The 2023 Affordable Care Act (ACA) Open Enrollment period marks the tenth year of Health Insurance Marketplaces opening their doors to new enrollees. This year’s open enrollment season will last from November 1, 2022, to January 15, 2023, in most states, longer in some state-based marketplaces. Even after a decade of operation, there continue to be changes in these markets. Keep an eye on:
Unsubsidized premiums will increase more than in past years
Leading into 2023, experts estimate that ACA Marketplace benchmark premiums are increasing an average of 4% across all 50 states and DC (which is similar to government estimates of premium changes in just the states that use Healthcare.gov). State average benchmark premium changes range from a drop of -18% in Virginia to an increase of +15% in New Mexico.
The vast majority of Marketplace enrollees receive a subsidy and therefore are largely shielded from these increases, though, as we discuss more below, they may need to switch plans to take full advantage of the subsidies.
In an earlier analysis of 2023 insurer rate filings, experts found that insurers cited rising prices and rebounding utilization as driving the bulk of these premium increases. Additionally, in an analysis of insurers’ financial performance last year, experts found individual market insurer margins fell in 2021 after years of relatively flat margins; some insurers may have raised premiums to regain margins of prior years.
Although premium changes vary quite a bit from state to state, 2023 will mark the first time in several years that benchmark premiums are increasing on average nationwide. Back in 2018, insurers responded to the loss of cost-sharing subsidy payments and concerns over enforcement of the individual mandate or repeal of the ACA by raising premiums sharply. In retrospect, insurers may have over-corrected, as many ended up owing large rebates to consumers, and a number of insurers lowered premiums in the subsequent years. The average unsubsidized silver benchmark premium for a 40-year-old was $481 in 2018, falling to $438 by 2022.
Enhanced Marketplace subsidies continue and will reduce net premiums for most consumers
Expanded and enhanced marketplace premium subsidies, enacted under the American Rescue Plan Act (ARPA), took effect in 2021 and remain in effect for 2022. The recently passed Inflation Reduction Act (IRA) ensures that the ARPA’s subsidies continue without interruption for an additional three years through 2025.
Just like the ARPA, the enhanced subsidies in the Inflation Reduction Act reduce costs across the board by further lowering payments for people who were already eligible for subsidies under the original ACA subsidy structure and by extending subsidy eligibility to middle-income people by removing the upper-income limit on subsidies.
The subsidy now fully covers the cost of enrolling in the benchmark silver plan for consumers with income up to 150% of the federal poverty level (FPL). With the original ACA subsidy structure, consumers at 150% FPL ($20,385 for a single person in 2023, or $41,625 for a family of 4) had to pay about 4% of household income for the benchmark plan. By reducing premium contributions to $0 (or near $0), the Inflation Reduction Act essentially guarantees access to silver plans with generous cost-sharing reductions that substantially reduce deductibles and copays.
The Inflation Reduction Act, like the ARPA before it, extends eligibility for premium tax credits to reach people with incomes over 400% FPL ($54,360 for a single person in 2023 or $111,000 for a family of 4). Now, these consumers must contribute no more than 8.5% of their income toward the benchmark silver plan. This change is especially beneficial to older marketplace consumers (50 and older) whose premiums are age-adjusted in most states and can be up to 3 times that of young adult premiums for the same policy. The average unsubsidized silver plan premium for a 60-year-old couple in 2023 is more than $1,900 per month in 2023. Under the original ACA subsidy structure, subsidies were unavailable to people with incomes above 400% FPL, meaning premiums for older enrollees could easily cost more than 20% of their household income. But now, premium payments are capped at no more than 8.5% of household income.
There may be more Marketplace enrollees renewing coverage than ever before
Marketplace enrollment reached a record high of 13.8 million people in 2022, with 12.5 million receiving a subsidy. Affordability gains due to expanded subsidies, as well as an extended enrollment period and increased outreach and enrollment assistance, all likely contributed to this result.
Individual market enrollment overall (including on and off-exchange) also remains higher than before the ACA was implemented. It is likely that ACA-compliant enrollment (both on- and off-Marketplace) is currently at a record high and that non-compliant enrollment is at a record low.
This means the 2023 open enrollment period may be the busiest yet, with more people renewing coverage than ever before.
Even so, millions of uninsured people are eligible for but not enrolled in subsidized marketplace plans. These uninsured individuals, including those eligible for zero-premium plans, disproportionately have a high school education or less, are Hispanic, young adults, live in rural areas, or lack internet access at home.
The infamous “family glitch” is fixed
Until this year, an estimated 5.1 million people were ineligible for marketplace subsidies because of the family glitch. Generally, people are ineligible for marketplace subsidies if they have an offer of “affordable” job-based coverage – including through a family member’s job. However, until 2023, the affordability of job-based coverage for a worker’s spouse and dependents only measured the premium contribution required for the worker’s self-only coverage. As a result, if an employer coverage offer met the affordability threshold (9.12% of income in 2023) for self-only coverage but not for family coverage, those family members were nonetheless considered to have an offer of “affordable” job-based health coverage and locked out of ACA marketplace subsidies. New rules will take effect for the 2023 coverage year, measuring the affordability of family coverage based on the worker’s premium contribution for family coverage. If that amount is more than 9.12% of household income in 2023, family members will have the option of buying health coverage through the Marketplace and will be eligible for premium tax credits based on their income.
