Expanded health insurance subsidies remain intact for 13 million people under Inflation Reduction Act

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Households that get help paying for health insurance through the public marketplace are likely to continue qualifying for more generous subsidies under a congressional bill moving closer to final approval.

The Inflation Reduction Act, which cleared the Senate on Sunday, includes an extension of temporarily expanded health insurance subsidies — technically tax credits — that were put in place for 2021 and 2022. The vote was 50-50 with no Republican support. Vice President Kamala Harris cast the tie-breaking vote in favor of the legislation.

Assuming the House approves the measure — which it is expected to do later this week — and President Joe Biden signs it into law, the more generous subsidies would remain available through the end of 2025.

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“Without the extension, the vast majority of the 13 million people who get subsidies … would see premium payments rise,” said Krutika Amin, associate director for the Kaiser Family Foundation’s Affordable Care Act program. “This would avert the massive premium increase [those] people would have seen otherwise.”

Nearly 13 million of the 14.5 million people enrolled in private health insurance through the public marketplace — which was authorized by the Affordable Care Act of 2010 — are receiving subsidies in 2022. Some people also may qualify for help with cost-sharing such as deductibles and copays on certain plans, depending on their income.

How the extension helps enrolled consumers

Generally speaking, people who get coverage this way — either through healthcare.gov or their state’s exchange — are self-employed or can’t get workplace insurance, or they don’t qualify for Medicaid or Medicare.

Before the temporary changes, the aid was generally only available to households with income from 100% to 400% of the poverty level. The American Rescue Plan Act, which was signed into law in March 2021, removed — for two years — that income cap, and the amount that anyone pays for premiums is limited to 8.5% of their income as calculated by the exchange.

The bill currently headed to the house would extend these modified calculations.

For some enrollees, the difference is significant: Premium payments could rise by more than 50% without the extension, Amin said. For instance, a 60-year-old with income just above $50,000 would see those monthly payments jump to $900 from $400.

The extension of the subsidies is one of a handful of provisions in the bill related to health care. The legislation also would allow Medicare to negotiate the price of certain drugs and would cap yearly outlays on prescription drugs under Part D to $2,000, as well as cap beneficiaries’ monthly insulin prices at $35. 

Sophie Tremblay

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