On March 11, 2021, President Biden signed a $1.9 trillion stimulus bill. Accordingly, the changes have resulted in the special enrollment extension and a discussion of the longer-term implications.
As part of the American Rescue Plan Act of 2021, there were expanded marketplace premium subsidies. Additionally, the Biden Administration has extended Open Enrollment for HealthCare.gov through January 15, 2022. Here's what to know about the ongoing improved Marketplace subsidies and the implications for ACA compliance.
The American Rescue Plan Act of 2021 (ARPA) and changes to ACA
On March 11, 2021, President Biden signed into law a $1.9 trillion stimulus bill called the American Rescue Plan Act of 2021, commonly referred to as ARPA.
As a reminder, the Affordable Care Act (ACA) offers health insurance plans at a lower cost for individuals who cannot otherwise afford health insurance and medical care. Subsidies are available for health insurance coverage purchased on a federal or state Health Insurance Marketplace or Exchange, usually accessed through the Healthcare.gov website.
ARPA extended eligibility to individuals for ACA health insurance subsidies, also known as premium tax credits. This means that millions of individuals qualified for ACA tax credits in 2021 and remain eligible through 2022 who did not qualify in 2020.
The ARPA subsidy expansion enabled many households to save on ACA premiums at different income levels, and some low-income individuals who enroll in Exchange coverage could pay nothing in premiums. For 2021 and 2022, ARPA eliminated the upper-income limit on eligibility for premium tax credits, which was set at 400% of the federal poverty level, and increased the amount of premium tax credits offered by decreasing how much a person must contribute to the cost of coverage. ARPA capped the cost of premiums at 8.5% of an individual's household income. This was retroactive to January 1, 2021.
Changes to open enrollment dates
In the past few years, the open enrollment period has lasted only six weeks beginning November 1. For the current open enrollment in the 36 states served by the Healthcare.gov platform (the federally facilitated marketplace), it has run from November 1, 2021, and will continue through January 15, 2022. State-based marketplaces have flexibility to hold even longer open enrollment periods (California, D.C., New Jersey, New York, Rhode Island, and Washington all run through January 31, 2022).
The White House announced record enrollment numbers as of the end of December (as of December 15, 2020, there were 13.6 million enrollees through HealthCare.gov and state-based marketplaces, with 4.6 million of those enrolling during 2021's Extended Special Enrollment provided under ARPA). This means that employers will likely see an uptick in Employer Exchange Notices. These notices, also referred to as Section 1411 Certification Notices, inform employers that one or more of their employees have been conditionally approved for subsidies to pay for coverage on the Exchange. Employers should watch for these notices and in some cases respond to them.
What are the implications for employers and ACA compliance?
There is no direct impact to the ACA's employer shared responsibility provisions. It is possible, however, that expanded subsidy eligibility may increase an organization's potential exposure to ACA penalties.
Exchange coverage is generally available to everyone, regardless of whether their employer offers health coverage. Employers typically pay at least part of the premiums associated with job-based health plans. If an individual is offered job-based health insurance, the individual will qualify for a subsidy only if their income is low enough and the employer's health plans are not considered affordable and do not meet minimum value standards.
ACA penalties are triggered when applicable large employers don't offer full-time employees health coverage that is affordable and provides minimum value and an employee receives a subsidy or premium tax credit for exchange coverage. If an employer fails to offer health coverage as required in ACA compliance and their employees receive subsidized exchange coverage, that employer will have a higher risk of facing an employer shared responsibility penalty. The IRS is actively enforcing these penalties, which can lead to substantial costs ranging from a few thousand to several million dollars.
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