The American Rescue Plan: What You Need to Know

President Biden signed the American Rescue Plan Act into law on March 11, 2021. The $1.9 trillion package provides relief to millions of families, businesses, schools, and state and local governments struggling because of the COVID-19 pandemic and its economic fallout. The law also includes provisions to expand access to affordable, comprehensive insurance coverage. The following frequently asked questions (FAQs) provi

The American Rescue Plan: What You Need to Know

President Biden signed the American Rescue Plan Act into law on March 11, 2021. The $1.9 trillion package provides relief to millions of families, businesses, schools, and state and local governments struggling because of the COVID-19 pandemic and its economic fallout. The law also includes provisions to expand access to affordable, comprehensive insurance coverage. The following frequently asked questions (FAQs) provide more detail about these coverage provisions. They are intended to supplement, not replace, any training provided by the marketplace to Navigators and other assisters. For more FAQs on the Affordable Care Act insurance reforms and marketplace eligibility and enrollment, visit CHIR’s Navigator Resource Guide.

Enhanced Premium Tax Credits

I’ve heard I might be eligible for more premium tax credits under the American Rescue Plan. Is that true?

Most likely, yes. In fact, four out of five federal marketplace enrollees will be able to find a plan for $10 or less per month. The American Rescue Plan increases the premium tax credits (PTCs) available for marketplace enrollees by reducing the percentage of income that individuals and families are expected to contribute towards premiums, for plan years 2021 and 2022. Under the new premium schedule, families with incomes between 100 and 150 percent of the federal poverty level could have their premium contribution reduced to $0. Families with incomes over 400 of the federal poverty line would have their premium contribution capped at 8.5 percent of their household income.

In addition to premium relief, does the American Rescue Plan also reduce enrollee deductibles and other cost-sharing?

Under the American Rescue Plan, many people will be able to find more affordable plans that offer reduced cost-sharing. If you’ve signed up for a Bronze plan, which covers only 60 percent of an average person’s health care costs, and have a household income under 150 percent of the federal poverty line, you can switch to a $0 premium Silver plan with low cost-sharing (on average, the plan would cover 94 percent of someone’s health care costs). Those with incomes between 151-250 percent of the federal poverty line can also qualify for a plan with reduced cost-sharing.

The American Rescue Plan also provides cost-sharing relief to individuals who receive or are eligible for at least one week of unemployment insurance benefits in 2021. These individuals, regardless of income level, will be able to enroll in a $0 Silver plan that covers 94 percent of an average person’s health care costs.

When will the enhanced premium tax credits under the American Rescue Plan be available?

The enhanced premium tax credits based on income will be available through HealthCare.gov beginning April 1, 2021. However, some of the state-based marketplaces may establish different start dates.

Regardless, if you are not currently enrolled in the marketplace and you want health coverage, you may want to submit a marketplace application as soon as possible. The enhanced subsidies are available for any month you are enrolled in a marketplace plan in 2021. By enrolling now, even if the marketplace platform is not yet able to apply the enhanced premium tax credits to your plan, you will establish your entitlement to those tax credits. While you may have to contribute more towards your monthly premiums at first, depending on your state, you will either have additional credits applied to your premiums in future months or be able to claim them when you reconcile your 2021 income taxes. If you wait to enroll in a marketplace plan, you will not be eligible for subsidies in the months of 2021 when you were not enrolled.

I am currently enrolled in a marketplace health plan. What should I do to obtain the enhanced premium tax credits under the American Rescue Plan?

You should return to HealthCare.gov or your state-based marketplace website and update your application. Some state-based marketplaces may automatically apply the enhanced premium tax credits to your plan. However, it is prudent to return to the marketplace and make sure all of your account information is accurate and up to date, including your household income. If you are enrolled in a Bronze plan and have not already paid out a substantial amount towards your deductible, you may also want to see whether switching to a plan with a lower deductible, such as a Silver or a Gold plan, would be a better value for you.

If you have been enrolled in a marketplace plan since January 1, 2021, under the American Rescue Plan you are entitled to enhanced premium tax credits dating back to that date. If you have enrolled in a plan through HealthCare.gov, you will be able to recover those additional premium tax credits when you reconcile your 2021 tax return. However, some state-based marketplaces may give you an additional credit towards your premiums for the balance of the year, to reflect the amount you are entitled to from January until the marketplace begins applying the enhanced tax credits to monthly premiums.

