Open enrollment period for the 2022 coverage year is well underway, and ACA premiums are continuing to drop.
The federal period for obtaining health coverage kicked off on November 1 and the cost of premiums for silver-quality health plans dropped, on average, more than 3%. This marks the fourth consecutive year for reduced premiums, according to a recent analysis by the Kaiser Family Foundation (KFF).Gold-quality healthcare plans are seeing an even greater drop in premiums, averaging 4.1% less.
KFF’s analysis does show, however, that the cost of premiums for individuals varies by location, age, income, and metal healthcare tier option. KFF says, “As we show in this analysis, unsubsidized premiums are holding flat or falling on average nationally across metal levels, but actual payments net of subsidies vary greatly depending on location and income.”
A big contributing factor for the lower average costs of premiums for Americans can be attributed to the American Rescue Plan. Signed into law by Biden earlier this year, the American rescue plan provides individuals with incomes up to 150% of the Federal Poverty Level (FPL) the opportunity to obtain health coverage for $0 monthly premiums via Premium Tax Credits (PTCs) on the ACA marketplace.
Individuals beyond 400% of the FPL can also obtain coverage for significantly reduced monthly premiums, specifically no more than 8.5% of their income. Changes to ACA healthcare coverage and premiums introduced by the American Rescue Plan are slated to run through December of 2022.Biden’s Build Back Better plan seeks to extend the eligibility through 2025.
Another contributing factor for lower ACA premiums during open enrollment is the expansion of several healthcare insurers. According to a post by Forbes, “There’s also been an influx of competition to the marketplace that has impacted premiums. Companies like Centene, Cigna, Oscar Health and Blue Cross and Blue Shield plans that have long offered individual coverage under the ACA have expanded into new markets while some companies like UnitedHealth Group’s UnitedHealthcare and the Aetna unit of CVS Health have returned to markets they left a few years ago.”
Some of the companies above, including Aetna and CVS Health, have partnered together to offer a first-time hybrid insurance option that provides individuals with an enhanced healthcare experience in select locations.
Individuals looking to obtain coverage by January 1, 2022,through the federal ACA marketplace will need to sign up by December 15. The window to sign up for coverage, however, will run through January 15, 2022.
Employers should take note that as premiums continue to drop, employees may opt to receive a PTC, which is the current trigger for the IRS issuing ACA Employer Mandate non-compliance penalty notices. With increased resources for assisting individuals with receiving PTCs, and cost-sharing reductions, the chances are even greater that more PTCs will be issued for this coming coverage year.
Under the ACA’s Employer Mandate, employers with 50 or more full-time employees and full-time equivalent employees are Applicable Large Employers (ALEs) and must:
- Offer Minimum Essential Coverage (MEC) to at least 95% of their full-time employees (and their dependents) whereby such coverage meets Minimum Value (MV); and
- Ensure that the coverage for the full-time employee is affordable based on one of the IRS-approved methods for calculating affordability.
ACA Employer Mandate non-compliance penalties are being issued via Letter 226J, which the IRS has officially begun assessing on employers for the 2019 tax year.
If you need assistance reconciling healthcare offers of coverage amongst your workforce, and ultimately reducing IRS penalty risk, best practices suggest implementing a sound ACA compliance process like ACA Complete.
ACA Complete completely reduces the burden of having to extend timely offers of coverage, completing ACA reporting, and keeping records of supporting documentation. Contact us to learn more about this comprehensive ACA solution.
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