Newsletter

AETNA EXITS AFFORDABLE CARE ACT MARKETPLACE

Aetna announced on May 4 they will not be offering Affordable Care Act plans in 2026. Almost 1 million people in seventeen states will lose their Aetna coverage and will have to take action to enroll in alternative plans during Open Enrollment, which will run from November 1 through December 15 (shortened from January 15).

Note that these people will NOT be automatically mapped to other carriers and/or plans and will have to take proactive action to enroll in a plan or they will not be covered by an Affordable Care Act plan in 2026.

The Aetna announcement mentions they are not a major Affordable Care Act carrier and that a major reason for exiting the market is because of uncertainty over what Affordable Care Act subsidies will be in 2026 (improved subsidies under the Affordable Care Act as provided in the Inflation Reduction Act will sunset as of December 31 unless Congress takes action; see the next article). This is the second time Aetna has exited the Affordable Care Act market, and Aetna IS a major carrier in South Florida.

We'll be contacting all our clients who presently have Aetna plans in the first two weeks of November to discuss alternative plan options for 2026. 

AFFORDABLE CARE ACT PREMIUMS WILL INCREASE DRAMATICALLY IF CONGRESSIONAL BUDGET BILL PASSES

The House of Representatives passed the congressional budget Bill, which is officially named the “One Big Beautiful Bill of 2025” by a vote of 215-214 early in the morning on May 22 just ahead of the Memorial Day weekend. Irrespective of the House vote, passage of the legislation is dependent on changes that will be made in the Senate, which returns from recess on June 2, and House-Senate reconciliation before final passage.

Perhaps the most controversial provisions of the Bill pertain to Medicaid (about $700 Bn of savings are included in the Bill), and some changes regarding Medicaid (and other items included in the Bill) are certain to be made in the Senate version of the Bill and in House-Senate reconciliation.

The Bill does NOT presently include continuing enhanced Affordable Care Act subsidies, which sunset as of December 31, and because of other priorities we do not expect the Senate to include provisions for continuing the enhanced subsidies.

According to a USA Today article that appeared May 19, “an estimated 4 million Floridians who get their health insurance through the Affordable Care Act could see their health care premiums rise dramatically by the end of 2025.”

Five Florida congressional districts have more than a third of their population getting their health insurance through the ACA. Four of those five districts are in South Florida.

Unless the enhanced subsidies are extended, Florida would be hit harder than any other state. No other state has a higher proportion of residents getting their health care through the ACA Marketplace — 20 out of every one-hundred Floridians are enrolled. And the vast majority of them are getting subsidies for their premiums.

ACA subsidies were enhanced in 2021, under former President Joe Biden’s American Rescue Plan Act, which was passed as COVID-19 was raging. Then, in 2022, the subsidies were extended with the passage of the Inflation Reduction Act. The Kaiser Family Foundation (KFF) estimates that enhanced subsidies for Floridians cost $2.2 billion.

The way it works, those who make less money get more of a subsidy. So, the expiration of subsidies would hit those with lower incomes harder, according to KFF’s analysis.

A 30-year-old single person in South Florida projecting income of $15,650 in 2026 — the lowest rung of ACA subsidy eligibility — will be paying $23 more per month for his or her health care premium if the enhanced subsidies expire but will still receive some help, according to a KFF calculator.

By contrast, that same person projecting income of $62,600 in 2026, near the highest limit to be eligible for a subsidy, would be paying $8 more per month in premiums if the enhanced ACA subsidies expire.

Tax subsidies are calculated based on a person’s age, income, and zip code of residence. They’re calculated based on how their family income relates to the cost of the second lowest-cost silver plan offered in their zip code. The cost of the plan differs according to age, zip code and family size, and the calculation assumes that all family members are non-smokers. Under the American Rescue Plan Act and as continued under the Inflation Reduction Act, the % of income requirements to receive subsidies were lowered for all income levels, and those making over 400% of the Federal Poverty Level (who formerly were not eligible for subsidies) were limited to paying 8.5% of their income for the second lowest-cost silver plan in their area (this is referred to as the “benchmark” plan).

