The $64,000* Question: Enroll NOW or wait until the #AmRescuePlan is signed?

*(Yes, believe it or not, I was able to come up with an extreme example of an older couple in Oklahoma managing to save a jaw-dropping $64,000/year in heath insurance premiums if the American Rescue Plan is passed, signed and implemented.)

When President Biden announced that HealthCare.Gov would be re-launching an extended Special Enrollment Period in light of the ongoing COVID-19 pandemic, I wasn't surprised at all; in fact, I would have been shocked if he hadn't ordered the HHS Dept. to do so. I was surprised by how long the new COVID Enrollment Period would be: A full 3 months (I had been expecting either 30, 45 or perhaps 60 days at the outside).

The more I thought about it, however, I realized three good reasons to re-open HC.gov all the way out until mid-May. The first two I already wrote about several weeks ago:

  • First, because it means the SEP will overlap with tax filing season. HC.gov offered a 45-day "Tax Time" SEP back in spring 2015, the first year that the ACA's federal individual mandate penalty was enforced, though it was limited to people who attested that they "didn't know" there was a penalty (which I found hard to believe, but whatever). The federal penalty may be gone now, but five states (CA, DC, MA, NJ & RI) still have their own mandate penalties, and I believe those are charged when you file your state taxes as well. In any event, having it overlap with the tax filing season should still bump up enrollment. Of course, that only gets you to April 15th, but some people file late.

  • The second reason is more subtle: The #TexasFoldEm lawsuit. Remember, the Supreme Court heard oral arguments in the case back in November (a week after the election), but they aren't expected to release their ruling on the case until sometime this spring or early summer...most likely sometime in April - June. Having ACA enrollment still ongoing through mid-May means that the ACA will likely be back in the news and in the public's mind right around the same time the SCOTUS issues their decision.

Last week a third reason presented itself when the House Ways & Means Committee posted their portion of the American Rescue Plan:

Another important thing to note is that it would be retroactive to the beginning of 2021. That means that not only would most of the ~9 million or so exchange enrollees currently receiving subsidies see them boosted dating back to January, but anyone who enrolls during the pending 3-month COVID19 Enrollment Period set to launch on February 15th would also see the boosted subsidies...including many of those earning more than 400% FPL. That's potentially huge, assuming it passes and they're able to get the word out (remember, the actual final bill may not be signed into law by President Biden until late February or so).

This is a potential game-changer. Not only do uninsured residents of all 50 states +DC have a second opportunity to #GetCovered for 2021 (it's 3 months in most states, though only one month in Connecticut and Idaho), but assuming the #AmRescuePlan goes through and is signed into law by President Biden, millions of Americans who don't currently qualify for subsidies would suddenly become eligible for this year. This helps explain why the deadline (again, in most states) is all the way out to mid-May.

Except...the American Rescue Plan is still working its way through the various House committees, and then it'll need a full floor vote, and now that the 2nd Impeachment Trial of Donald Trump is over, the Senate version will have to be marked up and voted on...and then the House & Senate versions will have to be mushed together and voted on as well. Democrats hope to have the final bill passed through both the House & Senate and on Biden's desk no later than March 14th for him to sign into law.

Let's assume that happens. The thing is, this also presents a bit of a conundrum for both uninsured folks looking to newly enroll and some logistical headaches for the exchanges themselves. For instance, one state-based ACA exchange administrator said:

"We're talking to other states on our platform to share costs if/when we build. I also know SBEs are working on asking for time and $ to help build around a lot of these rule changes. To get it right, it would take a few months. We need to build and test."

They also said that making the expanded APTC (tax credits) retroactive to January 1st will be extremely tricky and weren't quite sure whether it would be done via a rebate check from the IRS, a rebate check from the insurance carriers or (my personal guess) a credit towards payment of future premium payments. For all I know you might not actually receive the retroactive extra subsidies until you reconcile your federal tax return in 2022, though my guess is it'd be sooner than that.

In other words, let's say you've been enrolled in a plan since January which runs $800/month at full price, you currently receive $600/month in tax credits, and under the AmRescuePlan you qualify for $700/month...but the enhanced subsidies don't go into effect until, say, May 1st. In that scenario, you'd be "owed" $400 for January - April ($100 x 4 months). Would your insurance carrier apply that $400 to your May - August premiums so you wouldn't pay anything until September? Would they cut you a rebate check for $400? Who knows (hopefully someone at CMS does...)?

The rebate checks (or credits) could actually take somewhat longer. If President Biden signs the bill into law on March 14th, it could take a couple more months for the exchanges to retool, so for all I know it could be June or July before enrollees would start seeing the extra savings (though again, they're supposed to be made retroactive to January, for those who've been enrolled since then).

However, that's all on the exchange's side of the counter. Now let's look at the enrollee's situation and decision-making process.

