2023 ACA Open Enrollment: FAQs, Answered

Open enrollment season for the Affordable Care Act begins on November 1st and runs through January 15th, 2023, in most U.S. states. Consumers might have questions as we face this unique open enrollment season – will inflation affect health insurance prices? What happens if I’ve priced out of an ACA plan? We sat down with Shandon Fowler, principal of HR & benefits technology consulting firm Four8 Insights, to ask a few top-of-mind questions about the looming open enrollment.

What can consumers expect from this HSA open enrollment season? Any surprises?

The stakes are high for benefit administrators as this year’s open enrollment period comes amidst two major and seemingly contradictory trends – an uncertain economy and the Great Reshuffle. In other words, people are anxious about their income and finances while also looking to find new jobs in record numbers.

As a result, companies have to figure out new ways to attract and retain talent and also keep an eye on their costs, opening up a huge opportunity for administrators to rethink how they engage talent-hungry employers. High-deductible health plans with a savings account (HSA) option are seen as a way for employers to reduce or level off their healthcare costs and drive better experiences for their employees at the same time. This year, you might see an uptick in HDHPs offered as part of comprehensive benefits programs.

Since cost is only one side of the coin and the other is talent attraction and retention, you could also see more “lifestyle benefits” offered this year. These payment solutions are designed to help better personalize employee benefits by targeting specific needs, giving employees a debit card with a defined contribution, and letting them pick what they need help with most – groceries, gas, new clothes for returning to the office, new home office supplies for shifting to remote, exercise equipment, etc. Employers may still look to salary to offset the impacts of inflation, but lifestyle accounts are a flexible option for addressing individualized needs in a different way.

Will inflation impact health insurance prices in HSA plans? If so, how bad/high will the price increases be?

When understanding what inflation might do to healthcare costs, it’s important to know that healthcare costs have risen well over the annual inflation rate and consumer price index for more than four decades. Essentially, the healthcare industry has been dealing with 4-8% inflation for years. So while this year’s health insurance premiums have averaged a rise of 10%+, which will certainly send a shock to employers and employees whose income has not kept pace with inflation, it’s not an entirely new phenomenon but really more like business as usual.

What options do healthcare consumers have if they’re priced out of an ACA plan this year?

One of the smarter features of the ACA Marketplace Advanced Premium Tax Credit (APTC) subsidy model is that it largely protects consumers from premium cost increases. Since your subsidy is dependent upon your income in relation to the Federal Poverty Level (FPL) and the second-lowest-cost Silver plan in your state or region (yes, it’s complicated), the amount you’ll pay is usually well below the total premium cost. And on average for ACA enrollees, well below their premium cost share if they were enrolled in a company-sponsored health plan.

For example, according to the Kaiser Family Foundation’s ACA subsidy calculator, if you have a family of three and household income of $75,000 per year, the national average subsidy amount is $659 and the average Silver plan total cost is $1,099, meaning you would pay $440 per month in premium costs. Meanwhile, again according to the Kaiser Family Foundation, the average family health insurance premium for employer-sponsored coverage was $497 per month, more than you would pay for ACA coverage. Plus, you have the option to “buy down” to a Bronze plan with ACA coverage, which is an option you may not have with your employer-sponsored coverage.

What is the federal government doing, if anything, to keep a lid on health care insurance plans in the ACA system?

As explained above, the subsidy formula is based on income, FPL and the cost of the second-lowest-cost silver plan, which all combine to keep costs relatively low for all who qualify for ACA coverage. It’s not exactly keeping a lid on costs, but employers are having the same challenges at roughly the same scale, so nobody’s really keeping a lid on costs.

Certain other actions may help, like the recent extension of ACA subsidy eligibility to higher-income individuals and families, as well as prescription drug negotiation power for Medicare that could trickle down to other programs in the near future. But for now, the pain is being felt everywhere and the ACA seems to be the only one that’s been able to keep the actual costs paid by individuals relatively stable, if not low.

To learn more about 2023 open enrollment trends and predictions, watch the replay of our recent webinar on the topic.