Understanding Health Insurance Changes For 2022

 Healthcare reform has been in the news almost non-stop for the last few years, so if you're confused, you're certainly not alone.

This article will explain what's changed, what's stayed the same, and what you can expect in terms of your health insurance in 2022.

Yuri Arcurs / Getty Images Note: This discussion mostly applies to individual/family health insurance. Although only a small fraction of the US population has individual market coverage, this is where the bulk of the headlines tend to focus, as it's the market that was most affected by the Affordable Care Act (ACA).

If you get your health coverage from your employer, they will provide details about any changes for the coming plan year, which may or may not follow the calendar year. And if you have government-run health insurance (Medicare or Medicaid), you'll receive communications either from the state or federal government, or from the insurer that manages your coverage (Medicare Advantage, Medigap, Medicare Part D, or a private Medicaid managed care plan).

The American Rescue Plan Made Subsidies Larger and More Widely Available; That's Still The Case for For millions of people who buy their own health insurance, the American Rescue Plan has increased the size of their premium subsidies and made the subsidies available to enrollees who previously didn't qualify. The larger subsidies are also available to millions of uninsured Americans and people who are enrolled in coverage outside the exchange, but only if they enroll in a plan through their state's health insurance exchange.

The American Rescue Plan has made some important changes to health insurance subsidies, which continue to be in effect for 2022 coverage:

* The income cap (normally 400% of the poverty level) for subsidy eligibility has been eliminated through the end of 2022. People with income above 400% of the poverty level can qualify for a premium subsidy if the cost of the benchmark plan would otherwise be more than 8.5% of their household income.
* The percentage of income that people have to pay for the benchmark plan has been reduced for people with income below 400% of the poverty level. It now ranges from 0% to 8.5% of income, depending on the household's income. This means that people who already qualified for subsidies now qualify for larger subsidies.

The American Rescue Plan also ensured that people who received unemployment compensation at any point during 2021 could get a premium subsidy large enough to fully cover the cost of the benchmark plan, along with full cost-sharing reductions.

That benefit is slated to run through the end of 2021, but the Build Back Better Act would extend it through the end of 2025, allowing people who receive unemployment benefits in a given year to access premium-free benchmark plans and full cost-sharing reductions.

The Build Back Better Act would also extend the other subsidy enhancements (described above, and already slated to last through 2022) through the end of 2025. The Build Back Better Act passed the House of Representatives in November 2021, and was sent to the Senate for consideration.

Open Enrollment for Individual/Family Health Insurance Continues Through January 15, 2022 in Most States
In most states, open enrollment for 2022 individual/family health coverage runs through January 15, 2022. This is a month longer than the standard open enrollment window that was used in most states for the past few years.

The Biden administration opted to permanently extend the open enrollment window through January 15 in the 33 states that use HealthCare.gov, and most of the states that run their own health insurance exchanges have opted to extend the enrollment window to January 15 or even later.

In most states, however, you do still need to enroll or make a plan change by December 15 if you want your coverage to take effect January 1.

Individual Mandate Penalty No Longer Applies (in Most States)
Although efforts to repeal the ACA were unsuccessful, GOP lawmakers did succeed in repealing the ACA's individual mandate penalty as part of the tax bill that they passed in late 2017.

The penalty repeal took effect in January 2019, which means there is no longer a federal penalty for being uninsured in 2019 or future years.

But Massachusetts, New Jersey, DC, California, and Rhode Island have their own individual mandates, with penalties for non-compliance. (Vermont also has an individual mandate, but without a penalty for non-compliance). So if you're in one of those states and choose to go without coverage in 2022, know that you'll either have to qualify for an exemption from the penalty (details on those vary by state) or pay a penalty when you file your 2022 state tax return.

The Rest of the ACA Remains in Effect
Other than the individual mandate penalty repeal (and the repeal of a few of the ACA's taxes, including the Cadillac Tax), the ACA is still fully in effect.

