Record numbers of Americans are enrolling in affordable healthcare through state and federal marketplaces.
Nearly 16 million Americans have signed up for individual market health insurance coverage since November 1, 2022, according to a 2023 ACA open enrollment report issued by the Centers for Medicare and Medicare Services (CMS). About 20% of the total consumers nationwide are new to the marketplace this year.
So what does this mean for business owners and the nation at large?
The amount of uninsured Americans is dropping
Depending on where they live, individuals have the option to enroll in the federally facilitated marketplace or a state-based marketplace.
Of the nearly 15.9 million people who signed up for coverage during this open enrollment period, 11.9 million plan selections during 2023 ACA enrollment were purchased through January 7 using the federal platform Healthcare.gov.
Four million plan selections were purchased in state-based marketplaces through December 31, 2022.
The CMS report also details plan selections by state, with Florida and Texas leading by roughly 3.1 million and 2.3 million respectively. Both of these states use the federal marketplace. Despite having the biggest population in the country, California, which uses its own state-based marketplace, trails at approximately 1.7 million plan selections.
What’s the difference between state and federal marketplaces?
Thirty-three states in the HealthCare.gov marketplaces use the online HealthCare.gov platform.
The remaining 17 states and the District of Columbia use marketplaces that operate their own eligibility and enrollment platforms.
Increased federal subsidies and logistical support are helping boost ACA enrollment
You may be wondering why ACA enrollment is so high. For one, plans are cheaper than they used to be, thanks to help from the federal government in recent years. Marketplace enrollees can get Premium Tax Credits (PTCs), which they can use to lower their monthly insurance payments. Health officials say four out of five enrollees qualify for plans that cost $10 or less per month.
The Inflation Reduction Act extended PTCs, guaranteeing continued ACA enrollment through December 31, 2025. While not a permanent change, this move represents progress toward fulfilling President Biden’s American Families Plan.
Another factor involves logistical support. There are more free resources available for helping Americans understand the different health coverage options and complete the required forms, such as ACA navigators, which received nearly $100 million in funding over the last two years.
With an increase in ACA enrollment comes more IRS activity
The 2023 enrollment numbers illustrate the ongoing need for affordable insurance, and thus the integral role the ACA plays in U.S. healthcare. Access to affordable healthcare is and will continue to be, a necessity for millions of Americans.
With participation through state and federal ACA health exchanges, more individuals are likely to get more PTCs, which tangentially triggers the IRS issuing ACA penalty notices via Letter 226J. As such, employers need to ensure their ACA filings are in good shape, especially with federal and state reporting deadlines for the 2022 tax year on the horizon.
Contact Trusaic if your organization needs professional guidance on ACA compliance. Organizations that have outsourced their compliance efforts to us become 100% ACA compliant and save their staff time and money. That’s because we handle everything from employee offer eligibility tracking, affordability calculations, measurement method implementation, and IRS audit defense. We’ve prevented over $1 billion in penalties for our clients.
You can also review our interactive guide on the ACA’s Employer Mandate for more critical information on the role of PTCs and ACA compliance below.
To gain invaluable insights on penalty amounts, affordability percentages, filing deadlines, expert tips for responding to penalty notices, and proven strategies for minimizing IRS penalty risk, download the ACA 101 Toolkit.