If you get your health insurance through the government’s Health Insurance Marketplace, you should expect to pay more next year.
Unless Congress acts, enhanced premium subsidies — technically, tax credits — in place for 2021 and 2022 will expire at the end of this year. The change would impact 13 million of the 14.5 million people who obtain health insurance through the federal exchange or their state’s marketplace.
“The default position is that the expanded subsidies will expire at the end of this year,” said Cynthia Cox, vice president and director of the Kaiser Family Foundation’s Affordable Care Act program. “On average, premiums would rise by more than 50%, but for some, it will be higher.”
The majority of enrollees, which include the self-employed and workers who do not have job-based health insurance, receive subsidies, which reduce the amount of money they pay in premiums. Depending on their income, some people may also be eligible for assistance with cost-sharing such as deductibles and copays on certain plans.
Prior to the temporary changes to the calculation for subsidy eligibility, aid was generally only available to households with incomes ranging from 100% to 400% of the poverty line.
The American Rescue Plan Act, signed into law in March 2021, eliminated the income cap for two years, and the amount anyone pays for premiums during the reprieve is limited to 8.5 percent of their income as calculated by the exchange.
If Congress does not renew the expanded tax credits, only people with household incomes ranging from 100 percent to 400 percent of the federal poverty line will be eligible for subsidies.
According to Kaiser, the amount of a premium increase a person would see depends on their income, age, the premium cost where they live, and how insurers’ premiums change for next year.
Based on a Congressional Budget Office report, here’s a hypothetical example: Assume a 64-year-old with an income of $58,000 — roughly 430 percent of the 2022 poverty level of $13,590 — has insurance through the exchange. The 8.5 percent limit currently in place means they would pay no more than $4,950 for premiums this year. However, if faced with a 400 percent eligibility cap in 2023, that same person would have to pay $12,900 in premiums because they would no longer be eligible for subsidies.
A proposal to extend the additional subsidies through 2025 was included in the Democrats’ Build Back Better bill, which passed the House but failed in the Senate last year.
It’s unclear whether the provision will be resurrected in some form through other legislation that Democrats may try to get through the Senate before a new Congress convenes in January, the makeup of which could be drastically different due to the Nov. 8 midterm elections.