This includes the premium subsidies, the cost-sharing reductions (aka, cost-sharing subsidies), guaranteed-issue coverage, Medicaid expansion (adopted in 38 states and DC), the employer mandate, protections for people with pre-existing conditions, essential health benefits, medical loss ratio rules, caps on out-of-pocket costs, etc.

Cost-sharing subsidies continue to be available for 2022, despite the fact that the federal government stopped reimbursing insurers for that cost in late 2017. Insurers in most states have incorporated the cost of providing cost-sharing subsidies into the premiums they charge. In most cases, the cost has only been added to silver plan rates, which results in larger premium subsidies for everyone who gets premium subsidies.

Millions of uninsured Americans were already eligible for free (ie, no monthly premiums at all) health coverage, due in part to these larger premiums subsidies. And millions of additional people are eligible for premium-free coverage as a result of the American Rescue Plan.

Maximum Out-of-Pocket Limit Increased to $8,700
Under ACA rules, the maximum out-of-pocket limit for essential health benefits is capped, as long as the person receives their health care from an in-network medical provider. For 2022, the maximum out-of-pocket limit for a single person is $8,700 (the limit for a family is always twice as much). Health plans can have out-of-pocket caps that are smaller than that amount, but not larger.

Catastrophic plans have deductibles that are equal to the maximum out-of-pocket limit, so all catastrophic plans in 2022 have deductibles of $8,700.

The maximum out-of-pocket limits apply to all non-grandfathered, non-grandmothered health plans, including large group plans and self-insured plans. These plans do not have to cover the ACA's essential health benefits, but to the extent that they do (and most of them do), they cannot have out-of-pocket exposure above $8,700 for 2022.

Average Premiums Increase Slightly for 2022 (Average Benchmark Premiums Decrease in Most States), But American Rescue Plan Continues to Boost Subsidies
Unlike 2017 and 2018, when individual market health insurance premiums increased significantly, average pre-subsidy premiums increased by less than 3% nationwide for 2019, were essentially flat for 2020, increased only slightly for 2021, and are increasing by about 3.5% for 2022. In other words, overall premium changes in the individual/family market have been very modest for several years in a row.

But for the fourth year in a row, overall average premiums for the benchmark plan (the second-lowest-cost silver plan in each area) are decreasing for 2022 in the 33 states that use HealthCare.gov. For 2022, the average premium decrease for these plans is 3%, on the heels of a similar 3% decrease the year before.

The overall average reduction in benchmark premiums is due to a combination of new insurers entering (or re-entering) the individual markets in many states, as well as price reductions from some of the existing insurers.

As is always the case when it comes to individual health insurance, there are significant variations from one state to another, and even from one area to another within the same state. But in general, benchmark premiums are a little lower for 2022, while overall average premiums (for existing plans; not counting new entrants to the market) have increased modestly.

Premium subsidies are based on the cost of the benchmark plan. And when benchmark premiums decline—with all other factors remaining unchanged—premium subsidies decline as well. So enrollees who receive premium subsidies may find that their subsidy amounts are smaller in 2022. Depending on how the pre-subsidy cost of their own plan changed, that could result in a higher after-subsidy premium in 2022 if they keep their existing plan.

But the American Rescue Plan's subsidy enhancements remain in effect for 2022. So for people who haven't checked their coverage options since the fall of 2020, the after-subsidy premiums for 2022 are likely to be more affordable than they were at that point (the American Rescue Plan's subsidy enhancements went into effect mid-year in 2021).

