Federal Marketplace Improvements Will Help Enrollees Get Proper Subsidies

A recent change in how the federal marketplace calculates tax subsidies to help people afford health coverage will help ensure that people get the right subsidies next year when they renew their coverage, making it less likely that they’ll have to repay money when they file their 2016 taxes.  It’s one of a number of ways the Administration is improving the federal marketplace to serve people better.  

People in 34 states who enroll in coverage through the federal marketplace are automatically re-enrolled in the same plan for the next year if they don’t return to the marketplace during the fall open enrollment season to provide updated information.  I have described the problems with the auto-renewal process for 2015, in which people who didn’t return to the marketplace received not only the same plan as in 2014 but also the same subsidies. 

That didn’t account for factors that affect the level of people’s subsidies and can change from year to year, such as household size or income and premium costs for health coverage.  As a result, many people who auto-renewed likely didn’t get subsidies that reflect what they were eligible for. 

The Centers for Medicare and Medicaid Services, which administers the federal marketplace, announced last week that enrollees who don’t return to the marketplace this fall will still be automatically re-enrolled, but their subsidies will be recalculated to reflect more recent information from the enrollees’ records or the IRS on income and other factors that affect the subsidies.  This is a significant improvement compared to last year’s process, and will make it a lot easier for consumers to keep their coverage.  It will also reduce the likelihood of the marketplace making incorrect subsidy payments. 

Of course, the best course for enrollees is still to return to the marketplace during open enrollment and provide updated information.  New and better options may be available in the marketplace, and shopping every year is the best way to get the right subsidy amount and enroll in the health plan that best fits one’s needs.  But with these new improvements, the subsidies for people who don’t return to the marketplace should be more accurate.