The American Rescue Plan Act of 2021 – H.R. 1319 – was enacted on March 11, 2021. The legislation provides a great deal of financial relief to Americans struggling with the fallout of the ongoing COVID pandemic.
Some of the most widely known provisions are the third round of stimulus checks ($1,400 per person, for most Americans) and the extension of additional federal unemployment benefits into September 2021. But there are also several important health insurance provisions in the American Rescue Plan.
Throughout 2020, maintaining health insurance coverage was one of many challenges faced by Americans who lost their jobs or saw a reduction in their income due to the pandemic. To address this for 2021, the American Rescue plan ensures access to robust health coverage for people who are receiving unemployment compensation.
Anyone receiving unemployment compensation at any time in 2021 is eligible for full premium subsidies and full cost-sharing reductions throughout 2021 (unless they subsequently become eligible for an employer-sponsored plan or Medicare, in which case the subsidies would end at that point just as they normally do in that situation).
“Full” ACA premium subsidies means that the two lowest-cost Silver plans available to a buyer will be premium-free, as will any other marketplace plans that are priced below the benchmark plan. Depending on where the buyer resides, this can include the majority of Bronze plans and possibly even some Gold plans. But if you’re receiving unemployment compensation in 2021, it’s likely in your best interest to select a Silver plan (including one of the two that will have $0 premiums), as that Silver plan will also include the most robust level of cost-sharing reductions, making it better than a normal Platinum plan.
Note that the additional subsidies for Americans receiving unemployment benefits will be available on HealthCare.gov as of July 2021. For people in states that run their own marketplaces, the timing of the rollout of this benefit will vary from state to state.
The American Rescue Plan’s tax provisions affect health insurance in several ways:
Most Americans who buy their own health insurance are eligible for larger subsidies or newly eligible for subsidies under the American Rescue Plan:
It’s important to understand that premium subsidies (premium tax credits) are only available through the exchange/marketplace in each state. So people who are currently enrolled outside the exchange will need to transition to the exchange in order to claim the tax credits, either upfront or on their tax return next spring. This includes people who currently have off-exchange ACA-compliant coverage, as well as people enrolled in short-term plans, health care sharing ministry plans, Farm Bureau plans, etc.
Unfortunately, the American Rescue Plan does not fix the family glitch. So family members who are eligible to enroll on an employer-sponsored plan – which is considered affordable for the employee – are not eligible for subsidies, regardless of the cost to add the family members to the employer-sponsored plan.
And the American Rescue Plan also does not solve the Medicaid coverage gap in the states that have not yet expanded Medicaid. But it does provide full subsidies for a person receiving unemployment benefits in 2021, even if they would otherwise be in the coverage gap. And as noted above, it does provide additional funding in an effort to entice more states to expand Medicaid.
For now, the American Rescue Plan’s health insurance provisions are temporary:
But it’s possible that at least the enhanced premium tax credits (ie, the elimination of the subsidy cliff and the reduction in the percentage of income that people have to pay in after-subsidy premiums) could be made permanent as part of the infrastructure plan that the Biden administration is considering in 2021.
The Inflation Reduction Act would extend ARP's health insurance subsidy enhancements – helping millions eligible for ACA marketplace subsidies.
Legislation signed today provides substantial premium tax credits and cost-sharing reductions to Americans receiving unemployment benefits.