’s or a family’s gross income is compared to the Federal Poverty Level (FPL). How much subsidy they are eligible for is decided by the percentage of gross income to the FPL according to the number of family members. For example, the FPL for 2021 is $12,760 for a one-person household. This amount increases by $4,480 for each added family member. So the FPL for a four-person family is $26,200. According to ACA rules, subsidies are available for individuals and families with incomes ranging from 100% to 400% of the FPL. The FPL benchmark is adjusted for inflation each year.
Let us Crunch the Numbers! The exchange offers three (3) levels of coverage, referred as in metallic tiers, known as, Gold, Silver and Bronze. Each plan has a different percentage of health care costs it will pay for. The remaining percentage of costs is the policyholder’s responsibility:
- Gold Plans cover 80%
- Silver Plans cover 70%
- Bronze Plans cover 60%
The Silver Plan premium establishes the level at which subsidies are assessed. Since healthcare costs vary from state to state, Silver premiums will vary depending on the state. The percentage of premium paid by the policyholder is tied directly to their annual Modified Adjusted Gross Income as a percentage of the FPL. For example, individuals and families with incomes at 150% of the FPL will pay no more than 4.12% of their income toward their health insurance premium.
Here is a list of FPL percentages and the percentage of income policyholders must pay:
|INCOME LEVEL||ANNUAL PREMIUM NOT TO EXCEED % of MODIFIED ADJUSTED GROSS INCOME|
|100% to 133% FPL||2.06%|
|133% to 150% FPL||3.09% to 4.12%|
|150% to 200% FPL||4.12% to 6.49%|
|200% to 250% FPL||6.49% to 8.29%|
|250% to 300% FPL||8.29% to 9.78%|
|300% to 400% FPL||9.78%|
Let us say a family of three had a modified adjusted gross income of $43,440 in 2021 or 200% of the FPL. They would be required to pay no more than 6.49% of their modified adjusted gross income, or $2,819 toward their plan’s premium. Using, $7,500 as the second lowest Silver Plan annual premium in their city as the benchmark, the family would be eligible for a $4,681 subsidy and would pay the remaining $2,819 in annual premium. Importantly, the family is not required to buy the second lowest Silver Plan. They can purchase any plan available on the exchange and use their $4,681 subsidy to reduce the annual premium of any plan.
In addition to premium assistance, financial support for out-of-pocket expenses such as deductibles and out-of-pocket maximums is available to individuals and families whose incomes do not exceed 250% of the FPL. To qualify, they must buy at least a Silver Plan within the exchange.
STATESIDE CAN HELP!
Stateside Insurance Services, since 2003, has focused on providing comprehensive health insurance information, responsive customer service and expert industry knowledge for Texas consumers. Stateside has annually been recognized by health insurance carriers and the Health Insurance Marketplace as a Top Producer in Texas.
Whether the health insurance policy is for an individual, family, small business or supplemental Medicare coverage, Stateside dedicates the time, and our deep industry expertise, to ensure our clients have identified the best health insurance plan for their specific needs.
Stateside is available to answer any general questions regarding your coverage options, can provide a subsidy determination, and even assist in creating and submitting online applications for ACA compliant plans during an Open Enrollment or throughout Special Enrollment periods.
By using the Telephone Appointment System, clients can take advantage of scheduling a health insurance discussion when convenient for their schedule. During Open Enrollment phone appointment availability is expanded to include extended hours and weekends.