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American Rescue Plan delivers $0 Silver premiums to unemployed

Legislation signed today provides substantial premium tax credits and cost-sharing reductions to Americans receiving unemployment benefits

A major provision of the American Rescue Plan (which became law today) ensures that most Americans who receive at least one week of unemployment compensation at any time in 2021 will be able to buy a Silver health plan with $0 premiums. | Image: deagreez / stock.adobe.com

Reviewed by our health policy panel.

Although the American Rescue Plan (ARP) is about far more than just healthcare, it’s the most significant improvement to healthcare access and affordability since the Affordable Care Act.

We’ve already talked about how the new law – passed by Congress this week and signed by President Biden today – will boost premium subsidies for most marketplace enrollees in 2021 and 2022 and also protect people from having to repay excess premium subsidies from last year.

But another important provision in the legislation will provide substantial premium tax credits (premium subsidies) and cost-sharing reductions to Americans who are receiving unemployment benefits at any time this year.

EDIT: The specifics of the additional financial assistance are detailed below. CMS has confirmed that the additional health insurance subsidies for people receiving unemployment compensation in 2021 will be available on HealthCare.gov as of July 2021, and the state-based marketplaces are debuting this benefit on varying schedules as their software and systems allow.

The premium subsidies are retroactive to the start of the year, so people who receive unemployment compensation this year will be able to claim the additional subsidies for the first several months of the year when they file their 2021 tax returns (assuming they were enrolled in marketplace coverage during that time). But eligibility for robust cost-sharing reductions will depend on the marketplace being able to disregard income over 133% of the poverty level for people who are receiving unemployment compensation, and that won’t be available until the summer.

Full premium subsidies + strongest level of cost-sharing reductions

Section 9663 of the American Rescue Plan ensures that most people who receive at least one week of unemployment compensation at any time in 2021 will be able to obtain a Silver plan with $0 premiums. And Section 2305 ensures that the Silver plan will also include cost-sharing reductions that bring the actuarial value of the plan to 94% (which is superior to the actuarial value of a Platinum plan).

In both cases – for determining the premium tax credit amount and cost-sharing reduction eligibility – the exchange will disregard any income above 133% of the poverty level.

The enhanced premium subsidies in the American Rescue Plan result in $0 benchmark plan premiums for buyers with income up to 150% of the federal poverty level. So people receiving unemployment compensation will end up in that category, since their counted income will be capped at 133% of the poverty level.

And although there are three levels of cost-sharing reductions, the strongest – which result in added benefits that make Silver plans more robust than regular Platinum plans – are available to people who earn no more than 150% of FPL. Since counted income will be capped at 133% of the poverty level for people receiving unemployment compensation, all of the available Silver plans will have the strongest level of cost-sharing reductions built into their benefits.

In order to qualify for the enhanced premium tax credits and cost-sharing reductions, applicants only need to receive (or be approved to receive) unemployment compensation for at least one week in 2021. The legislation states that eligible enrollees will have to attest to the fact that they’re receiving or have received unemployment compensation this year, and that HHS will issue guidance clarifying what documentation will have to be submitted to the marketplace as proof.

The enhanced premium subsidies and cost-sharing reduction benefits are then potentially available for the remainder of 2021. But this will depend on whether you again become eligible for employer-sponsored health insurance that’s considered affordable and provides minimum value.

If you do, you’ll no longer be eligible for premium subsidies or cost-sharing reductions, since those are never available for months that a person is eligible for affordable employer-sponsored coverage that provides minimum value (regardless of whether the person is enrolled in the employer’s plan or not). That would also extend to family members who are eligible to enroll in the employer-sponsored plan, as the American Rescue Plan does not, unfortunately, address the family glitch.

Provides assistance to people who would otherwise be in the Medicaid coverage gap

Under the ARP, a person who receives unemployment compensation in 2021 is considered an “applicable taxpayer” for purposes of ACA Section 36B, which determines premium subsidy eligibility.

This means that a person who is receiving unemployment compensation but whose income is still low enough to be in the Medicaid coverage gap would be eligible for a $0 premium silver plan in 2021 (The Medicaid coverage gap still exists in 14 states; this will drop to 12 states once Oklahoma and Missouri expand Medicaid eligibility this summer.)

The ARP also encourages those remaining states to expand Medicaid. It provides two years of additional federal Medicaid funding to states that newly expand eligibility as called for in the Affordable Care Act.

Enrollment window is opportunity to take advantage of subsidies

From now through August 15, Americans can take advantage of an enrollment window that’s part of the Biden administration’s efforts to address the ongoing COVID pandemic (note that some states that run their own exchanges — as opposed to using HealthCare.gov — have different rules and deadlines for their COVID-related enrollment window in 2021). So if you’re uninsured and receiving unemployment benefits (or if you’ve received them at any point this year and do not have access to an employer-sponsored plan), you can sign up for health coverage through your state’s marketplace and take advantage of the financial assistance provided by the American Rescue Plan.