This chart shows how subsidy levels will be affected if the congressional Bill passes in its current form. The column on the left refers to the Federal Poverty Level (FPL). Subsidies are currently calculated in accordance with the third column. HOWEVER, subsidies will be calculated in accordance with the second column if the current Bill passes in its present form:

If current subsidy levels are not extended, it's our opinion that executive orders will be issued to make short-term health insurance plans more attractive and to make other health care options available. We’ll keep you informed as developments occur.

This article, written by Michael McAuliff for Modern Healthcare on May 22, details all the changes in the Bill that pertain to healthcare. The most significant changes are related to Medicaid and food stamps, but there are some changes to Medicare and the Affordable Care Act.

Here is an outline of the Affordable Care Act changes contained in the Bill. Many of these changes are already included, at least in part, in draft Executive Orders previously issued by President Trump (final regulations have not yet been released):

Institutes stricter eligibility and income verifications for exchange customers and requires new checks for low-income enrollees with zero-premium plans. This would save $101 billion.

Shortens open enrollment period by one month (November 1-December 15 instead of 11/1-1/15).

Ends permanent special enrollment opportunity for people with incomes up to 150% of poverty and bars federal and state exchanges from establishing special enrollment periods linked to income.

Allows health insurance companies to demand premium payments before beginning coverage and to remove customers who are in arrears, regardless of income.

Ends automatic enrollment into silver-level plans for low-income exchange customers with bronze-level plans who qualify for cost-sharing reductions that can only be applied to silver plans.

The above four provisions combined would reduce spending by $101 billion.

Restores cost-sharing reduction payments to health insurance companies covering the lowest-income exchange policyholders, which President Trump cut off in 2017. A Congressional Budget Office (CBO) analysis from 2018 said that would reduce federal spending by $19 billion, in part because it would enable insurers to reduce premiums, which would decrease spending on premium tax credits. The Bill also would withhold cost-sharing reduction payments for insurance plans that cover abortion.

Requires full repayment of excess premium tax credits regardless of enrollee income. Savings are projected to be $2.3 billion. [Note: this is very significant. Previously, repayments were limited to the value of the second-lowest cost silver-level plan in the individual’s zip code, and no efforts to collect repayment were made if someone projected income over the Federal Poverty Level (FPL) but had actual earnings under 100% of the FPL.]

Expands ICHRAs (individual coverage health reimbursement arrangements that permit employees offered these plans to buy Affordable Care Act Plans with pre-tax dollars). The Bill creates a tax credit for small employers that offer ICHRAs. This is projected to cut spending by $514 million. (Note: Because of increases to group premiums, the popularity of ICHRAs with employers is expected to increase significantly. The major reason is that ICHRAs are a defined contributions concept that applies to health insurance (similarly to 401(K) plans vs. pension plans). Some carriers like Oscar will be devoting considerable resources to promote ACA plans to individuals who have been offered ICHRAs. Over the next several months we will explain more about ICHRAs both in this newsletter and on our website.

Limits lawful immigrant access to unsubsidized exchange coverage and makes Deferred Action for Childhood Arrivals (DACA) recipients ineligible for subsidies. This section would save $63 billion.

Bans gender-affirming care as an Essential Health Benefit under the ACA as well as Medicaid and CHIP coverage of these services. This would reduce spending by $830 million.



HOW THE TRUMP ADMINISTRATION AIMS TO SLASH HEALTH CARE SPENDING

This article by Elisabeth Rosenthal that appeared in the May 20 issue of KFF Health News discusses the impact of Executive Orders the President has issued, as well as cuts that are expected for Medicaid, most of which would require legislation. However, this article does not address the impact of eliminating enhanced Affordable Care Act (ACA) subsidies (discussed in the above article).

About Paul Cholak

Paul has over forty years of benefits experience and has been Director of Employee Benefits for large companies, as well as a benefits consultant with major consulting firms. He understands the health and life insurance needs of individuals and families of all ages. He also has considerable experience in selling health and life insurance to employer groups.

He guides you through the steps of getting health and/or life insurance and is available to help you both BEFORE and AFTER you've made your purchase decision.