American Rescue Plan Act Expands Subsidies

On March 11, 2021, the American Rescue Plan Act passed both the House and Senate to be passed on to President Joe Biden for his final sign-off. Stimulus checks started hitting bank accounts within days and will continue to arrive for a few more weeks. While the cash stimulus is vitally important to relieve American households, there are other parts of the bill that are equally as important.

American Rescue Plan Act Defined

The new bill brought sweeping expansions to the Marketplace health insurance plans and improves affordability for millions of people. All Americans that are now eligible for subsidized health plans based on their income will receive even more discounts while those households making up to 400% of the poverty level will be newly eligible for coverage. This will give millions of Americans who lost their insurance coverage under President Trump a chance to get affordable coverage, which is vitally important in the height of a deadly pandemic.

Not only will Americans get an increased discount on their health insurance coverage and increased inclusions for coverage effective May 1, 2021, but taxpayers will also get increased premium tax credits based on lower-income contribution percentages. Those who make less will receive more benefit while those who make more income, up to 400% of the poverty line, will get a little less of the new benefit. The basic tenet is to give those most in need of financial assistance the best opportunities to get it.

To elaborate, current Marketplace enrollees and new customers of the insurance plans on or after April 1, 2021, will be the recipients of premium tax credits to help subsidize the expense of coverage. Those who are already enrolled in Marketplace coverage must update their applications and enrollment to qualify for the new subsidies after April 1, 2021.

Updating enrollment is easy. Enrollees simply need to reselect their current plan in order to flag their account for the credit and reduce their premiums for the rest of 2021. Those who neglect to reselect their plans before May 1, 2021, will be ineligible for the discounts and tax credits.

Americans in need of new coverage should select their plan by the end of March to have coverage by April 1. To receive coverage by May 1, enrollees need to select a plan by the end of April. If selecting insurance plans before April 1, enrollees will need to reselect coverage after April 1 to get the new discounts and credits. The special enrollment period ends at the beginning of May.

If you forget to jump through the required hoops to get the tax credits, don’t worry. Americans will have another opportunity when they file their taxes in 2022. However, they will miss out on the discounted monthly premiums.

Those who file and receive unemployment in 2021 will be eligible for Marketplace coverage as if their income were capped at 131% of the poverty line, making insurance free for the rest of the year. This rule will apply even if enrollees only receive a dollar of unemployment and are able to return to work almost immediately.

The American Rescue Plan Act is a step in the right direction for Americans who’ve recently lost coverage, can’t afford insurance, have never had health insurance, or otherwise need insurance now. Be sure to file by May 1, 2021, to take advantage of this special enrollment period.


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