The American Recovery Act of 2021 and Changes to Health Insurance

Last week, Congress passed a new stimulus package and it was signed into law by President Biden. This sweeping legislation will have a major effect on health care access for people who buy their own coverage or have taken COBRA coverage from lost employment. There are many important changes in the bill, many of them temporary.

While the implementation will take some time, here’s what we do know:

• Advanced Premium Tax Credits (APTC) will be extended to anyone eligible for a subsidy whose income is under 400% of the Federal Poverty Level (about $51,000 for a single person, about $70,000 for a couple). The rates premier on April 1st, so we are not yet sure of the potential impact.
• APTCs for people under 150% of the Federal Poverty Level (about $19,300 for a single person, about $26,100 for a couple) will make it so the benchmark Silver plan has a $0 premium. People may not necessarily want to choose the benchmark Silver plan as networks of doctors vary by plan, but we are hopeful this means that all plans will be more affordable through these subsidies.
• People who are over 400% of the Federal Poverty Level (about $51,000 for a single person, about $70,000 for a couple) will be eligible for an APTC if the benchmark Silver premium is more than 8.5% of their household Modified Adjusted Gross income. The APTC will make it so the lowest cost plan’s premium will be no more than 8.5% of income. This will largely affect people over 50, because premiums are higher based on age. Some younger people will benefit too, depending on how close they are to the income limits.
• People receiving Unemployment Compensation will be treated as if they had income at 130% of the Federal Poverty level and therefore receive the fullest cost-sharing subsidies on the Marketplace. This means that a Silver plan will have a small deductible and out of pocket maximum, making the plan quite affordable.

However, for all of the above, a person must not be eligible for (or have a spouse who is eligible for) any employer-based health insurance in order to get a subsidy. Oftentimes this particularly hurts families when one spouse has a job that offers a group plan to just the employee, or when the premiums are very expensive (this is often called the Family Gap, and it is truly a travesty of justice that Congress continues to have no interest in resolving).

All of these monumental changes are only valid for 2021 and 2022. Hopefully Congress will act before they expire to continue some of the new subsidies.

One other item of interest is a change to COBRA rules. COBRA applies to all large employers and any small employer with a fully-insured plan (most plans). COBRA premiums will be covered from April 1st to September 30th, 2021. Employers will have to pay the full price of the premiums and then will be able to apply for subsidies from the federal government. This will undoubtedly ruffle many feathers and put a high burden on small businesses. Exactly how this is going to be carried out is unclear.

We’re here to help. Call us at 414-797-3408 to set up an appointment to talk about your options.