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Worried about losing members if the enhanced premium tax credits (PTCs) expire at the end of 2022?

Health plans and states can use business rules to streamline changes to shopping interfaces and member communication. That way, carriers are more likely to keep the members they can.

Millions Will Lose Coverage – A Review of ARPA’s Affordability Improvements

An estimated 3 million individuals enrolled through the Affordable Care Act (ACA) Marketplace will lose coverage if the American Rescue Plan Act (ARPA) subsidy enhancements expire.

Before panic sets in, let’s first go over what made the ARPA so impactful.

Effective since April 2021, the ARPA responded to the increased need for affordable coverage. COVID-19 and renewed support for the ACA under the Biden Administration led to affordability changes. Increased tax credits resulted in a record 14.5 million individuals enrolling in Marketplace coverage during open enrollment. 2022 has so far seen a 21% increase in enrollment rates compared to the previous year.

The ARPA improves affordability and extends access to ACA plans by:

  • Lowering the premium contribution limit for households between 100-400% federal poverty level (FPL).
  • Offering zero-premium coverage for households from 100-150% FPL.
  • Eliminating the subsidy cliff by lowering the premium contribution limit to 8.5% and extending tax credits to households above 400% FPL.

With the ARPA enhanced subsidy expiration looming, enrollment gains are in jeopardy.

Switching From $0 to Low-Cost Plans Will Lead to Millions Losing Coverage – Focus on Establishing a Frictionless Enrollment Journey

A report from Urban Institute expects individuals between 138 and 400% FPL will experience the sharpest increase in uninsured rates. Certain individuals in this group were eligible for $0 plans under the ARPA, a selling point for many.

But the transition from $0 to low-premium plans can result in coverage gaps. Those losing access to $0 plans face barriers to coverage independent of affordability.

Members that transition to plans that cost as low as $1 per month will need to establish payment channels and respond to outreach. Both requirements could result in significant coverage losses.

Frequent changes to affordability requirements undermine outreach efforts in populations with low effectuation rates. Those who gained access to $0 plans — even if they were already enrolled on the Marketplace pre-ARPA — are now at the greatest risk for coverage loss.

Easy Enrollment Programs Show Success Independent of Affordability Improvements


Some states target those eligible for low to no-cost plans with easy enrollment programs. Based on tax-filing information, states can determine those eligible for subsidized coverage and enroll them. California enrolls members who are no longer eligible for Medicaid into the lowest-cost silver plan available.

Consumers confirm their enrollment by making the first payment. They can also choose to opt out of health coverage by not making a payment or cancelling the plan.

There remains the barrier of establishing a payment channel, but states have seen increased enrollment rates through this method.

Maryland launched their easy enrollment program in 2020 and saw positive results in groups that make up the majority of the state’s uninsured. About 7.5% of those eligible for Marketplace or Medicaid coverage confirmed their enrollment. Those who enrolled were comprised of demographics that are often considered “hard-to-reach.” 40% of those who enrolled in Marketplace coverage were between the ages of 18 to 34.

What to Do If Subsidies – and Risk Pools – Suddenly Change: Lessons from CSRs Funding Pull in 2017

Health plans, brokers, and states struggle with the uncertainty surrounding the ARPA.

Expanded subsidies resulted in younger and healthier individuals enrolling, improving risk pools. With individuals between the ages of 18 and 34 being at the greatest risk of lapsing now, health plans are apprehensive of filing low rates.

Health plans and government agencies faced a similar struggle in 2017 when the federal government cut off funding for Cost Sharing Reductions (CSRs).

The ACA’s CSRs lowered the cost of silver plans through funds provided by the federal government. Funding came to an immediate stop in October 2017, and health plans did not receive reimbursements for the final quarter of that year.

Without the distinct federal funding channel for CSRs, insurers were reimbursed for providing cost-sharing assistance through higher silver plan premiums. As a result, health plans and Departments of Insurance (DOIs) needed to make late changes to rates.

Much like in the event of the ARPA subsidy expiration, health plans that anticipated the sudden changes in rates avoided the last-minute scramble. Producing two sets of rates for silver plans allowed some health plans to turn on a dime, modify their rate displays, and inform members about price hikes. Two sets of rate notices were produced, and health plans ensured that their integration with exchanges allowed for a fast turnaround time.

Health plans and government agencies must be ready to flip on a dime again if subsidies change.

Investing in Integrated Plan Catalog Changes and Shopping Tools


Changes to affordability status could lead to large coverage losses. States and health plans must take a united front to provide a frictionless user experience.

Automated business rules that account for policy changes may prevent affordability confusion. Decision support tools, like subsidy calculators, must accommodate overnight subsidy changes.

To adapt to changing demographics, health plans may need to adjust their pricing. An integrated approach to plan management would allow for rate changes in near-real-time.

Scaling Outreach and Noticing Efforts Approaching Open Enrollment


Scale communications before Open Enrollment to address member confusion.

Some health plans will issue rates assuming the ARPA subsidies will end before 2023. Others plan to prepare two sets of notices, so they are ready regardless of the future of the ARPA. In the case of Missouri, a single notice will explain the potential variation in rates.

Regardless of how health plans communicate subsidy changes, they need custom and timely notice generation. Templates with personalization fields are the most efficient way to manage changing requirements.

Health plans and states that lack integration between member information and noticing may struggle. Noticing must strike the right mix of automation and personalization. Utilizing analytics on member behavior can inform messaging and drive enrollee action.

Download Softheon’s ACA Predictive Analytics Report to learn about the most influential factors for identifying members at-risk for coverage lapse and suggested retention strategies.