In nearly every state, people who are already enrolled in a health plan through the marketplace can also use this window to switch plans.

But what if you’re in a state with a state-run marketplace that is only allowing people who don’t already have marketplace coverage to enroll during the COVID-related enrollment window? You should still be able to switch to a Silver plan (if that’s your choice), as becoming newly eligible for cost-sharing reductions is a qualifying event that will allow you to replace your existing non-Silver plan with a Silver plan that includes cost-sharing reductions.

What if you’re eligible for Medicaid?

It’s important to understand that Medicaid eligibility is not affected by the change in how income is counted for people who are receiving unemployment compensation this year.

ARP Section 9663 temporarily adjusts the rules relating to ACA Section 36B (premium tax credits) and ARP Section 2305 temporarily adjusts the rules relating to ACA Section 1402 (cost-sharing reductions). In both cases, the legislative text that disregards income above 133% of FPL for 2021 is clear in noting that it’s “for purposes of this section,” meaning that the person’s income above 133% of FPL would not be disregarded for other purposes, such as determining Medicaid eligibility, Basic Health Program eligibility (in New York and Minnesota), or whether an offer of employer-sponsored coverage is considered affordable.

If a person is eligible for Medicaid based on their regular ACA-specific modified adjusted gross income, they would continue to be eligible for Medicaid in 2021 even if they’re receiving unemployment compensation. In states that have expanded Medicaid, eligibility for adults under the age of 65 extends to 138% of the poverty level (133% plus a built-in 5% income disregard). This could potentially cause some confusion in terms of the financial assistance for which people are eligible if they’re receiving unemployment compensation in 2021. But the crux of the matter is that the externally imposed temporary income cap of 133% of the poverty level does not apply for the determination of Medicaid eligibility, whereas it does apply for the determination of premium subsidies and cost-sharing reductions.

And as was the case in 2020, the additional COVID-related federal unemployment benefits (which have been extended through September 6) are not counted as income when determining eligibility for Medicaid.

So a person in a state that has expanded Medicaid will still be eligible for Medicaid in 2021 with an income of up to 138% of FPL. (That amounts to $17,774 for a single person in 2021.) As always, anyone eligible for Medicaid is not eligible for premium subsidies or cost-sharing reductions; this continues to be true for people receiving unemployment compensation at some point in 2021.

And a person in New York or Minnesota who is eligible for Basic Health Program coverage (the Essential Plan in New York; MinnesotaCare in Minnesota) will continue to be eligible for that coverage (as opposed to $0 premium silver plans in the marketplace) even if they receive unemployment compensation at some point this year. But there are premiums associated with Basic Health Program coverage.


Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

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Austin
Austin
23 days ago

Thank you! You answered many questions I have had since the bill passed.

Carolyn
Carolyn
21 days ago

I feel like there’s gotta be more to the $0 premium/94% CSR. If one spouse is on unemployment and the other makes $100k, are they still going to qualify at 133% of FPL?

Louise Norris
Editor
21 days ago
Reply to  Carolyn

The text of the legislation says “there shall not be taken into account any household income of the taxpayer in excess of 133 percent of the poverty line for a family of the size involved.” So yes, it would apply to the whole family in that case.
But it’s also fairly uncommon for a person to be earning $100k and not eligible for any sort of employer-sponsored health coverage. If the spouse has access to employer-sponsored coverage, they wouldn’t be eligible for subsidies at all. And if the other spouse (the one receiving unemployment benefits) is eligible to be added to their spouse’s employer-sponsored health plan, they would also be ineligible for subsidies — even if they haven’t enrolled in the employer’s plan, and regardless of how much it would cost to do so.

Kevin
Kevin
21 days ago
Reply to  Louise Norris

So the American Rescue plan does not cover the Obama Family glitch? I am on unemployment and my wife works. She is not a high earner. She pays $75 a week for her health insurance that meets all the requirements of the Affordable Care Act. I was told by her employer last year that they do not contribute to the spouse’s premium since they are not mandated to. They told me it was the “family glitch” and if I wanted to be on her plan it was $810 a month. They also told me if I go into the marketplace I am also ineligible for subsidies since I have access to this plan that meets ACA requirements. So am I S.O.L.? This is expensive when you are on unemployment.

Louise Norris
Editor
20 days ago
Reply to  Kevin

Unfortunately, the American Rescue Plan does not fix the family glitch. And in the situation you’re describing, the family glitch would continue to apply, and would continue to prevent you from receiving premium subsidies. Here’s more from Health Affairs: https://www.healthaffairs.org/do/10.1377/hblog20210311.725837/full/
In this case, it might make more sense for your wife’s employer to not offer spousal coverage at all, especially since they know they’re forcing people into a “family glitch” situation. But it’s possible that the Biden administration or Congress could fix the family glitch with future regulations or legislation.

