- Under the American Rescue Plan, many people are newly-eligible for premium subsidies.
- As of 2022, people enrolled in Silver plans who become newly ineligible for CSR will be able to switch to a non-Silver plan.
- As of 2020, off-exchange enrollees who experience an income change that makes them subsidy-eligible can switch to an on-exchange plan at that point.
- HHS has finalized a new rule, effective in 2022, that allows people who are newly ineligible for premium subsidies to pick a plan at a lower metal level.
- The existing SEP also applies to people who are newly eligible for cost-sharing subsidies, or for a different level of cost-sharing subsidies. HHS has also finalized a new rule that will allow exchange enrollees with silver CSR plans to switch to a bronze or gold plan if they lose CSR eligibility, although this won’t take effect until 2022.
The ACA provides two types of subsidies for eligible individuals who enroll in health insurance plans through the exchanges:
- Premium subsidies are available to people who aren’t eligible for Medicaid, and whose household income is at least 100% of the federal poverty level (FPL), and — normally — no more than 400% of the poverty level. (The lower limit for subsidy eligibility in states that have expanded Medicaid is 139% of the poverty level, as Medicaid is available in those states to people with income up to 138% of the poverty level, and subsidies aren’t available to people who are eligible for Medicaid; For 2021 and 2022, the American Rescue Plan eliminated the upper income limit for premium subsidy eligibility, instead providing subsidies for people with income over 400% of the poverty level if the benchmark plan would otherwise cost more than 8.5% of the person’s income).
- 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% of the poverty level but no more than 250% of the poverty level (the same caveat applies regarding the lower income limit for subsidy eligibility in states that have expanded Medicaid).
Newly eligible for subsidies as a result of the American Rescue Plan
For Americans who are already enrolled in minimum essential coverage, an income change or a change in family size counts as a qualifying event if it results in a change in eligibility for premium subsidies, or a person becoming newly eligible for CSR (as described below, as of 2022, becoming newly ineligible for CSR will be a qualifying event for people with silver plans).
Under the American Rescue Plan, some people who were not previously eligible for premium subsidies are eligible for them in 2021 and 2022. This includes people who already had an income in the subsidy-eligible range (but weren’t eligible because the benchmark plan was already considered affordable under normal rules), as well as people who were previously ineligible due to the subsidy cliff (ie, their income was over 400% of the poverty level).
Due to the change in subsidy eligibility, these individuals qualified for a special enrollment period to enroll in an on-exchange plan and take advantage of those newly available premium subsidies. And there was also a nationwide COVID-related special enrollment period in 2021, allowing people an extended opportunity to enroll or make a plan change, with no restrictions on metal level changes (even for people who opt to use another special enrollment period, including for retroactive coverage for a new baby or newly adopted child).
This window ended in most states on August 15, but it’s still underway in several states that run their own exchanges (ie, they don’t use HealthCare.gov).
Newly ineligible for CSR or APTC: As of 2022, this will trigger a SEP to switch to a non-silver plan or a plan at a lower metal level
Starting in 2022, people who are enrolled in a Silver plan with CSR benefits will qualify for a special enrollment period to switch to a plan at a different metal level if they become newly ineligible for CSR. This provision was finalized by HHS in 2020. Until then, the current rules (see § 155.420(a)(4)(ii)) clarify that an exchange enrollee who isn’t enrolled in a Silver plan must be allowed to switch to a Silver plan if they experience an income change that makes them eligible for CSR, assuming they wish to take advantage of CSR benefits, but it does not have a similar provision for people who are already enrolled in a CSR version of a Silver plan, who then lose their CSR eligibility.
An existing provision (see § 155.420(d)(6)(ii)) already grants a special enrollment period to an enrollee who experiences “a change in eligibility for cost-sharing reductions,” but in proposing the new rule change, HHS clarified that this provision limits people to a new plan at the same metal level they already have — hence the need for a new rule allowing people to switch from Silver to a different metal level if they lose their eligibility for CSR benefits (it’s not as beneficial to be limited only to picking a different Silver plan if you lose your CSR eligibility; as of 2022, people in that situation will be able to pick a bronze or gold plan instead if that’s their preference). The final rule from HHS notes that they will expand § 155.420(a)(4)(ii) to include subsections (A) and (B), to address those who are newly ineligible for CSR as well as those who are newly eligible for CSR.
The existing rules also limit the allowable plan changes for people who are newly ineligible for premium subsidies: They can pick a different plan, but only if it’s at the same metal level as the plan they already have. This is clarified in § 155.420(a)(4). But as of 2022, HHS will provide more flexibility on this. The new rule, finalized in May 2021, allows people who lose their advance premium tax credits to switch to a plan at a lower metal level (or a catastrophic plan, if they’re eligible for one) if they choose to do so.
