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For individuals or families who get — or could get — health insurance in the public market, the option to choose coverage for 2023 is approaching.
Open enrollment, when you can choose a health plan for next year, runs from November 1 through January 15 for the federal market on HealthCare.gov and most state exchanges. Generally speaking, people who get this coverage are self-employed or cannot get work insurance, or they are not eligible for Medicaid or Medicare.
Nearly 13 million of the 14.5 million people enrolled in private health insurance in the public market – authorized by the Affordable Care Act of 2010 – receive subsidies (technically tax credits) that reduce what they pay for premiums. Some people may also qualify for cost-sharing assistance such as deductibles and co-payments on some plans, depending on their income.
Here’s what they need to know for 2023.
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Premiums increase by 4 to 5% on average
Know that premiums are rising nationally next year by about 4% to 5% on average, said Cynthia Cox, director of the Kaiser Family Foundation’s Affordable Care Act program.
However, she said, there is a lot of variation between states. For example, in Virginia premiums are down an average of 18% and in New Mexico they are up 14%, Cox said.
“Most are between 1% and 7% increase,” she said.
If you have market coverage and are facing a steep premium increase, you can always check to see if there’s a more affordable option available, Cox said.
More generous subsidies are still in effect
However, more generous financial aid remains in place.
That is, the temporarily expanded subsidies that were put in place for 2021 and 2022 were extended through 2025 in the Inflation Reduction Act, which became law in August.
This means that there is no income cap to qualify for the grants and the amount anyone pays for the bonuses is limited to 8.5% of their income, as calculated by the exchange. Prior to the changes, assistance was generally only available to households with incomes between 100% and 400% of the federal poverty level.
The market grants you qualify for are based on factors such as income, age, and the second-cheapest “silver” plan in your geographic area (which may or may not be the plan you sign up for).
Be sure to give a good estimate of 2023 earnings
Since your grant amount is based at least in part on your income, you will need to estimate it for 2023 during the application process.
Giving a good estimate is important. If you end up having more annual income than you declared when you registered, it could mean that you are not eligible for as much help as you receive. And any excess should be accounted for at tax time in 2024, which would reduce your refund or increase the amount of tax you owe.
“You don’t want a nasty surprise when you do your taxes next year,” Cox said.
Similarly, if you are entitled to more than you received, the difference will increase your refund or reduce the amount of tax you owe.
In any case, at any time of the year, you can adjust your income estimate or note any relevant life change (birth of a child, marriage, etc.) that could affect the amount of grants you are entitled to. .
The “family problem” is generally corrected, from 2023
Workers who do not have employer-sponsored health insurance deemed “affordable” — no more than 9.61% of income this year — are allowed to purchase a plan on the market. However, the measure of affordability is based on the cost of coverage reserved for employees.
This is the case even if a worker also wants their dependents covered, meaning the actual cost of family coverage could well exceed this threshold.
From 2023, here’s how it will work: if workplace coverage for a family was unaffordable, the employee would have to remain on the employer plan, while the spouse and children would be covered by the market – and eligible for grants, Cox said.
“That means families would be split between two or more health plans, which would mean having multiple premiums and deductibles,” she said. “Anyone affected by the family glitch would not be better off switching to subsidized coverage.”
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