Kevin
Kevin
20 days ago
Reply to  Louise Norris

Thank you for your response. This is such a shame. In this bill they extending subsidies to those on unemployment. However, the way it is now with the “family glitch” I will not get affordable healthcare anywhere. I am wondering if somehow I can get subsidies for the market place and pay the difference in the premium when it is determined I had access to my wife’s ACA compliant plan at the full premium price. What I don’t want to happen is pay full market price while I am on unemployment and then down the road the gov’t makes change and say “ok, those on unemployment get a subsidy” It’s just like the $10.200 unemployment tax break given at the last minute after people already filed.

Marshawn Harris
18 days ago

Covered CA does not sell $0 premium silver plans. The lowest possible silver plan premium is $1. Here is a link to more information on Covered CA:
 new American Rescue Plan FAQ document.

Louise Norris
Editor
17 days ago

This is because California is one of the states that requires all health plans to cover non-Hyde abortion services: https://www.healthinsurance.org/faqs/do-health-insurance-plans-in-acas-exchanges-cover-abortion/
Insurers are required to charge at least $1/month for this (even though it doesn’t cost that much to provide the coverage) and premium subsidies cannot be used to cover that portion of the premium.

Kevin
Kevin
16 days ago

Reply to  Kevin
“Unfortunately, the American Rescue Plan does not fix the family glitch. And in the situation you’re describing, the family glitch would continue to apply, and would continue to prevent you from receiving premium subsidies. Here’s more from Health Affairs: https://www.healthaffairs.org/do/10.1377/hblog20210311.725837/full/
In this case, it might make more sense for your wife’s employer to not offer spousal coverage at all, especially since they know they’re forcing people into a “family glitch” situation. But it’s possible that the Biden administration or Congress could fix the family glitch with future regulations or legislation”.

I am at my wits end trying to find a way to get a subsidy. My question is if my wife’s employer stops offering spousal coverage how is the subsidy amount determined? Is it still by household income?

Louise Norris
Editor
15 days ago
Reply to  Kevin

I’m not sure whether your wife’s employer would be able to make that sort of change mid-year even if that’s something they want to do — they may have to wait until the start of their next plan year.
But if they didn’t offer spousal coverage, you’d potentially be eligible for subsidies in the marketplace. I say “potentially” because it would still be based on total household income. Assuming you’re the only household member applying for marketplace coverage, they’d be looking at the premium for just you and comparing it with your total household income. Here’s the math on how the subsidy itself is calculated: https://www.healthinsurance.org/faqs/is-the-irs-saying-ill-have-to-pay-more-for-my-health-insurance-next-year/ (note that subsidy eligibility is more generous than usual for 2021 and 2022, so there are people who qualify for subsidies during this period even though they normally do not).
But sometimes a person hit by the family glitch would end up not qualifying for subsidies *even if the family glitch didn’t exist* simply due to the fact that the whole household’s income would be used to determine subsidy eligibility. It’s similar to how subsidy eligibility works when one spouse is on Medicare and the other is in the marketplace, as outlined here: https://www.verywellhealth.com/obamacare-subsidies-change-with-family-size-4065153

Jackie
Jackie
14 days ago

When you say “switch plan” — does this mean you can switch the insurance provider or just migrate between plans (assuming you are already on the exchange in a plan). For instance, can you switch from Blue Cross Bronze to Aetna Silver? Or are you required to stay with Blue Cross?

Louise Norris
Editor
14 days ago
Reply to  Jackie

If you’re enrolled in a plan through HealthCare.gov, you can switch to any other available plan you like during the COVID-related enrollment period. Some of the state-run exchanges are currently offering more limited enrollment windows, however, and may not allow current enrollees to make plan changes without a qualifying event.

But if you’ve already spent any money in out-of-pocket costs this year, you’ll want to check with your insurer to see how they’re handling plan changes during the COVID-related enrollment window. Some insurers have said that they’ll allow people to carry over their deductible and out-of-pocket costs to a new plan, as long as it’s another plan offered by the same insurer. For example, if you have a Bright Health bronze plan, you want to switch to a Bright Health silver plan, and you’ve already spent $1,000 towards your deductible, Bright Health has said that they’ll credit that deductible spending on your new plan. Several other insurers have said the same thing, but it’s not universal and insurers are not required to do this. If your insurer is offering this, however, and if you’ve had out-of-pocket spending so far this year, it might be in your best interest to transition to another plan offered by your current insurer.

Jackie
Jackie
11 days ago
Reply to  Louise Norris

Very helpful – thank you!

