ACA marketplace enrollment in 2022 plans surged at higher incomes

Enrollment in ACA marketplace plans has surged, thanks to expanded eligibility for ACA marketplace subsidies. Leading that surge: buyers with higher incomes.

Enrollment climbed as more buyers gained subsidy eligibility

After the American Rescue Plan (ARP) expanded eligibility for premium subsidies in the ACA marketplace in 2021{{test}}, enrollment in 2022 plans increased by 21%. Enrollment in 2023 plans is on pace to grow by another 13%, to about 16.4 million by the time the open enrollment period ends in all states. Plainly, Americans who lack access to affordable employer-sponsored health plans, Medicaid, or Medicare are recognizing that the ARP made health plans in the ACA marketplace far more affordable.

The ARP increased premium subsidies in the ACA marketplace at every income level and removed the income cap on subsidy eligibility, which had been 400% of the Federal Poverty Level (FPL) since the ACA marketplace launched in 2014. In 2023, 400% FPL is $54,360 for an individual and $111,000 for a family of four. Enrollees with income above that level used to pay the full premium without subsidy. Now they receive premium subsidies if the unsubsidized benchmark Silver plan premium would cost them more than 8.5% of annual family income.

The table below shows the enrollment increase at each income level for 2022 plans in the 33 states that use HealthCare.gov, the federally run exchange. While enrollment in 2022 coverage rose by double-digit margins at all reported income levels, the growth rate increased with income and was highest at incomes over 400% FPL – i.e. among those formerly ineligible for subsidies. (Information about 2023 enrollees’ income is not yet available.)

A note on one data limitation: the chart combines enrollment by those with incomes below 100% FPL and above 400% FPL because that’s the way CMS reported income in 2021, when enrollees with incomes over 400% FPL were not eligible for subsidies. In 2022, 146,297 enrollees in HealthCare.gov states had income below 100% FPL, while 655,944 reported income above 400% FPL – so likely almost all of the increase in that combined category is attributable to enrollees with incomes above 400% FPL.

An obvious surge in enrollment at income levels over 400% FPL

In 2022, the first year in which there was no income cap on subsidies, enrollment at incomes above 400% FPL more than doubled. When you look at premiums with and without subsidies for enrollees of different ages, as shown below, it’s not hard to see why.

Coverage is much more affordable at incomes above 400% FPL than it was prior to 2022 – far more so than many people who looked at marketplace offerings before they became subsidy eligible probably recognize.  Note also that the number of enrollees who did not report income plummeted. That’s doubtless because the ARP dramatically reduced the number of enrollees who earn too much to obtain a subsidy.

Source: 2022 Marketplace Open Enrollment Public Use Files / CMS.gov

The enrollment surge, illustrated

Let’s take a closer look at one of the ACA’s hottest markets: Houston, Texas. Enrollment in 2022 coverage in Texas increased by 42%, and enrollment in 2023 plans is on pace to increase another 32%. The chart below shows what premiums now look like for couples of different ages with an annual income of $74,000 – slightly above the 400% FPL threshold – compared to what those couples would pay if they were ineligible for subsidies, as they would have been in years before 2022.

The source for all premiums quoted below is the “See plans and prices” tool on HealthCare.gov.

Impact of the American Rescue Plan on ACA premium subsidies

Monthly premiums paid with and without ARP subsidy increases: Houston, TX in 2023

Notice that the premiums that the older couple will pay (after subsidy) for Bronze and Gold plans are much lower than those paid by the 40-year-olds. That’s because premiums before subsidies are credited rise with age: At age 64, they are three times the premium for a 21-year-old and more than twice the premium for a 40-year-old.

But subsidies are structured so that everyone with the same income pays the same amount for the benchmark Silver plan: An enrollee with income at >400% of FPL receives a subsidy in a fixed amount that enables the enrollee to pay not more than 8.5% of their income for the benchmark, regardless of age. So the subsidy for the older couple is bigger than for the younger couple.

When the subsidy gets bigger, it covers a larger share of the premium for plans that cost less than the benchmark plan. Since the “spread” between the benchmark plan’s premium and the premiums for cheaper plans (one Silver and many Bronze plans) increases in proportion to the age of enrollees, older enrollees get bigger savings on cheaper plans.

Louise Norris has more on how the ARP has decreased premiums for older enrollees. For eligible higher income and older enrollees, the ARP subsidy boosts are not just an “8.5% solution.” Coverage, including sometimes Gold coverage, is often available for much less.