Loss of advance premium tax credits (ie, becoming ineligible for premium tax credits mid-year) can happen due to an increase in income, or due to a change in household size (for example, a household of four becomes a household of three when an older child ceases to be a tax dependent). Enrollees in this situation are currently limited to picking another plan at the same metal level (or keeping their existing plan and just paying full price for it), but the proposed rule change would allow them additional flexibility to pick a plan that might have significantly lower premiums.
People who qualify for a special enrollment period based on a change in subsidy eligibility have 60 days to switch to a different plan based on their new subsidy eligibility or ineligibility. This special enrollment period was previously only available for people who were already enrolled in a plan through the exchange. But as of 2020 (in states that use HealthCare.gov and in other states at the option of the state-run exchanges), people who have off-exchange coverage and who experience a change in income that makes them newly eligible for premium subsidies have a special enrollment period during which they can switch to a plan in the exchange. This gives these individuals the ability to take advantage of the premium subsidies — and cost-sharing subsidies, if applicable — for which they are newly eligible, since the subsidies are only available through the exchange.
(There were reports that HealthCare.gov’s call center doesn’t always recognize this special enrollment period, even several months after it technically became available. And it’s optional for state-run exchanges, so people who live in states that run their own exchanges should check with their exchange to see if the special enrollment period is being offered. For example, Minnesota’s state-run exchange announced in May 2020 that they are now offering this special enrollment period.)
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% of the poverty level, which would normally — but not in 2021 or 2022 — also make them ineligible for 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 (note that Medicaid eligibility is not being terminated by states during the COVID public health emergency, even if the member’s income rises above the normal eligibility threshold).
And for people who are uninsured but in the Medicaid coverage gap in a state that hasn’t expanded Medicaid, there’s a special enrollment period that applies if the person’s income increases to above the poverty level, making them newly eligible for subsidies in the exchange. This SEP does not have any sort of prior coverage requirement, as the assumption is that people in the Medicaid coverage gap do not generally have realistic access to health coverage.
Examples: changes in premium subsidy eligibility
Newly ineligible for premium subsidies: Proposed rule change would allow you to pick a new plan in a lower metal level
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. As noted above, the current rules limit him to picking a new plan at the same metal level as the plan he already has, but starting in 2022 that will no longer be the case; he’ll be able to switch to a plan at a lower metal level (ie, less expensive) if he prefers that option. 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.
And federal regulations allow people who lose eligibility for premium subsidies to switch from an on-exchange plan to an off-exchange plan. This is detailed in § 147.104(b)(2)(i)(B), and confirmed in the 2020 Notice of Benefit and Payment Parameters. Giving people the flexibility to switch from on-exchange to off-exchange when they lose eligibility to premium subsidies is particularly helpful now that insurers in many states are adding the cost of CSR to Silver plan premiums in the exchange, but offering off-exchange Silver plans without the cost of CSR added to their premiums.
So for example, if a person has a Silver plan in the exchange, with premium subsidies, and then experiences an income increase that makes them ineligible for premium subsidies, they may be able to find an off-exchange Silver plan that costs less (for people who have to pay full-price, without any subsidies) than the on-exchange version. The availability of a SEP in this circumstance facilitates the transition, although as is always the case with mid-year policies changes, out-of-pocket costs reset to zero each time a person switches to a new plan.
Newly eligible for premium subsidies: SEP within the same metal level
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, although it will have to be another plan at the same metal level she already has (unless there are no other plans available at that metal level, in which case she’d be allowed to go up or down own level — but that’s a rare scenario).
(Through the end of 2019, this only applied to people who already had a plan that they purchased through the exchange, and wished to switch to a different plan once they became eligible for subsidies. But as of 2020, off-exchange enrollees (in most states) who experience a drop in income that makes them subsidy-eligible also have an opportunity to enroll in an on-exchange plan.)
HHS addressed this issue in the proposed rule changes for 2022, and noted that they decided against a rule change to add additional flexibility to switch to a plan at a different metal level in a situation where a person becomes newly eligible for premium tax credits (see page 177).
Examples: changes in cost-sharing subsidy eligibility
If Kylie’s income was initially higher than 250% 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% 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% 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 an SEP during which he can select a different plan.
If Elaine initially qualifies for cost-sharing subsidies (and is enrolled in a Silver plan through the exchange) but her income increases during the year and she loses her eligibility for cost-sharing subsidies, the rule change finalized by HHS for 2022 will allow her a 60-day window during which she could switch to a bronze or gold plan instead.
