President Biden signed the American Rescue Plan Act into law on March 11, 2021. The $1.9 trillion package provides relief to millions of families, businesses, schools, and state and local governments struggling because of the COVID-19 pandemic and its economic fallout. The law also includes provisions to expand access to affordable, comprehensive insurance coverage. The following frequently asked questions (FAQs) provide more detail about these coverage provisions. They are intended to supplement, not replace, any training provided by the marketplace to Navigators and other assisters. For more FAQs on the Affordable Care Act insurance reforms and marketplace eligibility and enrollment, visit CHIR’s Navigator Resource Guide.
I’ve heard I might be eligible for more premium tax credits under the American Rescue Plan. Is that true?
Most likely, yes. In fact, four out of five federal marketplace enrollees will be able to find a plan for $10 or less per month. The American Rescue Plan increases the premium tax credits (PTCs) available for marketplace enrollees by reducing the percentage of income that individuals and families are expected to contribute towards premiums, for plan years 2021 and 2022. Under the new premium schedule, families with incomes between 100 and 150 percent of the federal poverty level could have their premium contribution reduced to $0. Families with incomes over 400 of the federal poverty line would have their premium contribution capped at 8.5 percent of their household income.
In addition to premium relief, does the American Rescue Plan also reduce enrollee deductibles and other cost-sharing?
Under the American Rescue Plan, many people will be able to find more affordable plans that offer reduced cost-sharing. If you’ve signed up for a Bronze plan, which covers only 60 percent of an average person’s health care costs, and have a household income under 150 percent of the federal poverty line, you can switch to a $0 premium Silver plan that would cover 94 percent of an average person’s health care costs. Those with incomes between 151-250 percent of the federal poverty line can also qualify for a cost-sharing reduced plan.
The American Rescue Plan also provides cost-sharing relief to individuals who receive or are eligible for at least one week of unemployment insurance benefits in 2021. These individuals, regardless of income level, will be able to enroll in a $0 Silver plan that covers 94 percent of an average person’s health care costs.
When will the enhanced premium tax credits under the American Rescue Plan be available?
Regardless, if you are not currently enrolled in the marketplace and you want health coverage, you may want to submit a marketplace application as soon as possible. The enhanced subsidies are available for any month you are enrolled in a marketplace plan in 2021. By enrolling now, even if the marketplace platform is not yet able to apply the enhanced premium tax credits to your plan, you will establish your entitlement to those tax credits. While you may have to contribute more towards your monthly premiums at first, depending on your state, you will either have additional credits applied to your premiums in future months or be able to claim them when you reconcile your 2021 income taxes. If you wait to enroll in a marketplace plan, you will not be eligible for subsidies in the months of 2021 when you were not enrolled.
I am currently enrolled in a marketplace health plan. What should I do to obtain the enhanced premium tax credits under the American Rescue Plan?
You should return to HealthCare.gov or your state-based marketplace website and update your application. Some state-based marketplaces may automatically apply the enhanced premium tax credits to your plan. However, it is prudent to return to the marketplace and make sure all of your account information is accurate and up to date, including your household income. If you are enrolled in a Bronze plan and have not already paid out a substantial amount towards your deductible, you may also want to see whether switching to a plan with a lower deductible, such as a Silver or a Gold plan, would be a better value for you.
If you have been enrolled in a marketplace plan since January 1, 2021, under the American Rescue Plan you are entitled to enhanced premium tax credits dating back to that date. If you have enrolled in a plan through HealthCare.gov, you will be able to recover those additional premium tax credits when you reconcile your 2021 tax return. However, some state-based marketplaces may give you an additional credit towards your premiums for the balance of the year, to reflect the amount you are entitled to from January until the marketplace begins applying the enhanced tax credits to monthly premiums.
I am currently enrolled in an individual market plan outside of the marketplace. Will I be able to find a more affordable plan on the marketplace?
Most likely, yes. Many people with incomes that previously did not qualify them for premium tax credits will now qualify, thanks to the American Rescue Plan. Everyone, regardless of income, will have plans available with premiums that cost no more than 8.5 percent of their household income. For example, under the American Rescue Plan, a 64-year-old earning $58,000 (450 percent of the federal poverty level) would have their premiums reduced from $12,900 per year to $4,950.