The case for switching from Bronze to Silver

In the 2022 open enrollment period for ACA marketplace plans, more Americans enrolled than in any previous year. An estimated 14.5 million people obtained 2022 marketplace coverage, an increase of 21% over 2021. And 89% of them were subsidized, with the federal government paying more than 80% of the premium on average in the 33 states that use HealthCare.gov, the federal platform.

The increased enrollment was largely due to a boost to premium subsidies provided last March by the American Rescue Plan. (The boost extends only through 2022 and subsidy increases will expire next year unless Congress extends them.) The ARP did away with the ACA’s notorious subsidy cliff, which cut off subsidy eligibility at 400% of the Federal Poverty Level ($51,040 for an individual, $104,800 for a family of four in 2022). The ARP also reduced the percentage of income required to pay for a benchmark Silver plan (the second cheapest Silver plan in each area) at every income level.

In fact, the ARP made a benchmark Silver plan free at incomes up to 150%  FPL. A third of all marketplace enrollees – 4.9 million – have incomes below that threshold ($19,320 for an individual, $26,130 for a couple, $39,750 for a family of four).

That’s really good news. But not every low-income enrollee obtained the full value of the coverage available to them. A substantial number chose or remained enrolled in Bronze plans with much higher out-of-pocket costs.

Bronze plan holders may be leaving money on the table

At incomes up to 250% FPL, Silver plans are enhanced by cost-sharing reduction, which reduces out-of-pocket costs. CSR is particularly strong at incomes up to 150% FPL, where it reduces the average deductible to $146 and the average annual out-of-pocket maximum – the most an enrollee will pay for in-network care – to $1,208. Bronze plans – in prior years usually the only free option – have deductibles averaging $7,051 and OOP maxes usually in the $7,000-8,700 range.

Thanks to the ARP, every ACA market now has two Silver plans that are free to people with incomes up to 150% FPL, and often several more with single-digit premiums. Still, more than 600,000 enrollees with income below the 150% FPL threshold – 14% of enrollees in that income category – are enrolled in Bronze plans. Many of them may have been enrolled in those Bronze plans in 2021, when Silver plans were rarely free, and let themselves be passively auto-renewed, which happens if you take no action during the open enrollment period.

A small percentage of enrollees with income under 150% FPL may be ineligible for premium subsidies – for example, if they have an offer of insurance from an employer that’s deemed affordable by ACA standards but for some reason prefer to pay full cost for a marketplace plan. But the vast majority of the more than 600,000 low-income enrollees in Bronze plans are leaving serious money on the table – or, more exactly, exposing themselves to serious costs if they prove to need significant medical care.

At low incomes, a new opportunity to switch to Silver

Fortunately, if you find yourself in this situation – enrolled in a Bronze plan while a free high-CSR Silver plan is available to you – CMS (U.S. Centers for Medicare & Medicaid Services) has created a remedy that went into effect just this March. As Louise Norris recently explained on this site:

In September 2021, the U.S. Department of Health & Human Services finalized a new special enrollment period (SEP) in states that use HealthCare.gov (optional for other states), granting year-round enrollment in ACA-compliant health insurance if an applicant’s household income does not exceed 150% of the federal poverty level (FPL) and if the applicant is eligible for a premium tax credit (subsidy) that will cover the cost of the benchmark plan.

This SEP became available on the HealthCare.gov website (and enhanced direct enrollment entity websites) as of March 21, 2022.

Some but not all of the 18 state-based exchanges are currently offering this SEP. Several don’t need to, because they offer another type of free health insurance (Medicaid or a Basic Health Program) to enrollees with incomes up to 150% FPL or higher. See the note at bottom for details.

This newly instituted SEP also allows current enrollees with income below the 150% FPL threshold to switch into a Silver plan at any time. In fact, enrolling low-income people in Silver plans specifically is an express goal of the department of Health and Human Services, spelled out in its finalization of the rule establishing the SEP:

HHS proposed making this special enrollment period available to individuals based on household income level because enhanced financial assistance provided by the ARP for tax years 2021 and 2022 is such that many individuals with a household income no greater than 150 percent of the FPL have access to a silver plan with a zero dollar monthly premium.

