Did you know that some Americans enrolled in private health insurance through the marketplace/exchange are paying $0/month for their coverage? If you’re currently uninsured or relying on something like a short-term plan or health care sharing ministry plan, you might find out that you could enroll in a marketplace plan with much lower premiums than you expected.
Zero-premium plans are more widely available than they used to be, thanks to the American Rescue Plan (ARP). And we don’t know whether the ARP’s subsidy enhancements will be extended past the end of 2022.
How are zero-premium health plans possible?
The availability of zero-premium plans stems from several factors:
- For 2021 and 2022, due to the ARP, Americans who are eligible for premium subsidies and who earn up to 150% of the federal poverty level can select from among two premium-free Silver plans. (Bronze plans priced below the benchmark Silver plan will also be premium-free, but usually are not a good choice for this population.) During the open enrollment period for 2022 coverage, there were 4.6 million marketplace enrollees with income that didn’t exceed 150% of the poverty level. Although virtually all of them were eligible for zero-premium plans, some opted to pay more for higher-cost Silver or Gold plans. (Silver plans other than the two lowest-cost options will have a monthly premium for this population, as will Gold plans in most areas.)
- Because the federal government no longer reimburses insurers for the cost of cost-sharing reductions (CSR), insurers in most states add the cost of CSR to Silver plan premiums. This “silver loading” results in disproportionately large Silver premiums, and premium subsidy amounts are based on the cost of the benchmark Silver plan. The result is that subsidies are generally larger than they were prior to 2018, and more enrollees are eligible for zero-premium Bronze and even Gold plans.
- So even without the ARP, some enrollees are eligible for premium subsidies that are large enough to fully cover the cost of at least one available plan in the marketplace. According to a KFF analysis in the fall of 2020 (pre-ARP), there were 4.5 million uninsured Americans who were eligible for zero-premium Bronze plans in the marketplace.
- The availability of zero-premium plans is particularly common for marketplace enrollees who are older, or who live in areas where premiums are very high. Both of these factors result in larger subsidy amounts, which tend to cover a larger chunk of the cost of the lowest-priced plans available to them.
Who’s actually getting zero-dollar plans?
People who qualify for zero-premium plans in the marketplace include those with fairly low incomes, but the availability of zero-premium plans is lot more widespread than that. There are also zero-premium plans available due to:
- Age – Older people are more likely to have zero-premium plans available to them.
- Location – Being in an area where full-price premiums are higher than average (just like being older, this results in larger subsidies, which are more likely to fully cover the cost of at least one available plan), and
- Plans available – the specific mix of plans that insurers offer in the area. In some areas, there are Gold plans priced lower than the benchmark plan, which means that some enrollees qualify for free Gold plans. And if there’s a large price spread between the lowest-cost Silver plan and the benchmark Silver plan, some people can qualify for a free Silver plan even with an income well above 150% of the poverty level. Free Bronze plans are widely available, depending on how much the pricing differs between the Bronze plans and the benchmark plan.
How many Americans are getting zero-premium health plans?
We don’t have specific data in terms of exactly how many people have $0 premiums in the marketplace/exchange. But we do have some useful information:
- During the open enrollment period for 2022 coverage, 14.5 million people enrolled in plans through the exchanges nationwide. And more than 4 million of those enrollees are paying less than $10/month for their coverage.
- HealthSherpa (an enhanced direct enrollment platform) enrolled more than 3.3 million of those 14.5 million people (they signed up for on-exchange plans directly through HealthSherpa’s platform). And 30% of their enrollees — a little over a million people — selected zero-premium plans.
Do you have to be poor to get zero-premium coverage?
No, not at all! It’s true that premium subsidies are income based, and that people with household income up to 150% of the poverty level are automatically eligible for zero-premium plans at both the Bronze and Silver level this year.
But the availability of zero-premium plans also depends a lot on where you live and how old you are, and can extend to folks with income much higher than 150% of the poverty level.
As an example, consider a single 60-year-old in Montgomery, Alabama, who earns $55,000 this year. She would be eligible for a subsidy that’s large enough to completely cover the cost of the two Bronze plans that are available in her area. She could choose to pay more for a Silver or Gold plan, but she also has the option to enroll in a zero-premium plan.
$55,000 for a single person in Montgomery would certainly not be considered poor. In fact, it amounts to 427% of the poverty level, which would have been too high for any subsidy eligibility at all before the American Rescue Plan was implemented (ie, she would have been hit by the “subsidy cliff”).
But if this same 60-year-old lived in Detroit, Michigan, she would have to earn no more than about $35,000 in order to qualify for a zero-premium plan. This is because the benchmark plan (on which subsidy amounts are based) is much more expensive in Montgomery ($932/month, versus just $464/month in Detroit), and the difference in price between the lowest-cost plan and the benchmark plan is much smaller in Detroit than it is in Montgomery. So the subsidy amount doesn’t cover as much of the cost of the lower-priced plans in Detroit.
It’s also worth noting how much this person’s age affects the availability of zero-premium plans. If the enrollee in Montgomery is 30 instead of 60, but still earning $55,000, she’ll have to pay $213/month for the cheapest plan (as opposed to $0/month if she’s 60). In both cases — at age 30 or age 60 — the benchmark plan will be the same price after the subsidy is applied, since they both have the same income. But the subsidy is much larger for the 60-year-old, which means it stretches a lot further to fully cover the cost of available Bronze plans.
