The ACA created two federal health insurance subsidies – premium tax credits and cost-sharing reductions – to help eligible individuals and families purchase health insurance through an Exchange. The premium tax credit assists eligible individuals with the cost of the health insurance plan, and the cost-sharing reductions assist eligible individuals with lower out-of-pocket costs (for example, lower deductibles and copays).

The ACA requires insurers that offer Exchange health plans to reduce cost sharing for eligible individuals, and requires the federal government to reimburse insurers for the cost of that reduction on a monthly basis.

On Oct. 12, 2017, the White House announced that it will no longer reimburse insurers for cost-sharing reductions made available to low-income individuals through the Exchanges under the Affordable Care Act (ACA), effective immediately. Because Congress did not pass an appropriation for this expense, the Trump administration has taken the position that it cannot lawfully make the cost-sharing reduction payments.

While the immediate impact of this announcement is unclear, it could have a significant impact on individuals who enroll through the Exchange during the upcoming open enrollment period, which begins on Nov. 1. Insurers that offer plans through the Exchange likely will not have enough time to make significant changes before open enrollment begins. This may cause a lot of confusion and uncertainty in the Exchanges, both for insurers and for consumers enrolling in Exchange coverage for 2018.

Contact your NEEBCo representative with any questions you may have.

White House Announces ACA Subsidies Will End