Other Marketplace eligibility rules have been relaxed on HealthCare.gov
During the Trump Administration, insurance companies offering policies on HealthCare.gov were permitted to refuse to renew coverage for people who had fallen behind on premium payments. For 2023, that will no longer be the case. People who fell behind on premium payments in 2022 (or even lapsed coverage due to nonpayment) will still be able to enroll in a 2023 policy offered by that insurer, and the binder payment (the January 2023 monthly premium payment) required to effectuate coverage cannot be applied to past-due premiums.
In addition, once Open Enrollment ends, people will continue to be able to sign up for Marketplace coverage mid-year if they have a qualifying life event (such as loss of other coverage, marriage or divorce, or a permanent move) using a 60-day special enrollment period (SEP). HealthCare.gov states people had been required to first complete a pre-enrollment verification process by providing documentation of their qualifying event that made them eligible for a SEP. People who could not provide such documentation within 30 days often were denied the SEP. Starting in 2023, HealthCare.gov will only require pre-enrollment verification for SEPs due to the loss of other prior coverage. For other qualifying events (marriage, divorce, permanent move, etc.), people will be able to self-attest to their eligibility and proceed to enroll in coverage during their SEP.
New Insurers are entering the market and others are leaving
On average, consumers in HealthCare.gov states will have a choice of 6 to 7 qualified health plan issuers in 2023, which is similar to the number in 2022. In 2023, 92% of enrollees will have a choice of 3 or more qualified health plan issuers, up from 89% in 2022.
While insurers continue to enter, re-enter, or expand their footprints in 2023, others have scaled back. Bright Health is exiting the market, where it had been a low-cost insurer in several states.
With changing premiums, insurer participation, and out-of-pocket liability, active renewing is strongly recommended
In most states, if enrollees have not updated their application and plan selection for 2023, the marketplace may auto-re-enroll them in their current plan or a similar plan for the coming year. In recent Open Enrollment periods, about 4 in 10 returning marketplace participants were auto-re-enrolled.
However, passively renewing can sometimes put consumers at a disadvantage. If the enrollee’s benchmark plan changes from one year to the next, as is likely in 2023, the dollar value of the subsidy, which is tied to the cost of the benchmark plan, can also change. A person who was enrolled in the benchmark plan last year may no longer be enrolled in the 2023 benchmark plan and, therefore, may have to pay the difference in cost between their plan and the new benchmark plan. To take full advantage of their subsidy, Marketplace enrollees should actively shop each year to make sure they are in the best plan available to them.
The enhanced subsidies of the Inflation Reduction Act make active renewal particularly important for low-income enrollees who are eligible for $0 silver plans with low deductibles. Because of the way the subsidies are calculated, only the benchmark (second-lowest-cost silver plan) and the lowest-cost silver plan are $0. Enrollees of the third, fourth, and other higher-cost silver plans must pay the difference in cost between their plan and the benchmark plan. An enrollee who picked a $0 premium plan last year may find that their plan is no longer the lowest or second-lowest cost silver plan and, therefore, may find that they owe a premium payment in January.
Additionally, in the past, some consumers applied their premium tax credit to bronze plans in order to achieve a $0 premium bronze plan, but in so doing, they may not be taking full advantage of the new subsidies and may have given up access to cost-sharing subsidies that are only available through silver plans. The maximum allowable out-of-pocket limit will increase from $8,700 in 2022 to $9,100 in 2023. Consumers will want to actively shop for plans to evaluate out-of-pocket cost changes in their plan.
More enrollment help will be available than in some past years
In HealthCare.gov states, funding for Navigators has been restored following years of substantial funding cuts averaging 84%. Navigators are trained enrollment experts, certified by the marketplace, who provide free help to individuals shopping for marketplace coverage and subsidies or help signing up for Medicaid and CHIP. Fifty-nine programs will be available in 2023, with more resources to serve consumers, including extended hours, remote assistance, and language translation services. The “Find Local Help” link on HealthCare.gov provides contact information and hours of operation for the nearest programs.
Low-income individuals will be able to sign up for Marketplace coverage year-round
Again this year, people with annual income up to 150% of FPL ($20,385 for a single person and $34,545 for a family of 3 in 2023) will be able to enroll in marketplace plans year-round. The new low-income SEP, first offered in 2022, will continue to be available this year. Everyone is strongly encouraged to sign up for 2023 coverage during Open Enrollment, if possible, to ensure coverage throughout the year. However, low-income people who miss this deadline will still be able to sign up. People who elect the low-income SEP will have new coverage starting on the first day of the month after they sign up.