Stacey Pogue, Karen Davenport, and Sabrina Corlette
Enhanced premium tax credits (ePTCs), scheduled to expire at the end of 2025, have driven record Marketplace enrollment by making coverage much more affordable, including by expanding access to plans with $0 premiums.
Who can enroll in a plan with $0 premiums?
Some low-income consumers could enroll in a $0 premium plan under the original ACA subsidy structure, but these plans often came with a large deductible and high out-of-pocket costs. With ePTCs, people earning around $27,000-$40,000/year for a family of three have access to at least two silver-tier plans with a $0 premium and lower out-of-pocket costs. People earning incomes in this range are in working households and may be transitioning from Medicaid to private insurance in the Marketplace. At these very low income levels, plans with $0 premiums can be a lifeline as families struggle to afford rent, groceries, and gasoline, as well as out-of-pocket deductibles and copays for health care.
Increasing $0 premiums, even to just $1, has been shown to sharply reduce coverage
A sizeable body of research shows that premiums, even very small ones, create a significant barrier to coverage for low-income individuals:
- Massachusetts saw a sharp drop in Marketplace enrollment among low-income enrollees when premiums increased from $0 to just $1/month.
- Very low premiums of a few dollars a month can create administrative hassles and red tape related to remitting payments, causing people to lose coverage.
- Affordability is also a barrier for low-income individuals, even at premiums under $10/month.
Ending $0 premium plans would push Marketplace premiums higher across the board
Healthier individuals are less likely to enroll in coverage when they face barriers—whether administrative or financial—while sicker individuals are more likely to overcome those barriers to enroll in coverage. The availability of $0 premium plans has market-wide impacts:
- By increasing access to $0 premium plans, ePTCs not only significantly increased the number of people with coverage, they also made the pool of people covered healthier on average, which decreases overall premium rates, including for people ineligible for premium tax credits.
- On the other hand, raising the amount certain Marketplace enrollees pay each month for coverage from $0 to $5 was projected to raise overall Marketplace premiums by up to 3.7%.
$0 premiums are common, and even celebrated, in Medicare Advantage and Medicare Prescription Drug Coverage
Medicare Advantage and Medicare Prescription Drug Plans have evolved over time to provide coverage with $0 premiums to enrollees, regardless of income (enrollees still separately pay Medicare Part B premiums). The Trump administration recently released fact sheets touting the substantial share of Medicare enrollees with access to a $0 premium Medicare Advantage plan and highlighting that $0 premium prescription drug plans are offered in most states as well.
In addition, other programs, including certain Medicare Savings Programs and Medicare Part D “Extra Help” and certain Medicare Savings Programs, help lower-income enrollees by enabling them to enroll in Medicare Part B and prescription drug coverage with $0 premiums.