Making the Case for Transitioning from Bronze to Silver

  • The American Rescue Plan will allow low-income enrollees in the ACA market to get Silver plans that offer a substantial cost-sharing reduction (CSR) for free by 2022 (up to 150% of the Federal Poverty Level).
  • Bronze plan holders may also leave cash on their desk.
  • Low-income individuals who are enrolled in Bronze plans and earn up to 150% of FPL can now change their plans to Silver at any level.
  • Bronze protection is often purchased by customers, even though Silver coverage is usually free.
  • State-based exchanges have different enrollment periods that allow for a transition from Bronze to Silver.

In the open enrollment period for ACA plans in 2022, more People enrolled. This is a 21% increase over 2021. In 33 states using as the federal platform, 89% were sponsored by the federal government. On average, they paid more than 80% of their premiums.

The American Rescue Plan, which offered a premium subsidy increase in March last year, was responsible for the increased enrollment. The increase is only valid until 2022, and the subsidy increases will expire next year unless Congress extends them. The ARP eliminated the ACA’s infamous “subsidy cliff”, which reduced subsidy eligibility to 400% of Federal Poverty Level ($51,040 per person and $104,800 for a family of four in 2022). The ARP also reduced the amount of income required to purchase a benchmark Silver plan at every earnings level (the second-cheapest Silver plan available in each space).

ARP has a free Silver plan for incomes up to 150% of FPL. A third of market participants – 4.9 millions – earn less than that threshold. ($19,320 per person, $26,130 per couple, $39750 for four-person households).

This is a great news. Not all low-income enrollees received the full value of the coverage available to them. Many chose or stayed enrolled in Bronze Plans with much higher out-of pocket costs.

Bronze plan holders may also leave cash on their desk

Cost-sharing discounts are available for Silver plans that earn up to 250% FPL. This reduces the out-of pocket costs. CSR is particularly strong for those who earn up to 150% FPL. It reduces the average deductible to just $146, and the average annual out-of pocket maximum to $1208. Bronze plans, which were previously the only free option, have an average deductible of $7,051 with OOP maximums typically between $7,000 and $8,700.

The ARP has allowed each ACA market to offer two Silver plans that are free for individuals earning up to 150% FPL. There may also be a few more with premiums in the single digits. More than 600,000 enrollees who earn less than 150% FPL – or 14% of those in this income class – have Bronze plans. Many of these enrollees may have enrolled in Bronze plans when Silver plans were not always free in 2021. They could have also let their auto-renewal passively renew themselves if they did nothing during the open enrollment period.

Some enrollees who earn less than 150% of the federal poverty level may not be eligible for premium subsidies. For example, if an employer offers them a plan that is deemed affordable by ACA standards but they choose to pay full price for a market-based plan. The majority of low-income Bronze plan enrollees are leaving money on the table – or more precisely, they expose themselves to high costs if they need to seek important medical treatment.

A brand new option for low-income individuals to switch to Silver

CMS (U.S. Facilities for Medicaid & Medicare Companies) created a solution for this situation – enrolled on a Bronze plan when a high-CSR silver plan was offered for free – and it went into effect in March. Louise Norris recently explained on this site:

The U.S. Department of Health & Human Services (HHS) will finalize a new special enrollment period (SEP) for states using in September 2021 (optional for other states). This allows year-round enrollment for ACA-compliant health insurance if a family’s income does not exceed 150% of federal poverty level (FPL), and if a person is eligible for a tax credit (subsidy), which can cover the cost of the benchmark plan.

The SEP will be available on (and the enhanced direct enrollment entity websites) from March 21, 2022.

Some, but not all of the 18 state-based insurance exchanges offer this SEP. This is because they give out another type of free health care (Medicaid or the Basic Health Program) for enrollees who earn up to 150% of the FPL. Details are available in the back of this notice.

The newly implemented SEP also allows current enrollees who earn less than 150% of the FPL to switch at any time into a silver plan. Enrolling low-income people in silver plans is a specific goal of the Division of Health and Human Services, as stated in the finalization of its rule establishing SEP.

HHS proposed that this enrollment period be open to all people regardless of their family income level. This is because the ARP, which offers a greater financial help for the tax years 2021-2022, allows many individuals with family earnings of up to 150 percent of the FPL to have access to a Silver Plan with zero dollars in monthly premiums.

If your income is below 150% of the FPL, HHS wants you to be in a silver plan.

The new enrollment period for a QHP of silver level or higher is not available to enroll a dependent or other family member. However, enrollees can stay in their current plan or switch to the silver plan.

Silver plans have a disadvantage: the money you spent on medical care this year will not count towards your new out-of pocket maximum or deductible. The deductible, out-of-pocket maximum and copays are usually lower in Silver plans than Bronze. This is not a problem until you have already spent enough to reach or almost reach your current plan’s OOP limit.

Why choose Bronze when you can get Silver for free?

Bronze plans are often chosen by low-income enrollees who have been aware of the lower out-of pocket costs that Silver plans require. However, they still choose Bronze. Some insurers’ Silver plans (e.g. with a better supplier network) are priced well above benchmark. However, their Bronze plan, which has the same supplier network, may be free or very cheap.

Bronze plans are also seeing a slight trend towards lower deductibles: 10% of them have $0 in deductibles this year. Bronze plans have a lower actuarial value – 60% as opposed to 94% in silver plans for those earning up to 150% FPL. This means that the higher out-of pocket costs must be paid by other methods, such as very high hospital copays or maximum out-of money allowed.

Even if a Bronze plan is free and the Silver plan costs $50/month, it is likely that the Silver plan will be more valuable. You’re more likely to pay the Silver premium if you’re sufficiently concerned about a plan’s provider community to refuse a free Silver plan from a particular insurer. In the example above, you would be willing to pay $600 for a possible $5,000-7,000 improvement in the plan’s maximum out-of pocket and often in the deductible.

Gold plans were selected by approximately 50,000 participants with earnings below 150% FPL. In this stage of earnings, Silver plans offer a better value than Gold plans. Gold plans have deductibles that are typically $1,600 and maximum out-of pocket amounts that are usually much higher.

Bottom line: If your income is below the threshold of 150% FPL (again: $19 140 for an individual, or $32,580 if you have four members in your household) and you are enrolled in Bronze or Gold, seriously consider switching to Silver. Switching to the new SEP is easy with low-income individuals.

The SEP differs in state-based exchanges

The SEP is available to enrollees earning up to 150% of FPL.

The 18 state-run exchanges that exist as of 2022 are not required to offer this SEP. As of early 2022 however, several state-run exchanges had already launched the new SEP (Colorado Maine Pennsylvania New Jersey California and Rhode Island).

This SEP is not needed by many state-run exchanges, which offer other packages that are available all year round. This package contains:

  • New York and Minnesota each have Basic Well being Packages which cover individuals earning up to 200% of the FPL
  • Massachusetts offers Connector Care for individuals earning up to 300% of the FPL. (Admission is available year-round, to those who are newly eligible or have not been lined under this system before).
  • DC provides Medicaid to adults earning up to 215% of poverty level

Some state-run exchanges may decide to offer this SEP in 2022 while others may choose to refuse it. Some state-run exchanges may decide that this SEP is too difficult to implement for 2022 and will postpone its availability until 2023, assuming the ARP’s subsidy increases are extended.

The state-run exchanges can choose how to implement the SEP.

Some people may decide to never provide this SEP. If you do provide it, proof of income may be needed to activate the SEP. Or, they can follow the lead of the federal government and allow the SEP to be determined by the income attested by the client.