(Note that if you’re already enrolled in a CSR plan and you report an income change to the exchange that makes you eligible for a different CSR plan instead, the exchange may automatically transition you to the new CSR plan offered by the same insurer you already have. In some cases, this might reset your cost-sharing for the year to $0, and you’d need to contact the exchange and/or the health insurer to make sure that the out-of-pocket costs that you’ve already paid get credited towards your “new” plan. If you switch to a different plan, however, based on the options described above, you’ll need to be aware that doing so will likely result in your out-of-pocket spending being reset to $0 for the year.)
Through 2019, SEP was limited to people already enrolled through the exchange, but this changed as of 2020
Form 2014 through 2019, the SEP triggered by an income change only applied if the person was already enrolled in a plan through the exchange. If you were enrolled in an off-exchange plan, you were not eligible for a SEP if your income changed mid-year.
This made it challenging for some people to take advantage of the “Silver switch” option that many states have offered as a solution to the cost of CSR. People who aren’t eligible for premium subsidies — but who want a Silver plan — may find that the full-price cost of the plan is lower if they shop outside the exchange. But then if they experienced a change in income mid-year that made them eligible for a subsidy, they were still stuck with their full-price off-exchange plan until the following year.
Income changes and job changes can sometimes be difficult to predict, but from 2014 through 2019, neither of those counted as a qualifying event if you weren’t already enrolled through the exchange.
In finalizing the SEP that allows off-exchange enrollees to switch to the exchange, HHS noted that people enrolled in employer-sponsored coverage or exchange coverage who become newly eligible for premium subsidies in the exchange have an opportunity to take advantage of those subsidies, as do uninsured people in the Medicaid coverage gap who experience a change in income that makes them subsidy-eligible.
But prior to 2020, there wasn’t an opportunity for people enrolled in off-exchange coverage to take advantage of a premium subsidy for which they are newly eligible. The new rules changed that, starting in 2020 (as noted above, there is still some discrepancy in terms of how readily available this SEP is through HealthCare.gov, and state-run exchanges are not required to offer it).
Details for the off-exchange income change SEP
The new SEP for people who have off-exchange coverage and experience an income change that makes them subsidy-eligible was confirmed in the 2020 Notice of Benefit and Payment Parameters that HHS finalized in April 2019. Here are the details:
- HHS added a new section at § 155.420(d)(6)(v) describing the new SEP.
- The new SEP is available in all states that use HealthCare.gov (including state-run exchanges that use the federal enrollment platform).
- The new SEP is optional for states that run their own exchange platforms.
- Consumers have 60 days from the date of their income change to enroll in a plan through the exchange.
- If other members of the person’s household are already enrolled in a plan through the exchange, the person will be allowed to join them on that plan. Alternatively, the person will be allowed to enroll in a separate plan of their own choosing during the SEP.
- Consumers will have to provide proof of their income change, as well as proof that they had minimum essential coverage (or pregnancy Medicaid, CHIP unborn child, and Medically Needy Medicaid) prior to the income change (for at least 1 of the 60 days prior, as is the standard with other SEPs that require proof of prior coverage).
- Off-exchange minimum essential coverage obviously includes ACA-compliant plans that are sold outside the exchange, but it also includes grandmothered and grandfathered plans. So a person who has retained one of these plans — because they weren’t eligible for subsidies — will be able to switch to an on-exchange ACA-compliant plan with premium subsidies in the future if they have an income change mid-year that makes them subsidy-eligible.
- However, plans that are not minimum essential coverage, including short-term health plans, will NOT satisfy the prior coverage requirement for this SEP. So a person who enrolled in a short-term health plan (maybe because they weren’t eligible for a premium subsidy in the exchange and considered all of the available ACA-compliant plans to be too expensive) would not be eligible for a SEP to switch to an on-exchange plan mid-year if they experience a change in income.
- As is always the case when people switch from one plan to another mid-year, out-of-pocket amounts will start over at $0 on the new plan (unless the enrollee is switching to the exact same plan on-exchange that they already have off-exchange, and the insurer agrees to credit their out-of-pocket spending towards the new plan; there is nothing that requires insurers to do this, but it can never hurt to try).
- As of 2022, a new rule finalized by HHS will allow exchange enrollees with Silver CSR plans to switch to a bronze or gold plan if they experience an income change that makes them newly ineligible for CSR benefits.
- And also as of 2022, enrollees who are receiving premium subsidies will have a special enrollment period that allows them to switch to a plan at a lower metal level if they become newly ineligible for the premium subsidies.
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 starting in 2020, the flexibility added by this new SEP will make it easier for people with an uncertain income to pick the plan that works best based on their current income, knowing that they can make changes later in the year if they experience an income change.
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.