The American Rescue Plan – more formally known as H.R.1319 – was signed into law on March 11. 2021 by the newly-elected President Biden. This crucial piece of COVID-19-era legislation was designed and written in an effort to provide more widespread relief to the country during the ongoing COVID-19 pandemic. But, what does the American Rescue Plan mean for your health insurance?
What Does the American Rescue Plan Mean for Your Health Insurance?
Subsidy Cliff Eliminated (Temporarily)
Since 2014, those Americans who had to purchase their own healthcare coverage were forced to use the exchange or market. Most were eligible for premium tax credits, but a limit was put in place based on income. And while there were subsidies available, they also had a cut-off, known as the subsidy cliff. The subsidy cliff corresponds with the cut-off for subsidies when a person makes more than 400% above the poverty level.
With the American Rescue Plan, that subsidy cliff is being temporarily eliminated. For now, those who make 400% or more above the poverty level are simply required to spend 8.5% of their income on a benchmark plan. While this puts this bracket of people at the highest end of spending for healthcare coverage under the American Rescue Plan, it’s substantially better than having no subsidy at all as was the previous setup.
Better Subsidies Across The Board
Along with providing a better option for those at the higher end of the income bracket, better subsidies are built into the American Rescue Plan that can apply to a wider range of people.
As of 2014, there has been a sliding scale for the percentage of your income required to buy a benchmark plan under the Affordable Care Act. Whatever percentage of your income that you are required to pay that doesn’t cover the full price of a plan, the government would subsidize the rest. The sliding scale we’ve been using was about 2.07% to 9.85% of a person’s income.
Thanks to the American Rescue Plan, that sliding scale has been adjusted. The new sliding scale sits at 0% to 8.5% of your income. Where you land on the sliding scale is determined by your total annual income, with those who make 400% or more above the poverty level paying 8.5% of their income.
Health Insurance for Those Receiving Unemployment
The COVID-19 pandemic hit all of us in one way or another. Many unfortunately lost their jobs because of it. That’s why a provision was built into the American Rescue Plan that addressed those receiving unemployment benefits. The provision was made to ensure that those who are receiving unemployment can still have decent healthcare coverage without worrying about where the money to pay for it will come from.
The provision works like this: If a person looking for government-subsidized healthcare receives unemployment at any point during 2021, their total annual income will not be counted as more than 133% above the poverty level. This will determine their subsidy eligibility based on the updated sliding scale. It could even allow those receiving unemployment in 2021 to be eligible for healthcare without a monthly premium.
COBRA Coverage Subsidies
Known as COBRA continuation coverage, this allows people who are losing coverage from their employer – typically from being laid off – to buy an employer-sponsored plan. These plans usually cost about 102% of the total cost and can last up to 18 months.
Under the American Rescue Plan, there is a federal subsidy for 100% of a COBRA continuation coverage plan for those who have been laid off or had their hours reduced due to the COVID-19 pandemic. Available from April through September, this subsidy will be paid through tax credits given to the employers who have self-insured plans.
Navigating the Healthcare System
Navigating the healthcare system is never easy, especially in today’s world. If you’re looking for help to better care for yourself, your family, or your employees, we can help! Reach out to a Bedsiide Heath Assistant today!