How the American Rescue Plan Act Impact NY ACA Enrollee Costs

July 13, 2021 - The American Rescue Plan Act (ARPA) successfully lowered costs for some enrollee populations in New York, but it failed to address the family glitch and costs may remain high for some individuals, the United Hospital Fund found in an issue brief.

“The ARPA improves ACA affordability in two ways: substituting a lower sliding-scale cap for premiums than the original ACA income guide; and permitting individuals and families earning more than 400% FPL to qualify for subsidies if premiums for the benchmark plan in their county exceed 8.5% of income, the new cap at the top of the sliding scale,” United Hospital Fund explained. 

“These changes apply to the 2021 and 2022 policy years, and are due to expire at the end of 2022.”

The issue brief compared premiums under the Affordable Care Act to premiums under the ARPA in New York. 

Under the former, those at 201 percent of the federal poverty level in single and family plans in 2021 had a $128 per month premium totaling $1,542 per year. In contrast, under ARPA the same individuals would have a $31 monthly premium with an annual cost of $372. This resulted in a 76 percent difference between ARPA and ACA spending.

Under ARPA, individuals at 201 percent of the federal poverty level saved $97 per month on their monthly premiums and $1,170 over the course of the year.

The percent difference in savings between ACA premiums and ARPA premiums was lower for those with higher incomes. 

Those at 400 percent of the federal poverty level had $406 in monthly premiums under the ACA, compared to $349 in premiums under ARPA. The percent difference was only 14 percent lower under the ARPA compared to the ACA.

Individuals in areas with a bigger gap between lowest- and second-lowest-cost silver plans saw greater savings under the ACA.

United Hospital Fund demonstrated how ARPA benefited marketplace enrollees that may be susceptible to the ACA subsidy cliff. 

Without the ARPA, Queens, New York residents with incomes at 408 percent of the federal poverty level who were enrolled on the Affordable Care Act marketplace might pay nearly $21,000 in premiums each year. In contrast, with the ARPA, residents would pay slightly more than $8,500.

With the ARPA, enrollees on the lowest-cost silver-level plan in Queens, New York who had an income below 400 percent of the federal poverty level spent about $406 on their monthly premiums. If their incomes increased beyond the 400 percent cut-off, their premiums became approximately 35 percent higher—around $611 per month.

Despite the benefits that the ARPA presented to New Yorkers, the United Hospital Fund brief noted that the law did not reduce the high cost-sharing and immigration-related barriers,  some of which remain from defunct immigration policies.

The ARPA also did not resolve the family glitch, United Hospital Fund added. In a separate study, experts have recommended extending premium tax credits to increase access to affordable coverage. However, the current law does not support this. Over 200,000 New Yorkers are in the family glitch.

Costs may still be high for some families and individual enrollees, even with the ARPA in place, United Hospital Fund recognized.

“Another option for consumers fearful of out-of-pocket costs is to use the premium savings to ‘buy up' to a gold-level plan ($600 individual deductible and $1,200 for families),” the brief mentioned. 

“Although it recommends that consumers check with their health plan first, NYSOH is requiring insurers to allow consumers to choose a different product from the same insurer during the extended enrollment period, and to carry over any health expenses and apply them towards a new deductible or maximum out-of-pocket limit.”