Financial Assistance Under the ACA
The Affordable Care Act (ACA) introduced financial help for people buying insurance through the marketplace. This support helps reduce the cost of monthly premiums and out-of-pocket expenses for those within specific income ranges.
Before the American Rescue Plan Act (ARPA) and the Inflation Reduction Act (IRA), families with incomes between 100% and 400% of the federal poverty level (FPL) qualified for premium tax credits (APTC). For 2021, this meant a family of four earning between $26,500 to $106,000 would spend about 2% to 9.83% of their income on premiums. People earning under 100% FPL typically did not receive financial help on the marketplace.
Thanks to the ARPA and later extended by the IRA through 2025, anyone earning between 100% and 400% FPL can expect to spend between 0% to 8.5% of their income on a benchmark silver plan. This means in 2025, a family of four earning between $32,150 to $128,600 would benefit from these lower premiums. Notably, those earning between 100% and 150% FPL might get a plan with little to no cost. However, these enhanced subsidies will end in 2025.
APTC is linked to the price of silver plans but can be used for various plans on the marketplace, from gold plans with higher benefits to bronze plans with lower premiums. Unfortunately, it cannot be applied to catastrophic plans.
The impact of losing enhanced APTC can be significant. For instance, a 27-year-old individual in Sedgwick County earning $1,304 or $3,260 will see their costs jump from $0 and $130, respectively, to $27 and $275 without enhanced APTC. Households at 250% FPL may find themselves paying about double what they were previously.
Interestingly, a recent survey shows that many people are unaware of these changes and their potential impact. According to a 2022 report by the Kaiser Family Foundation, nearly 60% of Americans say they feel confused about their health insurance options, emphasizing the need for better communication about these changes.
Overall, as the enhancements fade, many families may struggle to find affordable coverage. Keeping an eye on income levels and understanding these changes will be crucial as 2025 approaches. For more detailed statistics and insights, you can check out the Kaiser Family Foundation for their comprehensive reports.