I am currently enrolled in an individual market plan outside of the marketplace. Will I be able to find a more affordable plan on the marketplace?

Most likely, yes. Many people with incomes that previously did not qualify them for premium tax credits will now qualify, thanks to the American Rescue Plan. Everyone, regardless of income, will have plans available with premium contributions set at no more than 8.5 percent of their household income. For example, under the American Rescue Plan, a 64-year-old earning $58,000 (450 percent of the federal poverty level) would have their premium contributions reduced from $12,900 per year to $4,950.

COBRA Subsidies

I was recently laid off and heard I might qualify for free COBRA benefits, is that true?

Probably, yes. Under the American Rescue Plan, the government will subsidize 100 percent of COBRA premiums between April 1 and September 30, 2021. The law also allows individuals who missed their 60-day enrollment window for COBRA prior to the availability of subsidies to go back and enroll. For example, if you were laid off from your job in August of 2020 but found the premiums too high to enroll at the time, you can come back and enroll for up to 60 days after you are notified of the availability of the subsidies under the American Rescue Plan. You would not have to pay premiums back to the date you were originally eligible to enroll in COBRA, but note that coverage for any medical claims you incurred would only apply from your date of enrollment.

However, if you were laid off more than 18 months ago, check with your plan administrator to see if you are eligible. No one can enroll in COBRA if their coverage window (either 18 or 36 months from their qualifying event) has passed. Individuals are also not eligible for the COBRA subsidies if they have an offer of coverage through a new employer or a spouse’s employer-based plan. Note that if you enroll in COBRA with the subsidies, but later become eligible for a group plan through a new employer, you must report it to the COBRA plan administrator and you will no longer be eligible for subsidies.

I was laid off from a small business. Will I be eligible for COBRA subsidies?

Most likely, but it could depend on where you live. Under federal law, small employers with fewer than 20 employees are exempt from COBRA. However, forty states have a state continuation of coverage program for small employer plans. These are often called “mini-COBRA” laws. The American Rescue Plan extends its COBRA subsidies to these mini-COBRA programs. However, the federal law defers to state rules on how employees of these small businesses will be notified of their eligibility. You may want to check with your former employer or state department of insurance for information about how to access these subsidies.

I left my job voluntarily. Will I qualify for COBRA subsidies?

No. The American Rescue Plan’s COBRA subsidies are not available to people who voluntarily terminate their employment.

I read about new subsidies for COBRA benefits, but my employer hasn’t given me any information about how to enroll. What should I do?

Under the American Rescue Plan, if you are eligible for COBRA subsidies, your former employer or health insurance company is required to notify you by May 31, 2021. You will have 60 days from the date of that notification to enroll in the COBRA coverage. You can choose to start your coverage prospectively, or to request to have your coverage made retroactive to April 1st. However, note that the COBRA subsidies are only available through September 30, 2021.

I was laid off 19 months ago, and couldn’t afford COBRA at the time. Can I sign up now?

Probably not. Most people are eligible for COBRA coverage for just 18 months after their qualifying event* (in your case, the date you were laid off). If that 18-month period has passed, you are no longer eligible for your former employer’s COBRA benefits. However, you may be eligible for Medicaid or enhanced premium tax credits through the Marketplace. In fact, under the American Rescue Plan, four out of five people will now be able to find a Marketplace plan for $10 per month or less.

*Individuals may be eligible for COBRA for up to 36 months in the following circumstances: (1) death of the covered employee; (2) Divorce or separation of the covered employee from his or her spouse; (3) the covered employee becoming eligible for Medicare benefits; or (4) a dependent child ceasing to become a dependent.

I’ve heard the COBRA subsidies expire in September. I won’t be able to pay the COBRA premiums without the subsidy. Will I be able to switch to a Marketplace plan?

Possibly not. Currently, under federal and most state rules, there is no special enrollment opportunity for individuals who dis-enroll from COBRA because they can no longer afford the premium. You may not be able to switch to a Marketplace plan after September 30 unless you have experienced another life event that would qualify you for a special enrollment opportunity.

Reconciliation of 2020 Premium Tax Credits

Help! I just got a big tax bill for excess premium tax credits I received in 2020. Do I have to pay these back?