Some Changes That Were Implemented for 2018 Continue to Apply
In April 2017, HHS finalized the market stabilization rule, which implemented several changes that apply to people who buy individual market coverage, on or off-exchange. Some of these changes continue to apply for 2022:

* If your policy was canceled for non-payment of premiums within the last 12 months and you're planning to re-enroll with the same insurer (or another insurer owned by the same parent company) during open enrollment, a special enrollment period, the insurer is allowed to require you to pay your past-due premiums before effectuating your new coverage. In general, it should only be one month of past-due premiums owed, as premiums are not charged after the plan was terminated. This is still in effect for 2022, but HHS has noted that they will reconsider this policy during the rulemaking process for 2023 coverage.
* The allowable actuarial value range for each metal level of coverage in the individual and small group market was expanded as of 2018. Bronze plans can have a -4/+5 range (including expanded bronze plans on the upper end of that range), while silver, gold, and platinum plans can have a -4/+2 range. Bronze plans have an actuarial value of about 60%, silver about 70%, gold about 80%, and platinum about 90%. But they can vary according to the allowable de minimus ranges, which were widened as of 2018. Individuals and small businesses should carefully compare the various options that are available within each metal level.

Benefit and coverage changes in the individual and small group market apply for 2022 just as they have in past years, with adjustments to deductibles and out-of-pocket limits, along with provider networks and covered drug lists.

And there are new insurers offering plans in the exchanges in many states for 2021. All of this annual upheaval makes it particularly important for enrollees to actively compare available plans anytime they have an opportunity to enroll (during open enrollment or a special enrollment period triggered by a qualifying life event), and select the one that offers the best value, instead of opting for auto-renewal.

Short-Term Plans Continue to Be Available in Most States
In 2018, the Trump administration made changes to the rules that apply to short-term limited-duration health plans (STLDI). The changes make the plans more readily available as a substitute for regular ACA-compliant individual market health insurance. But buyers need to beware: The cheaper prices that apply to short-term plans are a result of less robust coverage—you get what you pay for.

Because the new federal rules serve as minimum standards and states are allowed to impose stricter rules, the rules now vary considerably from one state to another. There are 11 states where no short-term plans are available at all and numerous other states where short-term plans are available but must meet stricter rules than those imposed by the Trump administration.

In Idaho, "enhanced short-term plans" debuted for 2020 and continue to be available for 2022. These plans are much more robust than traditional short-term plans, and can be thought of as a middle-ground between short-term coverage and ACA-compliant coverage.

Large Group, Medicare, and Medicaid
Most of the healthcare reform debates in recent years have centered around the individual market, the small group market, and Medicaid expansion under the ACA (which accounts for well over 15 million people, but still just a fraction of the total Medicaid population).

For people who get their insurance from large employers, Medicare, or Medicaid (taken together, that's most of the population), the changes for 2022 are generally the same sort of changes that happen each year.

Medicaid work requirements had been gaining traction in GOP-led states in recent years. But they were all suspended or overturned by judges by the time the COVID pandemic began, and the approvals for work requirements that had been granted by the Trump administration have since been withdrawn by the Biden administration.

Open enrollment for Medicare Advantage and Medicare Part D runs from October 15 to December 7, with all changes effective January 1, 2022 (this is the same schedule that's been used for several years). And the Medicare Advantage open enrollment period runs from January 1 to March 31, giving people enrolled in Medicare Advantage an opportunity to switch to a different Advantage plan or switch to Original Medicare.

For 2022 health coverage, there are additional insurers offering health plans through the marketplaces in many states. And the American Rescue Plan's subsidy enhancements remain in effect for 2022, making coverage more affordable than it was during the open enrollment period in the fall of 2020. Open enrollment for individual/family plans has been extended through January 15, 2022 in most states.

A Word From Verywell
If you buy your own health insurance or are currently uninsured, the autumn open enrollment period is your opportunity to secure coverage for 2022. Premium subsidies are larger and available to more people than they were last fall, thanks to the American Rescue Plan. You may find that you're eligible for premium-free coverage, or for coverage that costs just a few dollars a month, depending on your financial situation.

And the open enrollment period has been extended through mid-January in most states, although you'll still want to sign up by December 15 if you want your coverage to take effect on January 1.

There are more insurers offering coverage for 2022, so you'll want to make sure you actively compare your options. Don't just let your plan auto-renew, or you might end up leaving money on the table.

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