There's basically four types of potential enrollees to consider here:

  • Currently Uninsured (or Off-Exchange Insured) earning more than 400% FPL
  • Currently Uninsured (or Off-Exchange Insured) earning less than 400% FPL
  • Current On-Exchange Enrollees earning 200 - 400% FPL
  • Current On-Exchange Enrollees earning 100 - 200% FPL

Each of these groups has a different decision to make, and much of that depends on the timing of the passage/signing of the American Rescue Plan. Complicating the situation further (actually simplifying it, to be more accurate) is the fact that not every state is allowing current on-exchange enrollees to switch plans mid-year.

If you live in CA, CO, DC, MD, RI or VT, you can only take advantage of the new COVID Enrollment Period if you aren't currently enrolled in ACA-compliant healthcare coverage. This includes those completely uninsured but I believe also means those enrolled in "junk plans" such as "indemnity plans", "short-term limited duration" plans, "sharing ministry" plans, "farm bureau" plans etc. It may also include those enrolled in policies which are ACA-compliant but which were enrolled in off-exchange (directly via the insurance carrier).

In CT, MN, NV and WA, it's open to anyone who's not currently enrolled in an on-exchange plan, which basically means the same as the six states above but also includes folks enrolled in ACA-compliant plans as long as they're off-exchange (that is, enrolled directly through the carrier without any APTC assistance).

I may be off on a few of these, though (some of the press releases were a bit confusing), so check with your state's ACA exchange to be sure.

What this does mean is that in those states, current, on-exchange enrollees won't be allowed to switch plans mid-year via the COVID Enrollment Period anyway, which makes this question moot for them. They'll still receive expanded/enhanced subsidies for their current plans if eligible, however, so there's not much to complain about (though I'm sure some will regardless).

OK, but what about those in the other 41 states, where current on-exchange enrollees are allowed to swich plans during the COVID SEP? Should they do so? In most cases I'd say they should stay put (certainly they shouldn't switch at least until the AmRescuePlan is official policy), but there may be exceptions. The expanded/enhanced APTC formula might mean that someone currently enrolled in a Silver plan is better off upgrading to Gold for the same price...or they might be newly-eligible for a Bronze plan at $0 net premiums, and so on.

In every state, those who are currently uninsured also have to decide whether to enroll right now in whatever the best value plan is for them today...or whether to wait another month to see whether the expanded subsidies of the AmRescuePlan are actually locked in. Once they make their choice, in some states they'll be stuck with it, while in others they may be able to switch but doing so could involve a few paperwork hassles (my own family ran into an issue last year when we switched from an HMO to a PPO and our insurance carrier thought we were switching to an older PPO we hadn't been enrolled in for years by mistake).

What about those currently enrolled in ACA-compliant OFF-exchange plans? That one's probably the easiest call to make:

  • In every state except California, if they're certain that their annual 2021 income will be greater than 400% FPL ($51,520 for a single adult, $106,000 for a family of four; 15% higher in Hawaii, 25% higher in Alaska), they should stay put until they know for sure that the American Rescue Plan has been signed into law, then they should absolutely go on-exchange and plug in their 2021 income to see how much they'll qualify for in APTC subsidies by switching to the exact same policy on-exchange (or they can choose a different policy if they prefer).
  • In every state except California, if they expect to earn less than 400% FPL this year, they should DEFINITELY VISIT THEIR STATE ACA EXCHANGE and double-check to see if they're eligible for subsidies already! A lot of people think they have to pay full price for an ACA plan who turn out to be mistaken each year.
  • In California, the same applies if they're certain their annual 2021 income will be greater than 600% FPL ($77,280 if they're single, $159,000 for a family of four). If they earn less than 600% FPL they should already be checking at CoveredCA.com to make sure they aren't leaving money on the table.

All of this is confusing and makes for multiple "decision points" depending on your situation.

My general advice would be this in states where the COVID Enrollment Deadline is sometime in May or beyond. In states with earlier deadlines (Connecticut, Idaho & New York) I'd enroll as if the AmRescuePlan is irrelevant and simply look at the best value available under the existing APTC formula.

  • If you're currently enrolled in an on-exchange ACA plan which you're reasonably happy with...stay put until you know the American Rescue Plan is locked in.
  • If you're currently enrolled in an off-exchange ACA-compliant plan and are sure your 2021 annual income will be more than 400% FPL (600% in CA), stay put for now, but as soon as the AmRescuePlan is signed, shop around online to see your savings!
  • If you're currently enrolled in an off-exchange ACA-compliant plan but your 2021 income might end up being less than 400% FPL (600% in CA), enter your expected income via your ACA exchange RIGHT NOW; you may qualify already, and even if you don't, you'll be paying no more for the same plan at worst.
  • If you're currently uninsured or enrolled in a non-ACA compliant plan and earn less than 400% FPL (600% in CA), shop around on-exchange right now to make sure you aren't leaving money on the table...and if you're in one of the 41 states which are allowing mid-year switching, go ahead and enroll now in the best value plan available for you. If an even better deal becomes available post-AmRescuePlan, you'll be able to switch at that time.
  • If you're currently uninsured or enrolled in a non-ACA compliant plan and earn more than 400% FPL (600% in CA), I'd still at least window shop for now...and then absolutely return to do so again once the AmRescuePlan is official.

Seriously, doing so could mean saving as much as $64,000 per year. That's not a typo.