What do the lowest-cost Bronze, Silver and Gold plans shown above look like? Below are some key features. Note that in ACA marketplace plans, select features may not be subject to the deductible, meaning you don’t have to pay full price before you meet your deductible (i.e. a service may be free or you may pay only a co-pay).

• The lowest-cost Bronze plan in this market from Blue Cross Blue Shield of Texas, has a deductible of $7,400, and an annual out-of-pocket maximum of $9,100 (the highest allowable by law). Primary care doctor visits are free regardless of whether the plan’s deductible has been met, and generic drug prescriptions are $5, also before the deductible.
• The lowest-cost Silver plan, from Ambetter, has a $5,800 deductible and an $8,900 out-of-pocket max. Primary care visits are $40 and generic drug prescriptions are $20, both before the deductible, and other services (urgent care, specialist visits) are also not subject to the deductible.
• The lowest-cost Gold plan, from Blue Cross Blue Shield, has a deductible of $1,100, an out-of-pocket max of $9,100. Primary care doctor visits are free and generic drug prescriptions of $5, neither subject to the deductible.

Bargains are Gold-plated in Texas and a handful of other states

The tables also show an extra benefit in the Texas marketplace. In 2022, the Texas legislature unanimously passed a law, signed by Gov. Greg Abbott, instructing the Department of Insurance to issue regulations that would ensure that insurers price Gold plans lower than Silver plans. How can that be?

Well, most marketplace enrollees have incomes below 200% FPL, and below that threshold, Cost Sharing Reduction (CSR) subsidies give Silver plans lower out-of-pocket costs than Gold plans. In Texas in 2022, 88% of Silver plan enrollees had income below 200% FPL. So, setting Gold plan premiums below Silver premiums is a major benefit to enrollees with incomes above 200% FPL, for whom Gold plans have lower out-of-pocket costs than Silver.

At least six states have taken measures to have Gold plans consistently priced below or on a rough par with Silver, and in other states and regions, insurers have done so on their own. This post by Charles Gaba spotlights states and counties in which the economic upsides for Gold plans are most extreme.

Pricing CSR directly into Silver plan premiums is a practice known as “silver loading,” which began in 2018 after the federal government stopped paying insurers separately for the value of CSR. Silver loading creates discounts in Bronze as well as Gold plans – often wiping out the Bronze premium entirely, as the chart above illustrates in the case of the 63-year-olds. Insurers in all states except Mississippi and Indiana practice Silver loading to some degree.

When premiums go high, so does subsidy eligibility

At an income of $150,000 per year for a couple of 40-year-olds – more than 800% FPL for a two-person household –  the unsubsidized benchmark Silver plan in Houston costs less than 8.5% of income. The premium would be the same if the ARP were not in effect.

For two 60-somethings, however, the benchmark premium rises so high that it’s more than 8.5% of income even for a couple earning $150,000.  Subsidies therefore kick in even at this high income.

Those prohibitively high unsubsidized premiums may seem like an extreme case, but they’re not unusual for older enrollees. Providing affordable insurance to people who retire or are laid off before they’re eligible for Medicare is a major function of the ACA marketplace. In 2022, 28% of all enrollees were aged 55-64.

The ARP of course made plans significantly more affordable at every income bracket below 400% FPL as well.  Examples of how the subsidy increases affect enrollees at various income levels are laid out in this post.

Will high-earner enrollment continue to surge?

The American Rescue Plan was originally designed as COVID-19 relief, and the subsidy increases in the ACA marketplace were only granted through 2022. The Inflation Reduction Act, enacted in August 2022, extended the increased subsidies through 2025. Beyond that point, their future is uncertain, though they have plainly helped to reduce the uninsured population nationwide.

At least through 2025, if you need to find insurance in the individual market and have not yet examined your options, you’re likely to be pleasantly surprised – particularly if you were jolted by unsubsidized premiums in the past and now find yourself eligible for subsidized coverage.

Andrew Sprung is a freelance writer who blogs about health care policy and ACA implementation at xpostfactoid and at healthinsurance.org. His articles have appeared in publications including Health Affairs, The American Prospect, USA Today, The New York Times, The Incidental Economist, Mother Jones, The Atlantic and The New Republic. He is the winner of the National Institute of Health Care Management’s 2016 Health Care Digital Media Award and holds a Ph.D. in English literature from the University of Rochester.