The American Rescue Plan Reduces Healthcare Costs and Extends Insurance Coverage

On March 11, 2021, the Biden-Harris Administration signed into law the American Rescue Plan Act (ARP) of 2021 allocating $1.9 trillion towards economic relief. Being the sixth federal legislative relief package to directly address the economic fallout that resulted from the COVID-19 pandemic, the legislation continues relief programs that were previously established while instilling new measures. In addition to expanding resources to help directly combat economic instability, including a third round of stimulus payments reaching up to $1,400 for adults and any dependent, the ARP aims to expand Americans’ access to health insurance coverage will lower associated costs.

An Increase in Those Eligible for Tax Credits

The new law increases the available tax credits for people who buy their own health insurance through the Marketplace can use towards premiums. State Marketplaces are following suit, with details varying by state.

A household’s tax credit amount is determined by a variety of factors designed to reflect financial need:

• Total expected yearly income
• Number of individuals included on the household tax return
• The cost of the second lowest silver plan -benchmark plan- available in the consumer’s area
• Household income compared to the federal poverty levels

Reduction in Prior Income Caps Expand Eligibility Parameters

Prior to the changes introduced in this new legislation, households had to contribute up to 9.83% of their income towards the benchmark plan or lower price plan before being eligible for tax credits. Under the ARP, this minimum contribution amount is lowered to 8.5% of household income. This drop in minimum contribution thresholds is expected to drastically increase the availability of tax credits while simultaneously lowering premiums.

Additionally, prior to this legislation, households with incomes greater than 400% federal poverty level ($51,520 for a one-person household) were not eligible for tax credits. This cap was eliminated; households that make more than 400% federal poverty level can still be eligible for premium tax credits based on the cost of the benchmark plan.

These new measures introduced by the ARP are expected to reduce premiums by an average of $50 per-person-per-month or by $85 per policy per month. As a result, most enrollees will be eligible for plan under $10 a month after premium tax credits.

According to the US Department of Health & Human Services, 3.6 million uninsured individuals are projected to be newly eligible for health plan savings under the ARP. These savings can be found starting April 1, 2021 and reflected through the end of the year for members who enroll in health insurance through HealthCare.gov or its partners, like W3LL. These savings can be found starting April 1, 2021 and will be reflected through the end of the year for members who enroll in health insurance through HealthCare.gov or its partners, like W3LL.

Benefits Apply to the Uninsured and Those Currently Enrolled in the Federal Marketplace

Members already enrolled in a Marketplace plan are encouraged to investigate new saving options as a higher-quality health care plans may be available at a lower cost.
The 2021 Special Enrollment Period (SEP) opening from February 15 to May 15 dramatically increases the number of Americans signing up for insurance through the Federal Marketplace. The implementation of the changes proposed by the ARP on April 1 many qualifying individuals, including those who enrolled during the Special Enrollment Period, will receive additional financial support towards their Federal Marketplace health plans premiums. Reduced premiums will not be applied to plans retroactively, but members are encouraged to reevaluate their plan options before the end of the SEP to take advantage of these new standards.

Extending Unemployment Insurance Programs

The ARP extended the three major unemployment insurance programs created by the 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act:

• The Pandemic Unemployment Assistance (PUA) program.
• Pandemic Emergency Unemployment Compensation (PEUC).
• The Federal Pandemic Unemployment Compensation (FPUC).

Extended Coverage for Those Without Work

The Biden Administration also extended the coverage of group benefits to those who have been laid off, furloughed, or had their hours decreased without requiring COBRA premium payments. This coverage will continue until September 30, 2021.