Employees increasingly want ACA marketplace health plans, report says

On Aug. 16th, President Biden signed the Inflation Reduction Act into law, securing, among other things, a three-year extension on Advanced Premium Tax Credits, or APTCs. The extension of the credits is good for employers and employees across the country, according to Remodel Health, a health benefits software company whose 2022 National Health Benefits Analysis came out this week. According to the analysis, increasing numbers of employees are turning away from group plans and towards individual ACA marketplace offerings, a move that saves both employers and employees money.

According to the report, 3 out of 5 employees choose a marketplace plan when given the option. The next most popular choices were joining a spouse or parent’s plan, which 14.6% of employees favored, or joining Medicaid/CHIP, which just over 10% of employees did. This number was up 14% compared to 2020, when only about half of all employees chose marketplace plans.

The change in decision might be due to increased awareness of marketplace tax credits, including APTCs, Remodel Health’s report notes. With nearly 4 out of 5 employees eligible for tax credits, the average discount for marketplace plans after tax credits sits at 59.4%, or a savings of about $632 a month on average.

Subsidies and tax credits can vary between states, with Southern and Midwestern states tending to see the biggest discounts, including Florida, South Carolina, Oklahoma, and Texas. Nebraska sees the biggest cost difference of any state, with a more than 78% discount and savings of $1,035 dollars on average per person.

These types of discounts are obviously beneficial for employees who can see huge reductions in their health care spending. But they can be good for businesses, too, the report notes. 

Related: Health care provisions could increase access, reduce cost of Medicare

“This three-year extension today within the Inflation Reduction Act further proves that group plans are a thing of the past and individual plans are the future of health benefits,” says John Staub, the director of outreach for Remodel Health, in a press release. “Making this switch can save employers up to 50% in costs, which can be used to reinvigorate cashflow into your workforce in other ways such as raises, learning and development opportunities and more. This is a huge step forward for U.S. health benefits, providing Americans with substantial savings for their high quality health care plans.”