You Could Pay Less for Health Insurance if You Enroll Through Marketplace Now
When the American Rescue Plan Act passed Congress in March 2021, it got a lot of attention because of its third round of pandemic stimulus funds. But, like lots of legislation, it was packed with pages (and pages) of other provisions, including the possibility of lowering your health insurance premiums.
If there's anything that can be as mind-numbingly frustrating as figuring out what is in a 628-page Congressional bill, it's shopping for health insurance. It's worth digging in on this, though, because it could be real money in your pocket.
The extra cash comes from subsidies on premiums that are available when you purchase health insurance through federal and state-run health insurance marketplaces, such as on HealthCare.gov. Part of the Affordable Care Act (ACA), the idea of the Marketplace is to make health insurance available to anyone, rather than relying on policies through an employer. So if you lost a job during the pandemic or started your own business, it's one option to buy coverage.
Who is eligible?
Anyone can purchase through the Marketplace, regardless of income or employment status. In addition, subsidies are available for those who qualify based on their income. And in the American Rescue Plan Act, those subsidies increased: People who have income of up to over 600 percent of poverty level may be eligible for a subsidy as of April 2021. Plus, the amount of the subsidy for those who were already eligible increased. (For a family of four in 2021, 600 percent of the federal poverty level is $157,200.) An analysis from KFF found that the number of people eligible for subsidies increased from 18.1 million to 21.8 million.
If you had investigated Marketplace subsidies in the past and found you weren't eligible, or the amount of the subsidy was insignificant, it is worth checking again. You have until August 15, 2021 to enroll. That's another part of the American Rescue Plan Act, says Eric Jans, an independent insurance agent in Nashville who works with clients in more than 15 states. Usually, you can only enroll in October through December, unless you have a "qualifying event," like losing your job, moving to a new county, or getting married. But now, anyone can enroll this spring and summer.
When you apply, you enter what you think your Adjusted Gross Income (AGI) will be for 2021. For some people, that's easy. For the self-employed and gig workers, that can be trickier. But, Jans says, you can always go in and adjust when you have more updated information.
How do I sign up?
You can log on to HealthCare.gov and compare plans for yourself. While you might think the Bronze plans will be the cheapest, Jans says the Silver plans tend to be the ones that are the best deals for folks who qualify for subsidies.
If you sign up for a plan with a lower premium, Jans says you may end up with a credit on your tax return as the subsidy for first months of the year will be retroactive. For example, if you were paying $600 per month in January through April, and now find that your monthly premium is $475 per month starting in May, you may have $500 in a tax credit ($125 per month for four months).
You can always outsource
If you find this confusing, don't be hard on yourself: It is. Consider having an independent agent do the checking for you. The health insurance companies pay the agents' commission, so it won't cost you anything. A good agent will ask you questions about what's most important to you—be it lowering your premium, keeping your current doctors, or having certain prescriptions covered—and then will make recommendations for the right plans for you.
Because this provision hasn't gotten a lot of attention, Jans has been reaching out to his client list, asking them if they want him to check new rates for them. He had one couple who makes $120,000 annually who initially said no, because they hadn't qualified before. Then, they decided to have Jans run the numbers—and their premiums dropped by $1,000 per month. Yours could, too.
