Here’s How The American Rescue Plan Of 2021 Would Benefit Employees Seeking Private Health Coverage

The United States government has recently passed the ARP or the American Rescue Plan. What is the purpose? It expands your eligibility for ACA premium subsidies, especially for those who have signed up for marketplace health plans. ACA stands for the Affordable Premium Act.

Legally, there are also new and temporary premium subsidies in case of the continuation coverage of COBRA. The law brought about certain alterations in the Medicaid program and expanded the scope of coverage, benefits, and adjustments in federal financing. Here is almost everything you want to know about the American Rescue Plan. Don’t skip any point.

Expanded Marketplace Premium Subsidies

Under the American Rescue Plan, the marketplace premium subsidies of the Affordable Care Act are higher for people of all income levels. This is the first time this is for those who have earned more than four times the FPL or the Federal Poverty Level. In previous times, marketplace premium subsidies were partial, irrespective of how poor they were, and were compelled to contribute a sum of money to the second-lowest-cost silver plan, i.e., the benchmark silver plan cost.

Those who had earnings at par with the Federal Poverty Plan had to deposit 2.07%of the income of their entire household. That was around $264 per year as of 2021. If they were 150% above the Federal Poverty Level, the amount crept higher to 4.14% of the entire household earnings. That came to $792 every year. Now that the American rescue Plan is a law, the benchmark marketplace plan will be completely subsidized for people whose earnings stand at 150% of the Federal Poverty Level.

Premium tax credits will go up for all income groups. Individuals who earned 200% above the Federal Poverty Level had to shell out $1664 for the benchmark marketplace plan earlier. But thanks to the American Rescue Plan, they will have to shell out $510. Those who have income at 400% of the Federal Poverty Level people had to deposit $5014. However, now they will only have to pay $4338. The premium subsidy will increase for the American Rescue Plan after its implementation between 2021 and 2022.

More Subsidies For Those Who Don’t Have A Job

People with approval for unemployment insurance benefits in 2021 will be eligible for better marketplace subsidies. And this will fall under the American Rescue Plan. The plan also extends the date beyond the 6th of September, 2021. When the unemployment insurance benefits recipients apply for marketplace subsidies, they will have to follow some special rules in 2021.

Household incomes of more than 133% of the Federal Poverty Level will not determine eligibility for cost-sharing subsidies and marketplace premium in 2021. Therefore, those eligible for UI benefits in 2021 can get a benchmark silver plan with a zero-premium. Besides that, they will also receive cost-sharing subsidies in 2021. People who want to qualify for marketplace subsidies will have to fulfill other criteria. This would qualify them even if they receive unemployment insurance benefits.

Premium Tax Credit Repayment Holiday 2020

When you push forward an application for marketplace premium subsidies, the application depends on your annual income for a tax year. When you file your tax returns for the tax year, your exact income must be consistent with the premium tax credit based on their approximate income. In a situation when the coronavirus pandemic has brought about a huge disruption in the country’s economy, the American Rescue Plan does away with a premium tax credit.

COBRA’s Temporary Premium Subsidies

Under the Rescue Plan, you receive COBRA’s temporary premium subsidies for a period that extends up to 6 months in 2021. These subsidies will be paying the entire monthly cost, considering whether you are eligible or not. According to the law, the former employer has to shell out the COBRA premium for eligible individuals to receive subsidies. The former employer will get a reimbursement of the amount they paid from the federal government. The premium subsidies will not fall under the category of income.

These changes attempt to help people afford private coverage more easily. And it comes after quite a significant number of people had already signed up for the 2021 marketplace plans. Remember, it is important to have your health insurance cover in place. And it is paramount at a time like now when the pandemic is wreaking havoc. So, make sure to do ample research to understand all the fine print!