(by Andres Rojas)
After an unusually long development period, the Department of Health and the Department of the Treasury published the final version of their 2022 Notice of Benefit and Payment Parameters (NBPP) this past September.
The document, which updates the rules regulating the Affordable Care Act (ACA) and the marketplaces, brings some much-needed changes that will apply to everybody enrolling on a health plan in the upcoming open enrollment 2021. So let’s see what ACA will look like in 2022.
Higher Health Insurer Fees / Higher Premiums
Obamacare imposes an annual insurance provider fee (Provision 9010) on health insurance companies. This health insurer fee, which helps fund the state and federal marketplaces, is a fixed amount that insurers must pay based on their relative share of the marketplace.
The NBPP for 2022 will increase the costs of using the federal and state marketplaces for insurance companies from 2.25% and 1.75%, in 2021, to 2.75% and 2.25%, in 2022, respectively. Although this rule only applies to carriers, plan sponsors can expect to see these costs passed along to them in the form of higher premiums.
Lower Affordability Threshold for Employers
In an internal bulletin, the IRS reduced the affordability threshold for Applicable Large Employers (ALEs) from 9.83%, in 2021, to 9.61%, in 2022.
The affordability threshold, also known as the pay-or-play rules, requires that ALEs employing at least 50 full-time-equivalent employees provide at least one affordable health plan and offer minimum value to their members. ALEs who don’t fulfill this obligation can face steep penalties under ACA’s shared responsibility provisions.
Since the threshold went down, employers could end up providing an unaffordable plan in 2022. This is considered an Employer Shared Responsibility Payment (ESRP) violation and could lead to the company receiving an IRS letter informing them of the opening of a play or pay penalty assessment against them.
To protect themselves from penalties, ALEs must recalculate their cost-sharing amounts before they renew their coverage for 2022.
Out-of-Pocket Costs Capped at $8,700
Out-of-pocket costs have grown steadily over the years. In 2021 alone, out-of-pocket costs increased by a whopping 10%, and the trend is expected to continue until 2026.
While the 2022 NBPP hasn’t stopped the growth of out-of-pocket expenses, it slowed them down by setting the limit at $8,700 for a single person and $17,400 for a family.
Statistics show that, on average, employers cover 83% of the costs of health insurance for single coverage. So, even this small adjustment is expected to increase the burden of providing health insurance for plan sponsors in 2022.
What Plans Are Affected by These Changes?
All qualified health plans sold through the Health Insurance Marketplace, or its state equivalents, must comply with these rules. Moreover, companies sponsoring group health plans or other health insurance arrangements that meet ACA’s definition of “minimum essential coverage” must also comply with these changes.
The 2022 ACA changes will affect both marketplace and non-marketplace plans such as:
- Group health insurance plans
- Health Reimbursement Arrangements (HRAs)
- Health Savings Accounts (HSAs)
- Health Flexible Spending Arrangements (FSAs)
Americans may sign up for any of these plans starting Monday, November 1, 2021.
What Do These Changes Mean for People Covered by ACA?
The ACA 2022 rule changes will empower consumers to make better choices while also cutting back on costs as much as possible.
Although the higher insurer fees will bring a small rise in premiums, these funds will go towards training more ACA Navigators who have the knowledge that consumers need to pick the right plan for themselves and their families.
Meanwhile, the $8,700 cap put on out-of-pocket costs ($400 lower than expected) will bring a small increase in healthcare access for many covered people.
We still have to wait for 2022 to see how these changes look firsthand. For most Americans, these changes will take effect starting January 1 – provided they enrolled by December 15, 2021 – or on February 1 – if they enrolled after December 15.
So, if you are unsure about how the new ACA changes will affect your health insurance plan, talk with a trusted broker today.