The Inflation Reduction Act has been signed into law. While the bill has many different provisions, we are specifically interested in how it will impact the cost of health insurance for 2023 and beyond. The bill will use hundreds of billions of dollars to extend already boosted levels of subsidies for many Americans until 2025. But what level are subsidies currently at?
Subsidies from the American Rescue Plan in 2021
To understand this, we must first start with the Affordable Care Act (ACA or “Obamacare”) which was passed in 2010. The ACA made premium tax credits (subsidies that decrease your premiums) available to people purchasing health insurance from the Marketplace. These Subsidies generally available for people whose income fell between 100% and 400% of the federal poverty level. The American Rescue Plan Act, which passed in March 2021, expanded these subsidies making them available to people above 400% of the federal poverty level as well as increasing the subsidies for those between 100% and 400% of the poverty level, making Marketplace insurance more affordable while providing some with better benefits. This was set to end in 2023. But until then, these subsidies yielded significantly lower premiums for the majority of nearly 15 million uninsured people who are eligible to buy on the marketplace. It also helped the nearly 14 million people insured on the individual market. Most of these 29 Million people could see lower health insurance premiums as a result of these subsidies, and many could also afford lower deductible plans (which are usually more expensive).
Inflation Protection Act and Subsidies
Fast forward to August 2022 and the Inflation Reduction Act (IRA). One of the provisions of the new Inflation Reduction Act concerns the subsidy extension. Currently, medical insurance premiums under the ACA/ARPA are subsidized by the federal government to lower premiums. These subsidies granted through the ARPA, which were scheduled to expire at the end of 2022, will be extended through 2025. According to the U.S. Department of Health and Human Services, approximately 3 million Americans could lose their health insurance if these subsidies weren’t extended. But nothing new was added to these benefits, just an extension of existing health care law until 2025. It doesn’t lower prices, It just allows the federal government to assist with more health care costs. This will result in many people being able to purchase more affordable insurance.
The practical results of the Inflation Reduction Act means that many people will have the opportunity for reduced prices for their health insurance. Many people will be eligible for plans from as low as $0 until 2025! For individuals who are not eligible for coverage through their work, individual and family plans offer a really great opportunity for savings.