Understand the Key Financial Components of the ARA

Liz Weston CFP NerdWallet Columnist
The latest coronavirus relief package did more than dole out $1,400 checks. The law also made
health insurance free for millions more people and reduced costs for others, at least for now. The American Rescue Plan , which President Joe Biden signed in March, expanded subsidies for people buying their own insurance on Affordable Care Act exchanges. In addition, anyone who receives unemployment benefits this year can qualify for zero-premium health insurance
through the exchanges, regardless of income. In fact, many people who are currently uninsured will qualify for free or low-cost coverage through the exchanges or Medicaid, says Daniel McDermott , a policy analyst with KFF , the nonpartisan health care think tank formerly known as the Kaiser Family Foundation. People who lost their jobs but want to keep their former employer’s health insurance also may get help. If you don’t qualify for group health insurance elsewhere, the federal government will pay your COBRA premiums for up to six months.

MILLIONS QUALIFY FOR FREE ACA COVERAGE

Since 2013 , ACA exchanges have allowed people to buy individual and family health insurance policies, usually with tax credits that reduced their premiums and other costs. ACA has four levels: bronze, silver, gold and platinum. Bronze plans typically have the lowest monthly premiums and the highest deductibles; platinum plans have the highest premiums and the lowest deductibles. Before the new relief package, people with incomes greater than 400% of the federal poverty level typically didn’t qualify for subsidies to reduce their premiums. Now people with incomes up to 600% of the poverty level — up to $76,560 for a single person or $157,200 for a family of four — can qualify, according to KFF. (KFF’s calculator can show you how much you’d likely pay for ACA coverage.)

The relief package reduced premiums for the vast majority of people who buy their own insurance, McDermott says. In addition, nearly half of the 29 million currently uninsured now qualify for a free plan, he says. Those with incomes below 250% of the poverty line also will benefit from reduced cost-sharing, which means lower deductibles and other out-of-pocket costs. At 150% of the poverty line — income of about $19,000 for a single person and just under $40,000 for a family of four —people qualify for zero-premium silver plans with annual deductibles of just $177 . Millions of unemployed people will be eligible for similar coverage. Anyone who receives unemployment benefits for any part of 2021 can qualify for a zero-premium silver plan with the maximum cost-sharing reductions, McDermott says. “For all intents and purposes, the health insurance exchanges are going to look at you as if your income was under 150%” of poverty level, he says.

HOW TO QUALIFY FOR ACA SUBSIDIES

The expansion of Affordable Care Act subsidies is retroactive to Jan. 1 and will continue through Dec. 31, 2022. People must purchase their insurance from Healthcare.gov or their state’s ACA exchange to qualify for subsidies. The act also created a new special enrollment period that extends through Aug . 15, 2021. Some people still don’t qualify for subsidies, including most people with incomes above 600% of the poverty line; undocumented immigrants; people who have offers of employer-provided health insurance that’s considered affordable; and certain low-income people in states that haven’t expanded Medicaid coverage. 

WHAT YOU SHOULD KNOW about FREE COBRA COVERAGE

Many people prefer to keep their employer’s health insurance coverage when they lose their jobs, although the cost is often prohibitive. Most employers pay a large portion of the cost to cover workers, but former employees who opt to extend their coverage using the federal COBRA law typically must pay the full premium plus a 2% administrative fee.

Thanks to the new law, employers are required to provide free COBRA coverage from April 1 through Sept. 30 to eligible former employees who lost their health care coverage because of involuntary termination or a reduction in hours, says financial planner and certified public accountant Kelley Long , consumer financial education advocate for the American Institute of
CPAs. The employers’ cost will be offset by federal tax credits. If you’re eligible for other group health coverage — through a spouse, new employer or Medicare, for example — you won’t qualify for free COBRA. “The intention is to help people who have no other options and would otherwise be uninsured
because they can’t afford COBRA,” Long says. Normally you have 60 days after you lose your job to opt for COBRA coverage, which typically lasts a total of 18 months. If you missed that 60-day window, or signed up but then dropped coverage, you may have another opportunity to enroll. The new law extends the sign-up period so that people who lost their jobs during the pandemic can get the free coverage. Employers are required to reach out to eligible former employees by May 31 . If you think you’re eligible but you haven’t heard from your employer, McDermott recommends contacting your former employer’s human resources department. There will be a special enrollment window at the end of September to allow people with COBRA to switch to an ACA plan, McDermott says.

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