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Why do premiums seem to change when re-submitting my client’s application for ARP subsidies?
Why do premiums seem to change when re-submitting my client’s application for ARP subsidies?
Jordan Patch avatar
Written by Jordan Patch
Updated over a week ago

Some agents have reported that premiums appear lower on HealthSherpa when re-submitting their client’s application for American Rescue Plan (ARP) subsidies until they finalize the enrollment. In this help article, we’ll cover why this is happening, and updates we’ve made to mitigate this as much as possible.

Why does the premium seem to change for some clients?

At the start of the ARP subsidy rollout on 4/1/21, agents began seeing this green box at the top of the profile for their Clients in their HealthSherpa account:

This green box and the quoter erroneously calculated subsidy amounts based on the client’s current age. For clients who already had a birthday in 2021, their premium subsidies appeared higher in the HealthSherpa application than they should have been. However, the eligibility result would return the correct subsidy amount, which meant a higher net premium for clients who have had a birthday in 2021 at the end of the enrollment.

Because of this discrepancy, some agents have gone to other ACA enrollment sites in an attempt to get the lower premium amount. While creating a new application will base the client’s subsidy amount on their current age, it will likely result in tax issues when they file in 2021. Also, if they cancel their existing policy to redo eligibility and re-enroll in coverage this will reset their deductibles and can create issues with their current coverage.

The Centers for Medicare & Medicaid Services (CMS) stresses that agents should not cancel existing policies or create new applications for their clients, and should use the regular mid-year changes in circumstance (CIC) process. Click here for steps on how to resubmit applications for ARP premium subsidies on HealthSherpa.

Timeline of changes on HealthSherpa

HealthSherpa fixed the estimated rates agents see in the green box in the Client profile and the quoter is being updated to avoid unexpected changes in net premium. This involved making sure the amount of premium subsidy was calculated on the client’s 2020 age.

How are subsidies calculated?

To illustrate how subsidies are calculated and work with mid-year CIC, we will use an example:

During Open Enrollment, the cost of the second-cheapest silver plan is based on the client’s age at the time of application. The percentage of household income they are obligated to pay towards premiums for the second-cheapest plans depends on how their income compares to the federal poverty level (FPL).

During the SEP, if a client makes a mid-year change in circumstance (CIC) after their birthday, the full cost of the premium will be re-rated based on age. However, the amount of subsidy they receive will still be based on their age during Open Enrollment.

This is how mid-year CICs have worked in the past, but this situation has become much more common due to the American Rescue Plan (ARP).

With the ARP SEP, the percentage of household income clients are obligated to pay towards the second-cheapest silver plan has lowered for almost all applicants.

For more information on changes to the ACA due to the ARP, please see our blog post here.

Given these more generous premium subsidies, agents and clients can resubmit their applications to pay a lower premium or take no action and get credited the difference when they file their 2021 taxes (see this visual for reference).

As mentioned above, the green box in the Client profile and the quoter were showing a subsidy amount based on the client’s current age as of their 2021 birthday, but the subsidy is calculated based on their 2020 age, making the premium slightly higher once eligibility results are fetched from the Marketplace. The issue is with our presentation in the application, and it should be solved shortly.

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