Healthcare.Gov Pricing Under ARPA21
When I was a young man, around 15-years-old, I already had two jobs. One working at a tennis pro shop, stringing rackets, scheduling courts, teaching lessons, and selling equipment and clothing. The other job was working in a small convenience store, where I was clearly too young to do what the job required, but the owners loved having me around. I was in high school, but I was making a TON of money by mid-70s standards. So much, in fact, that I invested in a very nice stereo I bought out of the Sears catalog.
It had everything, 8-track player, turntable, AM/FM radio, and two separate speakers you could move apart from where you were sitting to get that maximum stereo effect! So cool!
In the package with the owner’s manual was a flier about a membership in something called the Columbia Record Club: “For just one cent, choose any 10 8-tracks or albums on this page and we’ll ship them out to you immediately!” Then, in the fine print at the bottom, “Simply purchase eight more tapes or albums at regular club prices over the next two years to complete your membership!” Sounded really great! I immediately picked out my 10 free 8-tracks (maybe two of which I actually wanted).
Soon, I began to realize a few things. Like “regular club prices” were roughly double what music cost in a shop back then. And every month, they would send a postcard and if you didn’t send it back right away, BAM, tapes, albums and the bills for them would start showing up at your door! And it didn’t stop when you bought your “eight more tapes or albums,” either! They kept coming until the entire two years was up!
You can’t escape “Dad Wisdom”
I complained constantly about it, until one day my Dad sat me down, looked me in the eye and said, “Boy, you’ve just learned an important lesson. Two, actually! First, there ain’t no free lunch! And second, if it sounds too good to be true, it almost always is!” I love my Dad, but THAT did not make me feel better. But of course, he was right. Almost always.
That’s why, when I began to read the American Rescue Plan Act of 2021 (ARPA 21), especially the section on the new Advanced Tax Credits (ATCs) for people shopping on healthcare.gov, I got really skeptical. The new ATCs were HUGE. The income caps we’d lived with for over a decade? GONE! The restrictions on purchasing coverage outside open enrollment? GONE! Wide-open enrollment, all the way until Aug. 15, 2021! It was like everything Dad warned me about, all in one place.
So, I dug, and I dug, and I dug, and April 1 rolled around (the posted effective date for all the new money and rules), and EVERYTHING I had heard or read about came true.
All of it. As of right now, and all the way until at LEAST Dec. 31, 2022, billions more dollars have been made available for people buying individual health insurance on healthcare.gov.
So, Mike, what does all this money do to premiums?
So glad you asked! I’ve created a couple of graphs because in this case, pictures really ARE worth a thousand words. These graphs anticipate that a single person would buy a silver plan in Baton Rouge’s 70810 ZIP code at various ages and incomes, which you’ll see as we go along. Note that all of the prices in these graphs are for 2021 premiums.
First, let’s check out the new pricing for a 35-year-old. In this graph, the blue line shows the old premiums under the original ACA pricing. The orange line shows the NEW pricing for the exact same coverage under the ARPA 21 rules. Under the old ACA rules, there was no financial help once your income hit 400% of the Federal Poverty Level (about $50k/year for a single). As you can see below, the part of the premium you are responsible for is noticeably lower in the new model, all the way to $75,000 per year.
Under the ACA, prices for coverage go up with age. Likewise, tax credits go up as premiums go up. So, what do you think happens when we run these same numbers for a 50-year-old buying the same plan?
Now, we can see that under the new scheme, tax credits stretch all the way to an income of $105,000 a year, for a 50-year-old single person! For families, the deals are even better! This is really starting to look like a free lunch! So, how good can it get?
Pricing at the Margin: A 64-year-old’s new premiums:
Usually, older folks who want to retire before they reach Medicare age (65) are very, very reluctant to do so. This mainly happens because individual health insurance under the ACA rules for a 60-something is VERY expensive. In this illustration, the benchmark plan (that’s the second-cheapest silver plan) for a 64-year-old runs $1,306.08 per month!
Under the original ACA tax credits schedule, if that 64-year-old was making more than $50,000 per year, she had to pay 100% of that $1,306.08 a month right out of her pocket! That fact alone kept a lot of people in their 60s working, so they could keep their health insurance from their jobs. Kind of sad, really.
No more. Under the ARPA 21 ATCs schedule, a 64-year-old making $50,000 per year can get that $1,306.08 insurance for just $425 a month! How’s that for “too good to be true”?
But it is. Check out this grid, comparing the ACA prices to the ARPA 21 prices for a 64-year-old:
This new model is SO generous that our 64-year-old can get federal assistance to help her pay for her individual healthcare insurance even if her income is over $170,000 a year as a single! It’s not quite a free lunch, but man!
A few caveats, a.k.a. the fine print:
If you currently have a healthcare.gov plan, you have to go back to the site and re-enroll in a plan (even if you stay on the same plan) to claim the larger subsidy. The law only gives the subsidy to those who enroll after April 1, 2021. But because this is a special open enrollment period, you can do this without penalty.
If you are working and your employer offers you a bona fide health insurance plan, you are not eligible for ANY of this assistance, nor are your dependents or spouse if your employer offers them coverage, too.
These benefits are available in Louisiana ONLY if you purchase a policy on healthcare.gov. Many licensed agents and brokers do business on healthcare.gov, including our own here at Blue Cross. BUT if you purchase a plan off-exchange (meaning not on healthcare.gov) it is NOT eligible for ANY federal assistance, no tax credits at all. It MUST be a healthcare.gov on-exchange plan.
Ready to start shopping?
Straight Talk is, this is all new. It’s real. And there is no scary fine print!