ACA Subsidy Expansion Will Make Big Impact on Exchanges

For an individual health insurance market that is already hitting its stride, the new pandemic relief legislation’s expansion of Affordable Care Act (ACA) subsidies is yet another positive catalyst that should make the exchanges more attractive to insurers and customers alike, experts tell AIS Health. And it could have wide-ranging implications for the business and policy dynamics underpinning the ACA marketplaces, affecting everything from the risk pool to insurer competition to state-based reinsurance programs.

Under the American Rescue Plan, which President Joe Biden signed into law on March 11, individuals who already qualified for premium tax credits under the ACA will see more generous financial aid, including expanded access to zero-premium plans for lower-income people. In addition, people whose incomes were too high to qualify for subsidies — those who earn more than 400% of the federal poverty level (FPL) — will be eligible for reduced premiums for the first time thanks to a provision that caps marketplace premiums at 8.5% of all enrollees’ income.

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