The ACA provides two types of subsidies for eligible individuals who enroll in health plans through the exchanges:
- Premium subsidies are available to people who aren’t eligible for Medicaid, and whose household income is at least 100 percent of the federal poverty level, and no more than 400 percent of the poverty level (the lower limit for subsidy eligibility in states that have expanded Medicaid is 139 percent of the poverty level, as Medicaid is available in those states to people with income up to 138 percent of the poverty level, and subsidies aren’t available to people who are eligible for Medicaid).
- Cost-sharing subsidies, otherwise known as cost-sharing reductions (CSR), are available to people who aren’t eligible for Medicaid, who purchase a Silver plan, and whose income is at least 100 percent of the poverty level but no more than 250 percent of the poverty level (the same caveat applies regarding the lower income limit for subsidy eligibility in states that have expanded Medicaid).
For people who are already enrolled in a plan through the exchange, an income change counts as a qualifying event if it results in a change in eligibility for either type of subsidy. The enrollee then has 60 days to select a different plan.
For people who are currently enrolled in Medicaid and whose income increases to make them eligible for a premium subsidy instead (or even above 400 percent of the poverty level, making them ineligible for both Medicaid and premium subsidies), the special enrollment period also applies. In this case, it’s also a special enrollment period triggered by loss of other coverage, as an increase in income above the Medicaid eligibility level will result in loss of Medicaid coverage, and loss of coverage triggers a special enrollment period.
Examples: changes in premium subsidy eligibility
If John is receiving a premium subsidy and experiences a mid-year increase in income that makes him ineligible to continue receiving a subsidy, he’ll have access to a 60-day special enrollment period during which he can switch to a different plan. He may decide he wants to keep his plan, or he may prefer to pick a less expensive option once his premium subsidies are no longer available. The choice is his.
If Mary’s income is too high for premium subsidies, she may have initially selected a low-cost plan since she has to pay the entire bill herself. If her income subsequently drops into the subsidy-eligible range, she’ll have a 60-day SEP during which she can change plans, assuming she was already enrolled in a plan through the exchange.
Her premium subsidy can be applied to any metal-level plan in the exchange, including the plan she already has (as long as it’s not a catastrophic plan). If her existing plan is a catastrophic plan, this SEP will be particularly helpful, since catastrophic plan premiums can’t be subsidized. Even if she already had a metal-level plan, she’ll have the option to pick a different one during her SEP.
Examples: changes in cost-sharing subsidy eligibility
If Kylie’s income was initially higher than 250 percent of the federal poverty level, she may not have selected a Silver plan when she enrolled, since she wasn’t eligible for cost-sharing subsidies. But if her income drops under 250 percent of the poverty level later in the year, the SEP gives her an opportunity to enroll in a Silver plan with cost-sharing subsidies included in the coverage. (Cost-sharing subsidies are only available on Silver plans.)
There are three different levels of cost-sharing subsidies, depending on income. The subsidies are more robust at lower income levels, and relatively modest for people with income above 200 percent of the poverty level. If Trent’s income initially placed him in one eligibility bracket for cost-sharing subsidies, and it changes mid-year to one of the other eligibility brackets, he’ll have a SEP during which he can select a different plan.
If Elaine initially qualifies for cost-sharing subsidies but her income increases during the year and she loses her eligibility for cost-sharing subsidies, she’ll have a SEP during which she can pick a new plan.
Limited to those already enrolled through exchange
In all of these cases, the SEP only applies if the person is already enrolled in a plan through the exchange. If you’re enrolled in an off-exchange plan, you do not get a SEP if your income changes mid-year (note that the SEP also applies to people who are enrolled in Medicaid, who experience an increase in income that makes them ineligible to continue their Medicaid coverage).
This is one of the reasons a person with income too high for subsidies might still want to enroll through the exchange. Income changes and job changes can sometimes be difficult to predict, but neither of those count as a qualifying event if you’re not already enrolled through the exchange.
A third-party enrollment site like healthinsurance.org will let you compare both on- and off-exchange plans, and it’s worth looking at both if you’re not eligible for subsidies. (Subsidies are only available in the exchange.)
But enrolling in an exchange plan provides you with additional flexibility to make plan changes later in the year if your income fluctuates above or below the threshold for subsidy eligibility.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.