The American Rescue Plan Act (ARPA) has provisions that give individuals relief related to healthcare coverage. Perhaps the healthcare coverage provision most pertinent to employer plans, including self-insured plans, is related to the Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage premium subsidies. It instructs employers to cover 100% of the cost of COBRA premiums for qualified individuals. COBRA subsidies are not the sole option that the ARPA provides to those seeking affordable healthcare coverage. The ARPA also includes other provisions that provide subsidies and relief for healthcare coverage.
The ARPA offers enhanced Marketplace premium subsidies.
The ARPA reduces the out-of-pocket cost of coverage for most people enrolled in a Marketplace plan. The Affordable Care Act (ACA) provides premium tax credits for individuals and households with income that is 100% to 400% of the federal poverty level (FPL). Those tax credits are indexed to Marketplace silver plans and lower the amount that eligible individuals must contribute to their plan premium cost. Under the new law, the upper-income limit for eligibility is increased, and the percentage of household income that individuals must contribute to purchase Marketplace Exchange coverage from HealthCare.gov is decreased. The adjusted household contribution amounts range from 0% to 8.5%, amended from the 2021 amounts of 2.06% to 9.83% of household income.
The adjusted premium tax credits are available and effective for the 2021 and 2022 plan years.
The adjusted household contribution amounts are capped at 8.5% for those earning just over 400% of the FPL and 0% for those earning 150% of FPL or less. However, the amended premium tax credit percentages are only effective for the 2021 and 2022 plan years. Individuals who want to avail themselves of these premium tax credits for the 2021 plan year may need to update their applications on HealthCare.gov or their appropriate State Exchange website. Enrollees can claim the adjusted premium tax credits for the months of January through April of 2021 on their 2021 tax filings next year. Like California, Rhode Island and DC, some State Exchanges are automatically updating the premium rates for their Marketplace plan enrollees. The premium tax credits are also available to those who enroll in Marketplace coverage during the special open enrollment for the 2021 plan year, which continues until August 15, 2021. For the 2022 plan year, the new premium tax credit percentages will be reflected on the 2022 plan year open enrollment applications.
Under the ARPA, those who receive unemployment insurance may be entitled to free Marketplace health coverage.
Anyone who receives, or is eligible to receive, unemployment insurance during 2021 can get a Marketplace premium tax credit covering the entire cost of coverage for a silver-level plan. The ARPA classifies individuals receiving unemployment benefits as someone with income at 133% of FPL. The ARPA amended the premium tax credit divisions and considers those earning less than 150% of the FPL responsible for 0% in terms of their household contribution to a silver-level Marketplace health plan. Those getting unemployment insurance who enroll in a silver-level plan may also be eligible for other cost-sharing reductions that shrink their deductible and other out-of-pocket costs.
A provision in the ARPA alleviates the requirement that individuals pay back excess Marketplace premium tax credits.
Typically, if someone earned more money than they estimated on their Marketplace coverage application they have to repay any excess premium tax credits when they file their taxes. For the 2020 tax year, relief in the ARPA alleviates the requirement that someone pay back any excessive premium tax credits. This provision helps individuals who received unforeseen additional income during 2020. For those who already paid their taxes, the IRS is reviewing the law and developing guidance on the details of whether they will need to file amended returns. Those who have not yet filed their taxes have until the extended filing deadline of May 17, 2021.
The ARPA provides several avenues of relief for individuals who need healthcare coverage. Those searching for health coverage options and current Marketplace enrollees and options may want to research some of the available relief by reviewing the HealthCare.gov ARPA information page, the guidance on unemployment insurance relief and the IRS’s guidance on the premium tax credit.
EPIC offers this material for general information only. EPIC does not intend this material to be, nor may any person receiving this information construe or rely on this material as, tax or legal advice. The matters addressed in this document and any related discussions or correspondence should be reviewed and discussed with legal counsel prior to acting or relying on these materials.
Compliance Manager – Atlanta, GA