We should know shortly whether the American Rescue Plan will be approved by the US Congress. While most people think of this bill as pandemic relief by way of a third stimulus check, there are also a handful of provisions that pertain to the Affordable Care Act (ACA). Let’s take a quick look at how health insurance will be affected if the American Rescue Plan passes as is.
Increase the amount of the premium tax credit
When shopping on HealthCare.gov or a state exchange, health insurance premiums are deemed affordable if they do not exceed 9.83% of a person’s income. The administration has proposed lowering this percentage to 8.5%, which would in turn increase the amount of subsidy a person receives to make their premiums “affordable”. This would be in effect for 2021 and 2022.
Make subsidies more accessible
Today, households with incomes above 400 percent of the Federal Poverty Level (FPL) are not eligible for premium subsidies. Under the American Rescue Plan, for example, an individual at 800% of FPL (which is around $100,000 for this individual) could receive a subsidy if they purchase an individual market ACA public exchange plan. This would also be in effect for 2021 and 2022.
Restrict excess subsidy collection
When applying for premium tax credits, a consumer must estimate income for the year. If they end up earning more than expected, any excess subsidies would be collected when their taxes were filed. (The converse is also true. If a person earns less, they would receive a credit at tax time.) The American Rescue Plan would suspend collection of excess premium tax credits for the 2020 tax year.
No cost premiums for the unemployed
Those who are receiving unemployment benefits at any time in 2021 will be treated as if their income were 133 percent of the federal poverty level (FPL) when they apply for health insurance coverage on the federal or state exchanges. Those at 133 percent of the FPL qualify for $0 monthly health insurance premiums.
We will see what the final iteration of the bill will look like, but with the premium tax credit increase and more accessible subsidies, the Administration’s stated goal is to help millions more Americans enroll in a health insurance plan. As a technology provider for state exchanges, we are already in the process of planning changes to the platforms to accommodate the above (or any other) relevant changes this bill introduces and prepare for the increase in enrollment across all our clients.