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Critically Important Obamacare Subsidy Cliff Updates

Everyone who has individual coverage should know that the Inflation Reduction Act, which took effect in August of this year, extends health insurance premiums in the individual market to 8.5% of income through 2025. In order to benefit from this cap, however, one must buy insurance through healthcare.gov or a state-based Marketplace. The deadline for enrolling in individual coverage for February 1, 2023 is January 15, 2023 so everyone who might benefit from the cap who purchased off-exchange, should consider reevaluating coverage options on-exchange.

For those who aren’t aware of the term “subsidy cliff,” it refers to the fact that when the Obamacare subsidies took effect in 2014, if one’s income exceeded 400% of the federal poverty level, there was no premium subsidy available. An accountant shared with me a story of a young man who withdrew funds from his 401k to help in a family emergency and thereby unintentionally eliminated his Affordable Care Act (ACA) tax credit. This sad story illustrates that everyone who is eligible for a premium tax credit needs to understand how they lose eligibility.

Is this important? YES!!! Premiums are unaffordable for many, especially in high-cost states where premiums are also high and for older Americans because in most states premiums are age-rated.

In the video I refer to the couple who were featured previously with their 2023 renewal which will cost $3,010.52 monthly. Their plan is a bronze plan so it has the highest deductible and lowest premium. Their annual premiums will be $36,126.74. 400% of the federal poverty level for a couple in 2023 is an income of $73,240. Until recently, if income exceeded that level, one was expected to pay the entire premium. It is pretty obvious, however, that a couple earning $75,000 per year, just above the 400% threshold, could hardly pay half of their income for health insurance premiums.

This premium cap of 8.5% would help any couple purchasing the coverage identified above making an income of over $73,240 and up to about $425,400. At a higher income than that, there is no premium cap.

Many Americans are choosing to go without coverage due to high premiums. Please help get the word out about this information which should give more people access to more affordable coverage.

We expect people may be turning their attention from open enrollment season to the holidays so for the next two weeks, we will be airing reruns we feel are important reminders. We will be back in January with new content.

We wish everyone a beautiful holiday season and the happiest of new year’s! Thanks for watching!