The American Rescue Plan expands subsidies, makes ACA health insurance cheaper for most Americans

By HealthSherpa

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The American Rescue Plan was recently signed into law. This is the largest expansion of the Affordable Care Act since it was signed in 2010, and the American Rescue plan expands subsidies significantly, both increasing subsidies for those who qualified before and expanding subsidies to people who have never previously qualified.

Plus, there’s a new enrollment period, meaning anyone can enroll until August 15th without needing a Qualifying Life Event.

Here is some key information on how this newest COVID-19 relief bill impacts your health insurance:

1. Those who already qualified for subsidies will see larger subsidies. This means people who make up to 400% of the federal poverty level (up to $51,520 for an individual or $106k for a family of 4) will see even more savings than they did previously.
2. Most people who didn’t previously qualify for subsidies will now qualify. Before, if you made more than 400% of the federal poverty level, you could not get any subsidies. The new bill caps the percentage of income paid for a Marketplace benchmark silver premium to 8.5% of your household income, which makes health insurance significantly more affordable if you previously had too high of income to get a subsidy.
3. Subsidy guarantees for enrollees receiving unemployment compensation. If you’ve received unemployment compensation in 2021, you may qualify for significant subsidies regardless of your income.
4. COBRA covered at 100% until September. If you were laid off/involuntarily terminated, you can get the cost of COBRA covered until September.

For context, here are the 2021 federal poverty levels.

How these new subsidies affect consumers 

The vast majority of consumers will see larger subsidies for their plans. The American Rescue Plan increases the amount of premium subsidy for all households within 100—400% of the federal poverty level, and extends subsidies to those above 400%.

People who make above 400% of the federal poverty level, who were previously ineligible for subsidies, can see huge savings—just look at the example below.

What should I do if I’m already enrolled in an ACA plan? Will I get new savings?

Extra subsidies will become available on April 1st, 2021. After that, if you are currently enrolled in a Marketplace plan, your premium will not be automatically lowered. You have 2 options:

1. Do nothing and get any extra subsidy you’re eligible for as part of your 2021 tax refund
2. Update your application and reselect your health plan to see savings applied immediately. We recommend doing this—you’ll also be able to see if there’s a better plan available to you for the same cost. If you’re within 100 – 150% of the federal poverty level, you’ll be eligible for a $0 premium silver plan with substantial cost sharing reductions that lower deductibles.

If you change plans, the amount you’ve already paid towards your deductible may be reset, and you might need to start over paying out of pocket expenses to reach the deductible of the new plan. You should check with your insurance company to see whether they’ll give you credit towards your new deductible if you stick with a new plan with the same insurer

If you are receiving unemployment, you’ll get extra tax credits starting this summer. We recommend that you update your applications after April 1 to receive updated tax credits and then wait for more information in the summer as these additional savings from the bill become available.

What should I do if I don’t currently have health insurance?

We highly recommend that you shop on the Marketplace after April 1st to see if you can get a low-cost health insurance plan. The new subsidies make plans much more affordable, and you may be able to get a very low-cost or free health insurance plan. Go to healthsherpa.com to see plans and prices or call us at (872) 228-2549 to get help enrolling.