As part of the Inflation Reduction Act, the Senate recently passed a three-year extension (through 2025) of enhanced subsidies for people buying their own health coverage on the Affordable Care Act Marketplaces. These temporary subsidies were originally slated to last two years (2021 and 2022) and were passed as part of the American Rescue Plan Act (ARPA). The enhanced subsidies increase the amount of financial help available to those already eligible and also newly expand subsidies to middle-income people, many of whom were previously priced out of coverage.
Health sector inflation, rising utilization, and other factors may cause 2023 premiums to rise by more than in past years. However, Congress’s action to extend the ARPA subsidies through the Inflation Reduction Act will have an even greater influence over how much subsidized ACA Marketplace enrollees pay out-of-pocket for their premiums than will market-driven factors that affect the underlying premium.
Whether subsidies expire at the end of this year or in two or three years, their expiration would result in the steepest increase in out-of-pocket premium payments most enrollees in this market have seen. Because the Inflation Reduction Act extends the enhanced subsidies for three years and not permanently, future Marketplace enrollees may see steep premium increases when the subsidies eventually expire.
As always, please contact your Total Benefit Solutions health insurance specialists at (215)355-2121.