Enhanced Premium Tax Credits for Marketplace Are a Game Changer!
Forget what you think you know about the cost of a health insurance plan from the Marketplace (or State Exchange, depending on where you live). If you have to purchase your own insurance, you could be making some very costly assumptions if you dismiss considering the Marketplace to access affordable coverage. This comoing year, 2023, will bring several new regulations that dramatically impact the Marketplace and the cost of the plans. Unlike just about every other necessity we must purchase, most people will have access vyer afforderable options.
Do NOT assumme thtat your income is too high! Do NOT assume that yoou're not eligible for a subsidy for reasons like coverage offered by a spouse's employer!
Premium subsides are higher than they were in the past and easier to qualify for, which began in 2021, as a provision of the American Recovery Plan. Those provisions from the COVID relief legislation were set to expire at the end of 2022, but were extended through 2025 by the Inflation Reduction Act, which Congress passed in September 2022.
The enhanced premium tax credits, most significantly, remove the all-or-nothing income threshold of 400% of the federal poverty limit (FPL). Regular premium tax credits had a maximum income threshold of 400% of the Federal Poverty Limit, which was around $69,000 for a tax household of two. Enhanced premium tax credits remove the 400% FPL threshold and replace it with an equation that factors in household size and how many of those family members will be covered on the Marketplace, income and the premium of the second lowest cost Silver plan available in the applicant’s zip code. Once that calculation is made, applicants will receive a premium tax credit (subsidy) for all costs beyond 9.12% of their income.
Additionally, the subsidies themselves were increased and expanded eligibility to people who live in states that have not accepted the Federal funds to expanded Medicaid and who have an income between 100% and 150% FPL.
Millions of people were able to receive premium subsidies for the first time with expanded tax credits and now, following the passing of the Inflation Recovery Act, those expanded tax credits have been extended through 2025.
Lastly, just this month, the IRS released the final revisions of their interpretation of the Affordable Care Act to allow employees’ family members the ability to qualify for premium tax credits for coverage through the Marketplaces. The IRS had been instructed, via executive order, to close the loophole that is commonly referred to as "The Family Glitch." Effective January 1, 2023, the ability of spouses and dependent children to qualify for subsidized coverage will be based on whether the offer of coverage by an employer is affordable for those family members, not just if the employee-only coverage is affordable.
With all of the shifts in regulation, 2023 will very possibly be one of the most affordable years fsince the Affordable Care Act plans were introduced 12 years ago.