Health provisions in the American Rescue Plan Act of 2021
Congress recently passed, and President Biden signed into law, the American Rescue Plan Act of 2021 (ARP)—a $1.9 trillion legislative package that provides additional tools to respond to the ongoing COVID-19 pandemic. The legislation includes $1,400 direct payments to individuals and dependents, extended unemployment benefits, extended paid sick leave, a temporary expansion of the child tax credit, housing aid, funding for state governments and schools, and much more. This blog post summarizes some of the major health coverage provisions included in the legislation.
Enhanced subsidies for Affordable Care Act coverage
Currently under the Affordable Care Act (ACA), qualified individuals and families making 100-400% of the federal poverty level are eligible for advance premium tax credits (subsidies) for the purchase of a health insurance plan on ACA health insurance marketplaces. The current federal poverty level is $12,760 for individuals, or $26,200 for a family of four.
The ARP makes temporary changes for 2021 and 2022 that enhance premium tax credits for people who currently receive them and provides access to premium tax credits for people whose income is above 400% of the poverty level. Specifically, the ARP:
- Reduces the percentage cap that individuals and families contribute to their ACA plan premiums for 2021 and 2022. This means that if your income is between 100-150% of the poverty level, you would pay $0 in premiums for an ACA silver-level benchmark plan. If your income is between 300-400% of the poverty level, your premium contribution cap would be between 6-8.5% of your income. If your income is above 400% of the poverty level, you will now be eligible for premium tax credits by having your premium contribution capped at 8.5% of your income for a silver-level benchmark plan.
- Provides maximum ACA subsidies for people receiving unemployment compensation in 2021 and who are not eligible for other health coverage. If you receive unemployment compensation at any point in 2021, your income will be treated as being no greater than 133% of the poverty level, which means you can access the maximum ACA premium subsidies, including $0 premium coverage, as well as cost-sharing reductions.
- Removes the requirement that people pay back excess insurance premium tax credits for the 2020 tax year.
The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) allows certain people who lose employer-sponsored health insurance to continue with that coverage for a certain amount of time, usually up to 18 months. However, COBRA continuation coverage is typically very expensive for individuals, as you can be responsible for up to 102% of the total cost of coverage, including the amount that was previously paid by your employer.
The ARP provides a COBRA subsidy for eligible people who have lost employer-sponsored coverage after being laid off or having their work hours reduced. COBRA continuation coverage will be subsidized at 100% of the cost of premiums from April 1, 2021 through September 30, 2021. If you were previously eligible to enroll in COBRA coverage but did not, or you were enrolled in COBRA coverage but discontinued it, you may go back and enroll in subsidized coverage within 60 days of being notified by your employer of its availability. If you are eligible for other group coverage or Medicare, you are not eligible for the COBRA subsidy.
There are 12 states that did not expand Medicaid under the ACA. The ARP provides an opportunity for those states to receive a 5% increase to their Federal Medical Assistance Percentage (FMAP), which is the federal matching rate to cover a state’s “non-expansion” population, if they choose to expand Medicaid to more adults. The FMAP increase would be for two years. For the expansion population, the federal matching rate would be 90%, which is the same permanent matching rate for states that have already expanded Medicaid.
ARP makes several other changes to the Medicaid program, including:
- Allowing states (for five years) to provide full Medicaid benefits to eligible pregnant women for a year after giving birth.
- Providing higher federal matching funds for home and community-based services, including mobile crisis intervention services to individuals experiencing mental health or substance use disorder crises (for five years).
- Increased federal support for certain Indian Health and Native Hawaiian health providers.
- Coverage of COVID-19 vaccines and treatments until a year after the pandemic ends at no cost to beneficiaries under Medicaid and the Children’s Health Insurance Program (CHIP). The FMAP would be increased to 100% for vaccine costs during that period.
- COVID-19 vaccines and treatment would also be covered for the uninsured, and outpatient drugs used for COVID-19 treatment would be included in the Medicaid Drug Rebate Program.