Lorri
Lorri
11 days ago

My hypothetical. I am on unemployment currently with a few temp jobs so far in 2121. On ACA bronze. I hope to secure a job but no health insurance offered so on ACA. With unemployment benefits and future income in 2121 will I pay aca premiums base on total income. Say 65-70,000 at 8.5 of income or will my ACA insurance be free for the year?

Louise Norris
Editor
11 days ago
Reply to  Lorri

You’d still qualify for the $0-premium silver plan for the full year, as long as you don’t get an offer of coverage from a new employer. For the purpose of determining subsidy eligibility, Since you’re receiving unemployment compensation at some point in 2021, Section 9663 of the ARP effectively caps your countable income at a level that makes you eligible for the full subsidy, regardless of how much you actually earn.

You might want to consider switching to a Silver plan in order to get the full benefit. If you’re in a state that uses HealthCare.gov, the government has said the system will be updated to reflect the $0-premium benchmark (Silver) plan by July: https://www.cms.gov/newsroom/press-releases/2021-special-enrollment-period-access-extended-august-15-healthcaregov-marketplace-coverage (you can enroll in it before then, but the additional subsidy amount wouldn’t be incorporated yet, and you might have to recoup it on your tax return once the year is said and done). You’ll want to check with your insurer before making any changes, to see if any out-of-pocket costs you’ve already incurred this year could be transferred to a new Silver plan.

Kateryna Shahnewaz
Kateryna Shahnewaz
7 days ago

I just applied at healthcare.gov. We are 2 unemployed and they count all our income: 133% was completely disregarded. Tried to talk to manager and she do not want to talk and said to file the appeal. So, should you file appeal just to get benefits for which you eligible by Law?

Louise Norris
Editor
7 days ago

Unfortunately, this isn’t going to be available in realtime on HealthCare.gov until July: https://www.cms.gov/newsroom/press-releases/2021-special-enrollment-period-access-extended-august-15-healthcaregov-marketplace-coverage
You’ll be able to claim the additional premium tax credit on your 2021 tax return for months prior to that, if you’re able to pay the premiums yourself between now and then.

Lyne
Lyne
4 days ago

Both my husband and I lost our jobs during Covid and qualified for unemployment benefits. As we are both in our early 60’s we decided to semi retire and started collection our pensions and social security benefits. Our total income is at the 400% poverty level. Do we have to include the pension income and social security income when we are applying for 2021 marketplace health insurance? Please let us know. Thank you. Lyne

Louise Norris
Editor
3 days ago
Reply to  Lyne

We advise that you consult with a tax advisor who can provide more specific feedback based on your financial situation. But for general background, here’s how income is calculated under the ACA: https://www.healthinsurance.org/glossary/modified-adjusted-gross-income-magi/ Social Security income does get included. The pension income is also included, assuming it’s taxable.
Depending on where you live and the cost of coverage in your area, you can still qualify for premium tax credits in 2021 even if your income exceeds 400% of the poverty level, since the American Rescue Plan has temporarily eliminated the “subsidy cliff” that normally exists at 400% of the poverty level: https://www.healthinsurance.org/obamacare/beware-obamacares-subsidy-cliff/

Kevin
Kevin
4 days ago

Any news if POTUS is going to fix the family glitch?

Sage
Sage
15 hours ago
Reply to  Kevin

Kevin, have you checked to see if $801/month is “affordable” for your family? I don’t know what the criteria are for that, but it sounds really high.

Louise Norris
Editor
13 hours ago
Reply to  Sage

Unfortunately, affordability is not based on the whole family’s premium. They only consider the cost of the employee’s coverage (without adding a spouse or dependents) versus the household income. The cost to add family members is not taken into consideration. This is known as the “family glitch:” https://www.healthinsurance.org/obamacare/no-family-left-behind-by-obamacare/

Sage
Sage
15 hours ago

I’m self-employed, and receive UI benefits during stretches of low or no income. So I’ll qualify for the <133% income subsidy. This would entitle me to a free silver plan with the cost-sharing reduction. Great! However, I’ve had a bronze HSA-eligible plan since Jan. 1, and I contributed the full HSA amount already, back in January. I assume that, if I switched to a silver plan, that would count as an over-contribution to my HSA. True? How would I reconcile that? Thank you.

Louise Norris
Editor
13 hours ago
Reply to  Sage

Yes, this is a tricky situation. But as long as you withdraw the excess contributions (and any investment or interest earnings they generated) before you file your 2021 tax return, you won’t be subject to any penalties: https://www.irs.gov/publications/p969#en_US_2020_publink1000204078
You’ll be able to prorate your HSA contribution for 2021. So if you switch to a $0 premium silver plan as of July, for example, you would still be able to leave half your HSA contribution for 2021 in the account, and would need to withdraw the other half.
We recommend that you speak with a tax advisor to be sure you’re following all applicable rules with this, and accounting for any other financial implications this might have.

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