Wednesday, May 19, 2021

In New Jersey, silver plans are free or all but free up to 200% FPL

When New Jersey launched supplemental state premium subsidies along with the launch of its state-based ACA marketplace, GetCoveredNJ, in the fall of 2020, I was somewhat taken aback to note that the state subsidies were heavily weighted toward enrollees at higher incomes. 

The supplemental NJ subsidies ranged from $20/month at an income of 138% FPL ($17,609 for an individual) to $95/month, beginning at an income somewhere between 250% and 300% FPL (around $38,000 for 40 year-old individual, according to my price checks on GetCoveredNJ).

As I noted at the time,

The smaller subsidies at low incomes leave substantial premiums in place at incomes below 200% FPL for silver plans, which carry a strong CSR [Cost Sharing Reduction] benefit up to that income threshold.

For a 40 year-old with an income of $25,000 (just under 200% FPL), the lowest cost silver plan in most of the state will cost $86/month. The deductible is $800; the out-of-pocket maximum is $2,600. The lowest cost bronze plan is $17/month, with a deductible of $6,000 and an OOP max of $7,000. Last year, cheapest silver would have cost about $125/month. 

Well, the American Rescue Plan Act (ARPA), signed into law in March, with an extra boost from New Jersey, has solved that problem, at least through 2022 (and hopefully beyond, if Democrats make the new subsidy levels permanent as they intend).  New Jersey's income-weighted subsidies mesh quite well with the subsidy boosts provided by ARPA, which reduced premiums for a benchmark (second cheapest) silver plan with strong CSR to $0 at incomes up to 150% FPL and to 2% of income at 200% FPL.

The New Jersey supplemental subsidies all but wipe out premiums for a silver plan all the way to 200% FPL.  Here's what's available to a 40 year-old with an income of $25,500:

ARPA makes benchmark silver coverage free up to 150% FPL. As I've noted elsewhere, the cheapest silver plan in the average rating area pushes the "free" threshold for high-CSR silver up a bit higher -- perhaps to about 160% FPL on average for a 40 year-old.  

The Jersey supplemental subsidies virtually wipe out the residual premium up to the 200% FPL threshold. In fact they may have been boosted specifically  to do so. Last October, I reported that the state subsidy at 200% FPL was $30/month. That was based on the GetCoveredNJ preview tool, and I could have made a mistake. But at present the state subsidy goes as high as $40/month at 200% FPL. And the preview tool accompanies the estimate for a user who estimates her income at around 200% FPL with this notice:

Additional monthly premium savings

state subsidy

Estimated New Jersey Health Plan Savings of up to  $40 /month

Based on your income, you may qualify for new and expanded financial help through state subsidies. The State of New Jersey recently increased the state subsidy amount and made financial help available for more income levels to lower your monthly premium payment

That boost appears to have been in response to ARPA. Shortly after ARPA passage, a GetCoveredNJ notice stated, "The State of New Jersey is also providing more financial help to lower health insurance costs for residents enrolling at Get Covered New Jersey." The increased federal subsidies may negate NJ subsidies for most enrollments up to 150% FPL, and reduce them at incomes above that threshold; perhaps the savings were plowed into the increase. I have queried NJ's Dept. of Banking and Insurance on this question and will update if/when I get any information.

The availability of all-but-free high-CSR silver to the 200% FPL threshold is something of a milestone.  The out-of-pocket costs attached to these plans can be burdensome to low-income people -- and the plans, which pay commercial rates to providers, cost the federal government more than necessary. The promise of "affordable" care denoted in the ACA's name is reasonably fulfilled up to the threshold of what the Census Bureau deems "near-poor." 

What's needed in New Jersey now at incomes above 200% FPL: affordable gold plans.

1 comment:

  1. Thanks for the progress report.

    Now for the real challenge -- living on $25,000 a year in most parts of New Jersey. I have only visited Princeton and Cape May, but I could not live there long enough on $25K to even benefit from health insurance.

    This also shows the political weakness of the ACA --the law gives solid and deserved aid to the poor, but until very recently had next to nothing for the middle classes above $40K in annual income. This means testing flaw opened the door for politicians like Trump to trash the ACA.