U.S. President Biden is expected to sign an executive order today, January 28, 2021, that effectively reopens the nation’s health insurance marketplace. The move will allow Americans to gain coverage outside of the federal annual open enrollment period that ended on December 15th or special enrollment periods (SEPs) during the COVID-19 pandemic.
Americans will now have an additional window of opportunity to purchase individual coverage between February 15th and May 15th of this year.
See how individual coverage compares with group plans
What impact will the order have?
During the COVID-19 pandemic, more than 400,000 people have died from the virus in the U.S. alone. This has displayed a clear need for greater access to treatment, which can be found through health insurance coverage.
The Bureau of Labor Statistics’ latest report found the unemployment rate (6.7%) and number of unemployed persons (10.7 million) are almost twice that of pre-pandemic levels. Many of those currently unemployed are eligible for Marketplace coverage, but may not be enrolled if they didn’t sign up during their 60-day SEP after losing their job.
The Kaiser Family Foundation reported that, of the 14.9 million people who are currently uninsured and Marketplace-eligible, 4 million (27%) would be eligible for a subsidy that would make a Bronze plan completely free, while a further 4.9 million (33%) would be eligible for subsidies that would reduce the cost of a Bronze plan. Compared to the general population, the people eligible for free or subsidized coverage are more likely to be young adults between 19 - 34, currently working part-time or unemployed, and Hispanic.
The 6 million uninsured people who aren’t eligible for subsidies either have premiums that are too low—even though their income falls within the required 100 - 400% of the federal poverty line (FPL)—or their income exceeds 400% of the FPL.
Why wait until February 15 to reopen the marketplace?
According to CBS News, “The White House had no comment on Mr. Biden's expected order, but the two people familiar with the plan said the new enrollment period would not go into effect immediately. Instead, the White House wants to provide time for the Department of Health and Human Services to mount a marketing campaign, and for insurers to get ready for an influx of new customers.”
CBS also reports that “Opening the insurance markets is also likely to result in higher Medicaid enrollment, since people who qualify for that program are automatically referred.”
Is individual coverage cheaper than group coverage?
According to the Kaiser Family Foundation, individual health insurance costs have been cheaper than group health insurance rates, and are projected to continue on that path. In addition, employer-funded contributions to group health insurance have decreased throughout the nation in the last decade, putting a greater share of the financial burden on employees.
The new push to open the individual marketplace should help more Americans gain access to coverage that they would otherwise lose out on.
CBS News reports that for 2021, open enrollment participation grew by about 7%, showing increased demand in the individual marketplace.
Employers who offer a health reimbursement arrangement (HRA) can leverage lower individual premium costs and reimburse employees, tax-free, without the hassle of group health insurance. Learn More
Who is eligible to participate in the marketplace reopening?
Because the executive order enacts a one-time SEP, anyone who qualifies to purchase individual health insurance in the United States is eligible to participate.
The Kaiser Family Foundation reports that “millions of people remain uninsured despite being eligible for free or reduced cost coverage through the ACA Marketplaces or Medicaid Expansion.” The previously-mentioned marketing efforts will go into place in order to educate new customers about their eligibility for affordable coverage.
Individual health insurance
Group health insurance
Source: How much does individual health insurance cost?
CBS News also reports that “The Obama-era health care law covers more than 23 million people through a mix of subsidized private insurance sold in all states, and expanded Medicaid adopted by 38 states, with Southern states being the major exception. Coverage is available to people who don't have job-based health insurance, with the Medicaid expansion geared to those with low incomes.”
“Experts agree that [the] number of uninsured people has risen because of layoffs, perhaps by 5 million to 10 million, but authoritative estimates await government studies due later this year.”
What does the executive order mean for health reimbursement arrangements (HRAs)?
Employers who currently offer an HRA may see an increase in employees using their HRAs to get reimbursed for newly-acquired health insurance premiums and should notify any uninsured employees of their ability to get insurance through the Marketplace.
Luckily, however, because employers are able to set predetermined allowances, their maximum spending limits cannot be exceeded, placing no additional financial strain than what they previously budgeted for.
In addition, increased participation in your organization’s health benefit can help improve your employee retention rates, helping save money in the long run.