Hawaii residents who need health insurance going into the new year will be able to take advantage of extended federal subsidies that can reduce their premiums for Affordable Care Act plans to less than $10 a month thanks to a provision in the Inflation Reduction Act passed by Congress in August.
The hefty subsidies, created during the COVID-19 pandemic when millions of Americans were losing their jobs, were set to expire at the end of this year resulting in big spikes in monthly health care costs for middle- and low-income households. They’ve been extended through 2025.
The enrollment period ends Dec. 15 for coverage that begins Jan. 1 and Jan. 15 for coverage that begins Feb. 1. However, the federal government also has extended the year-round enrollment period through 2023 for low-income applicants, which includes those with annual income up to 150% of the federal poverty level — $20,385 for a single person and $34,545 for a family of three.
The health insurance plans, known as Obamacare, provide an important coverage option for individuals and their families who don’t receive insurance through an employer and aren’t eligible for Medicare or Medicaid. Prior to the creation of the marketplace plans, this segment often faced exorbitant premiums or were unable to qualify for a plan. In Hawaii the plans are particularly useful for independent contractors and part-time employees who don’t work enough hours to receive mandated health insurance through their employer.
Some 22,327 Hawaii residents were signed up for a plan in 2022, according to the Kaiser Family Foundation, a figure that has been steadily climbing since the launch of the marketplace plans in 2014.
The Biden administration has estimated that 80% of applicants should be able to find a plan that costs $10 or less a month with the subsidies, though plans with higher monthly premiums have better limits on out-of-pocket costs. Applicants earning under 400% of the federal poverty level — $53,360 for a single person and $111,00 for a family of four — can take advantage of the credits, though people earning more than this might also qualify for a subsidy depending on the cost of the plans.
For low- and middle- income Hawaii residents the subsidies, which come in the form of tax credits, can reduce monthly costs, known as premiums, by several hundred dollars a month, according to a review of available plans on healthcare.gov. Kaiser and the Hawaii Medical Service Association provide an array of options in Hawaii.
A single person in their 40s earning $42,000 a year qualifies for a tax credit that reduces their monthly health insurance cost by $385, according to health care.gov, the online exchange portal. The subsidy knocks a Kaiser bronze plan down to as low as $1.89 a month. The plan includes a $7,500 deductible, the amount you pay for medical services before coverage begins, and a $9,000 out-of-pocket maximum, which is the most you will have to pay for covered medical care in a year. Once you meet the maximum, your insurance covers 100% of covered costs.
On the other end of the spectrum, the cost of a Kaiser platinum plan with no subsidy is $704 a month, which is reduced to $319 a month with the tax credit. The plan has no deductible and a $3,000 annual out-of-pocket cap.
Residents currently enrolled in plans should be rolled over into the same or similar plan if they don’t make any changes to their coverage. Hawaii’s Department of Commerce and Consumer Affairs said that residents should receive a letter letting them know if they were successfully reenrolled. But residents are encouraged to log back on to healthcare.gov and review available options for 2023. Plan prices change and subsidies are dependent upon income levels.
