Your subsidy amount can change; if it decreases, auto-renewal could result in higher premiums. In 2017 and 2018, benchmark premiums rose considerably, which meant that premium subsidies got much larger. But for 2019, 2020, 2021, and 2022, average benchmark premiums declined each year, leading to reductions in subsidy amounts for people whose household income stayed at the same percentage of the poverty level.
For 2023 premiums are expected to increase modestly in most states, although that doesn’t necessarily mean that benchmark premiums will increase, especially in states where new insurers are entering the market. That can sometimes lead to a reduction in premium subsidies, if the new insurer undercuts the premiums of the existing insurers. The introduction of new insurers into your market is also a perfect opportunity to see if any of the new insurer’s plans might be a better fit for you than the plan you currently have – but you won’t know unless you actively compare the available options during open enrollment.
There can be significant changes in the benchmark premiums in a given area, even if the overall rate changes in the area are modest. And sometimes the benchmark premium decreases despite the fact that overall average rates increase. If that happens, premium subsidies decrease – since they’re based on the cost of the benchmark plan – and after-subsidy premiums increase. So even if your plan’s rates don’t end up increasing significantly, your after-subsidy premium could still increase significantly if the premium subsidy in your area goes down.
It’s also important to note that if your plan is being discontinued and you don’t select your own plan during open enrollment, auto-renewal will involve the exchange or your insurer enrolling you in the plan that’s most similar to the plan you already had. In some cases, this may be the plan you would have picked anyway, but actively selecting your own plan during open enrollment means that you get to choose your plan, rather than letting someone else choose it for you.
The American Rescue Plan’s (ARP) subsidy enhancements will continue to be in effect in 2023, thanks to the Inflation Reduction Act. These higher subsidies are already incorporated into 2022 premiums, so while the normal subsidy fluctuations will occur in 2023, subsidies will continue to be larger than they would have been if ARP subsidy enhancements had been allowed to expire. And some families will find that they’re newly eligible for subsidies, due to the proposed “family glitch” fix.