Will my ACA premium change every year?
Can I expect my monthly premium to increase or decrease after I’ve enrolled in an ACA plan?
After enrolling in an ACA health insurance plan, it’s natural to wonder if your monthly premium will stay the same or change throughout the year. While your premium is typically set for the duration of your coverage period (usually a year), there are certain factors that could cause your premium to increase or decrease. Here’s what you need to know about the potential changes in your ACA premium and what factors might affect it:
1. Premiums Are Locked in for the Year
Once you enroll in an ACA plan during the Open Enrollment Period, your premium is generally locked in for the entire plan year (typically from January 1 to December 31). This means that under normal circumstances, you can expect your premium to stay the same month-to-month throughout the year.
2. Factors That Could Increase or Decrease Your Premium Mid-Year
While your premium is usually stable for the year, there are some circumstances that could cause your premium to change during the year. These changes are primarily related to your household income, household size, or eligibility for subsidies. Here are the most common factors:
A. Changes in Income:
If your income increases or decreases during the year, it can affect your eligibility for premium tax credits. Premium tax credits are based on your income as a percentage of the federal poverty level (FPL), so changes in income could result in:
Higher premiums if your income increases and you qualify for less financial assistance.
Lower premiums if your income decreases and you qualify for more financial assistance.
It’s important to report income changes to the ACA Marketplace as soon as possible to avoid owing money back or missing out on additional tax credits when you file your taxes.
B. Changes in Household Size:
If your household size changes during the year (e.g., you get married, divorced, have a child, or adopt a child), it can also impact the amount of premium tax credits you’re eligible for. For example:
If your household size increases (e.g., having a baby), your premium tax credits may increase, resulting in lower premiums.
If your household size decreases (e.g., a dependent moves out), your premium tax credits may decrease, causing your premiums to increase.
C. Changes in Employment:
If you gain access to employer-sponsored health insurance that is considered affordable and meets minimum value standards, you may lose eligibility for premium tax credits through the Marketplace. This could result in a premium increase since you would no longer receive the subsidies that helped reduce your monthly costs.
If you lose your employer-sponsored coverage and become eligible for an ACA plan mid-year, you may qualify for additional premium tax credits, which could lower your premium.
D. Special Enrollment Period (SEP):
If you qualify for a Special Enrollment Period (SEP) due to a major life event (such as losing health coverage, moving, or getting married), your premium could change based on your new plan selection. For example, if you switch from a Bronze plan to a Silver plan during an SEP, your premium could increase or decrease depending on the cost of the new plan.
3. Annual Changes in Premiums
While your monthly premium typically remains the same throughout the plan year, premiums may increase or decrease at the start of each new Open Enrollment Period. This is due to several factors:
Annual adjustments by insurance companies: Insurers may adjust their premiums based on healthcare costs, claims experience, and changes in the healthcare market. These changes are usually applied at the start of the new year.
Changes in government subsidies: Premium tax credits and other forms of financial assistance may also be adjusted from year to year based on federal policy and updates to the federal poverty level (FPL).
4. Reconciling Premium Tax Credits at Tax Time
If you receive advance premium tax credits to lower your monthly premiums, you will need to reconcile the amount you received when you file your taxes. This means that if your income changes during the year and you didn’t report it to the Marketplace, you might owe money back or receive a refund depending on whether you received the correct amount of tax credits.
If your income increased and you received too much in premium tax credits, you may have to pay back a portion of the credits when you file your taxes.
If your income decreased and you received too little in premium tax credits, you may receive additional tax credits when you file.
5. How to Keep Your Premiums Stable
Report Changes Promptly: To avoid unexpected changes to your premium, it’s important to report any changes to your income, household size, or employment status to the ACA Marketplace as soon as they happen.
Review Plan Options Annually: Each year during the Open Enrollment Period, review the available plan options and compare premiums. You may find a plan that better suits your needs and offers more affordable coverage.
Key Takeaways:
Your monthly premium is generally locked in for the year once you enroll in an ACA plan during Open Enrollment.
Mid-year changes to your income, household size, or employment status can affect your premium by altering your eligibility for premium tax credits.
Premiums may also change at the start of a new Open Enrollment Period based on adjustments by insurers and changes in subsidies.
To avoid surprises, promptly report any life changes to the Marketplace to ensure you receive the correct amount of financial assistance.
For personalized help managing your premiums or understanding how life changes may impact your health insurance costs, schedule an appointment with a Tsunami Advisor here: Schedule an Appointment.
