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Open enrollment for the 2022 plan year ends later this week but ACA signups are already hitting record new highs.
Kaiser Health News cites a record-breaking 13.6 million Americans already signed up for 2022 coverage through an ACA marketplace exchange. The closest number of total signups was 12.7 million in 2016, during Obama’s final year in office.
What’s interesting is that some of the largest ACA signups are coming from states that have expanded Medicaid under the ACA. Data issued by the Centers of Medicare and Medicaid Services (CMS)finds that Florida, Texas, and Georgia for example are experiencing never-before-seen levels of participation.
In Florida, nearly 2.6 million Americans have signed up for coverage through an ACA/span> exchange – that’s up 500,000 from the previous year during the same time frame. Texas and Georgia both jumped in enrollment participation as well. As of December 15, 2022, 1.7 million Texans signed up for ACA coverage, up from 1.3 million in 2021. In Georgia, 653,990 residents signed up for coverage, up from 514,000 the year before.
The preliminary signup data for this ACA’s open enrollment signals a drastic shift in the U.S. healthcare system. And thanks to the American Rescue Plan, individuals can receive quality coverage for significantly lower premiums. CMS states, “92% of people in HealthCare.gov states who signed up for plans through December 15, 2021, will receive premium tax credits for 2022 coverage. Moreover, more than 400,000 people will receive tax credits for 2022 coverage, to date, that would have been inaccessible to them prior to the ARP.”
Health and Human Services Secretary Xavier Becerra said in an announcement issued by Health and Human Services (HHS) “The historic 13.6 million people who have enrolled in a health insurance plan so far this period shows that the demand and need for affordable health care remains high.” He adds that the American Rescue Plan is to thank for the turnout.
Under the American Rescue Plan, individuals with income up to 150% of the Federal Poverty Level can obtain coverage for premiums as little as $0 a month. Americans can obtain this type of coverage via Premium Tax Credits (PTCs). Via the American Rescue Plan, individuals with income at 400% of the FPL or beyond can also receive coverage for monthly premiums that are no more than 8.5% of their income.
These changes to healthcare costs are slated to run through the remainder of 2022, but Biden’s Build Back Better plan seeks to extend the eligibility for reduced premiums through 2025.
Open enrollment started on November 1 and ends officially on January 15. Following the close of the period to sign up for health coverage through an ACA state or federal health exchange, the enrollment data is anticipated to break previous record highs.
The open enrollment period comes on the heels of the wildly successful Special Enrollment Period, first created in response to the COVID-19pandemic and garnered millions of ACA signups.
With more Americans continuing to obtain healthcare through state and federal ACA health exchanges, employers should note that there will be a surplus in PTC and cost-sharing reductions issued to help individuals obtain affordable coverage. With more PTCs being issued, we can anticipate increased ACA penalties to follow, since PTCs are the trigger for the IRS identifying non-compliance of the ACA’s Employer Mandate.
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.
Now that it’s the 2022 tax year, employers must be diligent in their ACA reporting obligations, as the agency has made it known that it will be increasing enforcement efforts.
If you need assistance handling your ACA obligations, contact us to learn about our comprehensive ACA solutions, including ACA state filing.
Unsure of your current ACA compliance status? Get your ACA Vitals to find out.
For information on ACA penalty amounts, affordability percentages, important filing deadlines, steps for responding to penalty notices, and best practices for minimizing IRS penalty risk, download the ACA 101 Toolkit.
