Objectives: Families with incomes above 400% of the federal poverty level were ineligible for marketplace premium tax credits before 2021 and may again be after 2025. Current laws temporarily removed this income cap, but because credits cap out-of-pocket premiums for a reference plan as a share of income, some higher-income families still receive zero tax credits. We quantified (1) premium differences between on- and off-marketplace plans and (2) the association between these premium differences and state decisions to finance cost-sharing reductions (CSRs) for lower-income families.
Study design: We created a comprehensive database of on- and off-marketplace plans in each county (including both federal and state-based marketplaces).
Methods: By county and metal level, we compared on- and off-marketplace (1) plan premiums in 2020 and (2) growth rates in the numbers of plans. We contrasted outcomes for states by how insurers were instructed to finance CSRs.
Results: In 2020, 89% of the US population lived in counties where some plans were offered exclusively off-marketplace. In these counties, for a 45-year-old choosing among silver plans in 2020 and who did not qualify for premium subsidies, premiums for the lowest-cost off-marketplace plans averaged 11.3% less than premiums for the lowest-cost on-marketplace plans. In contrast, for bronze and gold plans, the lowest-cost off-marketplace plans were, on average, more expensive. Silver plan premiums were 6.1% higher off-marketplace than on-marketplace in states that loaded CSRs on all silver plans, and 13.5% lower in states that loaded CSRs only on on-marketplace silver plans.
Conclusions: Higher-income individuals and families may consider purchasing Affordable Care Act-compliant silver plans off-marketplace and thereby reduce their premiums. State and federal policy makers should consider the impact of their decisions on the choice between on- and off-marketplace plans.