Will zero-dollar premiums continue indefinitely?
There will likely continue to be zero-premium plans available indefinitely, at least for some enrollees in some areas.
If the American Rescue Plan’s subsidy enhancements are extended, zero-premium and very low-cost plans will continue to be widely available for many enrollees. But even if the subsidy enhancements expire at the end of 2022, some people will still qualify for zero-premium plans in 2023 and beyond, as was the case prior to the ARP.
Can I only get a zero-premium plan with a Silver plan?
Depending on where you live, how old you are, and how much you earn, you may find that there are zero-premium plans available to you in the Bronze, Silver, and/or Gold categories.
Of the 4 million people who are paying less than $10/month for marketplace coverage this year, 3.2 million are in states that use HealthCare.gov (the federally-run exchange, used in 33 states). Most of these 3.2 million people have Bronze plans (1.4 million) or Silver plans (1.8 million), but more than 73,000 have Gold plans. Some of these enrollees are paying a few dollars a month for their coverage, but others have zero-premium plans.
Zero-premium plans by metal level
Here’s an overview of how very low-cost plans can exist at each metal level:
- Very low-cost Bronze plans are available when a person’s subsidy covers all or nearly all of the cost of a Bronze plan, but would perhaps still leave them with a sizeable premium if they selected a more robust plan.
- Very low-cost Silver plans are available to people earning up to 150% of the poverty level, and to people with higher incomes who live in an area where there’s a considerable price difference between the lowest-cost and second-lowest-cost Silver plans.
- Very low-cost Gold plans are available in areas where silver loading has resulted in Silver plans being priced higher than some Gold plans.
If I can buy a plan with zero premiums, does that mean I’ll have high OOP costs?
Not necessarily. As noted above, there are zero-premium plans available at three metal levels, depending on a person’s age, income, and location.
If your household income doesn’t exceed 150% of the poverty level and you’re enrolling in a premium-free Silver plan, it will include strong cost-sharing reductions that will make the coverage very robust, covering 94% of medical costs for a standard population. (Here’s an explanation of why Silver plans make the most sense for this population.)
Out of the 3.2 million HealthCare.gov enrollees who are paying less than $10/month for their coverage, Silver plans were the most popular choice, and strong cost-sharing reductions are the reason for that.
But also keep in mind that due to silver loading, there are some areas where Gold plans are priced lower than Silver plans. If you have access to a zero-premium Gold plan, it might be an excellent choice, depending on whether cost-sharing reductions are available to you, and if so, how much you’d have to pay to enroll in a Silver plan.
Zero-premium Bronze plans have long been available, especially since silver loading became the norm starting in 2018. Bronze plans do tend to have high out-of-pocket costs, and enrollees should be aware of that before selecting a plan.
Can I expect solid coverage from a zero-dollar policy (compared to others where I pay more)?
But in terms of things like the deductible, out-of-pocket limit, drug formulary, network size, etc., the specific benefits you can get with a zero-premium plan will depend on a few different factors. They include your income, whether Gold plans are priced below the benchmark plan in your area, and the difference in price between the lowest-cost Silver plan and the benchmark plan.
In general, here are the things to keep in mind:
- If you’re eligible for zero-premium Silver plans and you’re also eligible for cost-sharing reductions, a Silver plan will provide robust coverage, particularly if your income doesn’t exceed 200% of the poverty level. (CSR benefits are available with income up to 250% of the poverty level, but are much stronger at or below 200% of the poverty level.)
- If the only zero-premium plans available to you are Bronze plans, you’ll want to carefully consider options at the other metal levels — especially Silver, if you’re eligible for CSR benefits. (You’ll forfeit that benefit if you pick a non-Silver plan.)
- If you’re eligible for zero-premium Gold plans, that might be an excellent choice. But if you’re also eligible for strong CSR benefits, it’s worth considering Silver plans as well, even if you’d have to pay a monthly premium for them.
- If you want to be able to see certain medical providers or have coverage for specific medications, you’ll need to carefully consider the provider networks and drug formularies of the available plans. You might be eligible for one or more zero-premium plans, but decide that it’s worth paying a monthly premium in order to have coverage that better fits your needs.
Should I always choose a zero-dollar plan if it’s available?
No. A zero-premium plan might be the perfect fit for your needs, especially if you’d otherwise go without coverage. But if you’re able to pay a monthly premium, you’ll want to look beyond the $0 premium plans and see what else is available to you.
It’s possible that a plan with a monthly premium could end up saving you money in the long run, either by reducing your out-of-pocket costs, providing access to more doctors and medical facilities, or offering better coverage for certain medications that you need.
When can I enroll in a zero-premium plan?
Open enrollment for 2023 coverage will begin on November 1, 2022. We don’t yet know whether the ARP subsidy enhancements will be extended past the end of 2022, but even if they aren’t, some people will continue to qualify for zero-premium plans in the marketplace in 2023.
People who experience certain qualifying life events can enroll in coverage through the marketplace before open enrollment begins, with coverage that takes effect this year. If you have a qualifying event, enrolling as soon as possible will allow you to take advantage of the ARP’s subsidy enhancements at least until the end of this year. If a zero-premium plan is available to you, it might be a great fit for your needs. But you’ll also want to consider the other options and pick the one that makes the most sense overall.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.