The 2021 American Rescue Plan Act (ARPA) was introduced as part of efforts to address issues particularly highlighted during the COVID-19 pandemic and cushion the negative economic effects on the economy. A major need highlighted during the pandemic is the inaccessibility of health insurance. Even with the Affordable Care Act, health insurance remained inaccessible for many employed and unemployed people. The worrying inaccessibility of health insurance has been directly linked to unaffordability.
People remained because they did not qualify because of their income levels or found the deductibles to be too high. In this article, we will be presenting how the ARPA addresses Marketplace health insurance issues. The ARPA specifically addresses aspects of health insurance such as eligibility for subsidies and tax credits. These changes are available through 2021 and 2022.
Health Insurance Plan Changes
Firstly, with ARP, more subsidies are available due to a reduction in the percentage of income that qualifies a person.
An important change is the availability of free benchmark silver-plan coverage for persons with an income that is between 100 and 150% of the federal poverty level (FPL). With the rescue plan, people with income levels up to 150% of FPL will get premium-free silver plans as well as cost-effective deductibles.
This change is in contrast to the 2.07% and 4.14% contributions that applied to people with 100 and 150% of the FPL income previously required. Free bronze plans will also be available. It has also been predicted that some states will reduce the costs of gold plans. Those with incomes above 400% of the federal poverty level can get subsidies because of the ARP too. This is an especially historic change in marketplace coverage that was achieved with the rescue plan.
Formerly, subsidies were not available to persons with incomes of 400% FPL. The contributions of persons within this income bracket towards benchmark marketplace plans are now capped at 8.5% of household income.
We should mention that the cost-sharing feature of the silver plans remains, even with the ARP. This cost-sharing feature could mean more costs incurred for persons with high-income levels. However, cost-sharing could be described as quite generous for people with an income level of up to 150% FPL.
Tax Credit Changes
Savings in the form of improved tax credits are now available with the rescue plan. These savings are available in the following forms:
- Persons that experienced reduced or fluctuating income in 2020 or received unemployment compensation are not required to make tax credit overpayments that could apply. Those that already paid will have their money returned.
- Persons that received unemployment compensation in 2021 and are not eligible for health insurance coverage will have access to maximum marketplace subsidies and marketplace place. An individual qualifies when they receive unemployment compensation for at least one week in 2021. This provision extends the benefits to not just people that earn more than 100% of the federal poverty level, as is seen with ACA.
- People with incomes 200% FPL are required to contribute just $510 to the cost of benchmark marketplace place under the ARP, as opposed to $1,664 previously available.
- For those with incomes 400% FPL, contributions towards benchmark marketplace place are capped at $4,338 instead of $5,017.
The changes to health insurance with the ARP are to be available for two years, 2021 and 2022. If you are already enrolled, you make changes to your plans to achieve maximum savings during the
special enrollment or open enrollment period. You can also enroll newly during these periods.
While the special enrollment period applies to persons with major life changes such as changing jobs, having a baby, moving, and getting married, the open enrollment period applies to everyone.
The Congressional Budget Office (CBO) estimated that changes in premium will benefit about 1.7 million people and make insurance accessible to about 1.3 million uninsured persons.
According to the CBO, about 1.4 million people are bound to benefit from the premium tax provisions. About 900,000 people are also bound to get lower premiums with the tax premium provisions.
With improved savings available with the ARP and the open enrollment period currently available, now is a good time to review your health insurance and make necessary changes.