If your income is below 150% FPL in particular, HHS wants you in a Silver plan:

… enrollees with a newly-enrolling dependent or other household member may not use the new monthly special enrollment period to change to a plan of a different metal level other than a silver-level QHP to enroll together with their newly-enrolling household member, but can stay in the same plan or change to a silver plan to enroll together with the newly-enrolling household member.

There is one downside to switching to a Silver plan during the plan year: any money you’ve already spent this year on medical care will not count toward your new deductible and out-of-pocket max. But the deductible, OOP max and copays or coinsurance are generally so much lower in Silver plans than in Bronze that this will rarely be a deterrent – unless you have already spent enough to have reached or nearly your current plan’s OOP max.

Why choose Bronze when Silver is free?

Some low-income Bronze plan enrollees may be aware of the much lower out-of-pocket costs generally required by a Silver plan, but still have chosen Bronze deliberately. In some cases, a desired insurer’s Silver plan (e.g., with a superior provider network) might be priced well above benchmark, while that insurer’s Bronze plan with the same provider network might be available free or at very low cost.

There is also a modest trend toward lower deductibles in Bronze plans: this year, 10% have $0 deductibles. But a Bronze plan’s much lower actuarial value – 60% vs. 94% for silver plans at incomes up to 150% FPL – means the higher out-of-pocket costs have to be paid in other ways – for example, in very high hospital copays and highest allowable out-of-pocket maximums.

In most cases, even if the Silver plan with desired provider network costs, say, $50/month while a  Bronze with the same network is available for free, the Silver plan is likely to be a better value. If you know enough to care enough about a plan’s provider network to forgo a different insurer’s free Silver plan, odds are that you’ll need enough care to make the Silver premium worth paying.  In the example above, you’d be accepting $600 in premiums to get a likely $5,000-7,000 improvement in the plan’s out-of-pocket maximum, and in most cases in its deductible as well.

Roughly 50,000 enrollees with income below 150% FPL chose Gold plans. At this income level, Silver plans are higher-value than Gold plans too. Deductibles for gold plans average $1,600, and out-of-pocket maximums are usually above $5,000, often much higher.

Bottom line: if your income is below the 150% FPL threshold (again: $19,140 for a single person, $32,580 for a family of four) and you are enrolled in a Bronze or Gold plan, strongly consider switching to Silver. The new SEP for low incomes makes switching easy.

SEP varies in state-based exchanges (SBEs)

Our prior post about the SEP for enrollees with income up to 150% FPL explains:

State-run exchanges (there are 18 as of the 2022 plan year) are not required to offer this SEP. But as of early 2022, several state-run exchanges (Colorado, Maine, Pennsylvania, New Jersey, California, and Rhode Island) had already debuted the new SEP.

Several other state-run exchanges have no need for this SEP, because they have other programs with year-round availability. This includes:

• New York and Minnesota, both of which have Basic Health Programs that cover people with income up to 200% of FPL
• Massachusetts, which offers Connector Care to people with income up to 300% of FPL (enrollment is open year-round to people who are newly eligible or who have not been covered under the program in the past)
• DC, which offers Medicaid to adults with income up to 215% of the poverty level

Some of the remaining state-run exchanges may decide to allow this SEP as of 2022, and others may choose not to offer it at all. Some state-run exchanges may find that it’s too operationally challenging to make this SEP available for 2022, and may postpone it until 2023 (assuming that the ARP’s subsidy enhancements are extended).

State-run exchanges have flexibility in terms of how they implement this SEP.

As noted above, some may choose not to offer this SEP at all. For those that do offer it, proof of income might be required in order to trigger the SEP, or they may follow the federal government’s lead and allow the SEP eligibility to be based on the income attested by the consumer.

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Andrew Sprung is a freelance writer who blogs about politics and healthcare policy at xpostfactoid. His articles about the Affordable Care Act have appeared in publications including The American Prospect, Health Affairs, The Atlantic, and The New Republic. He is the winner of the National Institute of Health Care Management’s 2016 Digital Media Award. He holds a Ph.D. in English literature from the University of Rochester.