Cost Could Still Be A Deterrent In ACA Special Enrollment Period

February 24, 2021 - The special enrollment period on the Affordable Care Act marketplace opened to boost healthcare coverage during the coronavirus pandemic, but familiar barriers—namely, cost—could still stunt enrollment, according to a Kaiser Family Foundation policy watch.

“Though styled as a ‘special' enrollment period, it will operate more like an open enrollment period; no qualifying life event is required to apply. People who are currently uninsured can enroll, and people already enrolled in marketplace plans can change to different policies,” the researchers explained.

As many as 8.9 million Americans who could receive marketplace subsidies do not take advantage of them and an additional 6.0 million uninsured Americans could buy unsubsidized marketplace coverage. Of those who are uninsured, 3.4 million have an income that is too high to qualify for subsidies. Around 4.0 million uninsured Americans qualify for free bronze-level plans.

Reasons for enrollment hesitancy

However, this does not mean that all 8.9 million individuals who could receive subsidized insurance will be attracted to marketplace plans during the special enrollment period. Even potential enrollees who qualify for subsidized insurance may have to forego enrolling in a marketplace plan due to the price.

Subsidies depend primarily on income and age. For an individual who is at the poverty level, the out-of-pocket healthcare spending on her Affordable Care Act marketplace premium could amount to around two percent of her income. In 2021, this would be around $22 per month.

However, for a subsidy-eligible person whose income is at 401 percent of the poverty level and who is nearing the age of Medicare eligibility, the premium could total over 24 percent of his income, even with the subsidy.

A $0 premium bronze plan might seem like an offer that is too good to resist for the 4.0 million uninsured individuals who qualify.

However, many eligible individuals turn down this possibility due to the bronze plan’s deductibles. While the premium costs are reduced to zero, out-of-pocket healthcare spending for deductibles is often capped at $7,000. The risks of incurring such high costs prevent qualifying individuals from enrolling in an Affordable Care Act marketplace plan.

Factors incentivizing uptake

Some of the cost barriers could be reduced due to policy changes.

The coronavirus relief bill from the House of Representatives, the American Rescue Plan, would amplify premium tax credits. The Affordable Care Act enrollees or potential enrollees with incomes of up to 150 percent of the federal poverty level would be able to access a silver plan with no premium costs.

The plan also seeks to decrease costs for elderly individuals with incomes above 400 percent of the federal poverty level.

A unique element of this open enrollment, as compared to open enrollment periods of the past four years, is the level of federal investment in outreach and consumer assistance.

Almost one in five individuals have sought consumer assistance while shopping, applying for, or seeking to renew their insurance or Medicaid coverage in 2020, according to previous Kaiser Family Foundation research.

But in 2018, the Trump administration reduced navigator funding by $26 million. The administration explained that most individuals who apply for the Affordable Care Act marketplace have a basic knowledge of the available plans and determined that investing in independent agents and brokers is less costly.

During this special enrollment period, the federal government will be funding a national outreach campaign, which could affect enrollment.

Additionally, the special enrollment period could lead to reduced coverage disparities if eligible, uninsured minorities take up Affordable Care Act marketplace coverage. The share of uninsured individuals in the non-Hispanic Black and Hispanic populations who are eligible for subsidies exceeds these races’ share of the overall non-elderly population.

Black, non-Hispanic, uninsured Americans and Hispanic, uninsured Americans make up 13 and 20 percent of the non-elderly population overall, but they account for 15 and 31 percent of the uninsured population that is eligible for marketplace subsidies, respectively.

In contrast, the rate of uninsured who are subsidy-eligible among other races was lower than their share of the overall population. For example, while White, non-Hispanic individuals amount to 57 percent of the US population, 47 percent of White uninsured individuals were eligible for marketplace subsidies.