No. The American Rescue Plan waives the requirement that you pay back premium tax credits you received in 2020 to which you were not entitled. Under the Affordable Care Act, individuals must estimate their income for the coming year, and the marketplace advances premium tax credits to eligible enrollees on a monthly basis. In a typical year, if your actual income exceeded the amount you originally estimated, you could owe some or all of the excess premium tax credits back to the federal government via your annual tax filing. This process is called “reconciliation.”

While the American Rescue Plan provides relief from this process for tax year 2020, it did not do so for future years, so if you are receiving premium tax credits for your marketplace plan in 2021, and experience a change in your income or household, be sure to promptly report it to the Marketplace.

I’ve filed my 2020 tax return and paid back excess premium tax credits. Now I hear that I didn’t owe that money back. What should I do?

That is correct. The American Rescue Plan waived the requirement that you pay back excess premium tax credits that you received in 2020. If you have already submitted your tax return and paid back the excess premium tax credits, the Internal Revenue Service (IRS) will issue you a refund. While it is not yet clear when or how that refund will be processed, the IRS has advised that people refrain from filing an amended return at this time, and that it will issue more guidance soon.

de more detail about these coverage provisions. They are intended to supplement, not replace, any training provided by the marketplace to Navigators and other assisters. For more FAQs on the Affordable Care Act insurance reforms and marketplace eligibility and enrollment, visit CHIR’s Navigator Resource Guide.

Enhanced Premium Tax Credits

I’ve heard I might be eligible for more premium tax credits under the American Rescue Plan. Is that true?

Most likely, yes. In fact, four out of five federal marketplace enrollees will be able to find a plan for $10 or less per month. The American Rescue Plan increases the premium tax credits (PTCs) available for marketplace enrollees by reducing the percentage of income that individuals and families are expected to contribute towards premiums, for plan years 2021 and 2022. Under the new premium schedule, families with incomes between 100 and 150 percent of the federal poverty level could have their premium contribution reduced to $0. Families with incomes over 400 of the federal poverty line would have their premium contribution capped at 8.5 percent of their household income.

In addition to premium relief, does the American Rescue Plan also reduce enrollee deductibles and other cost-sharing?

Under the American Rescue Plan, many people will be able to find more affordable plans that offer reduced cost-sharing. If you’ve signed up for a Bronze plan, which covers only 60 percent of an average person’s health care costs, and have a household income under 150 percent of the federal poverty line, you can switch to a $0 premium Silver plan with low cost-sharing (on average, the plan would cover 94 percent of someone’s health care costs). Those with incomes between 151-250 percent of the federal poverty line can also qualify for a plan with reduced cost-sharing.

The American Rescue Plan also provides cost-sharing relief to individuals who receive or are eligible for at least one week of unemployment insurance benefits in 2021. These individuals, regardless of income level, will be able to enroll in a $0 Silver plan that covers 94 percent of an average person’s health care costs.

When will the enhanced premium tax credits under the American Rescue Plan be available?

The enhanced premium tax credits based on income will be available through HealthCare.gov beginning April 1, 2021. However, some of the state-based marketplaces may establish different start dates.

Regardless, if you are not currently enrolled in the marketplace and you want health coverage, you may want to submit a marketplace application as soon as possible. The enhanced subsidies are available for any month you are enrolled in a marketplace plan in 2021. By enrolling now, even if the marketplace platform is not yet able to apply the enhanced premium tax credits to your plan, you will establish your entitlement to those tax credits. While you may have to contribute more towards your monthly premiums at first, depending on your state, you will either have additional credits applied to your premiums in future months or be able to claim them when you reconcile your 2021 income taxes. If you wait to enroll in a marketplace plan, you will not be eligible for subsidies in the months of 2021 when you were not enrolled.

I am currently enrolled in a marketplace health plan. What should I do to obtain the enhanced premium tax credits under the American Rescue Plan?

You should return to HealthCare.gov or your state-based marketplace website and update your application. Some state-based marketplaces may automatically apply the enhanced premium tax credits to your plan. However, it is prudent to return to the marketplace and make sure all of your account information is accurate and up to date, including your household income. If you are enrolled in a Bronze plan and have not already paid out a substantial amount towards your deductible, you may also want to see whether switching to a plan with a lower deductible, such as a Silver or a Gold plan, would be a better value for you.

If you have been enrolled in a marketplace plan since January 1, 2021, under the American Rescue Plan you are entitled to enhanced premium tax credits dating back to that date. If you have enrolled in a plan through HealthCare.gov, you will be able to recover those additional premium tax credits when you reconcile your 2021 tax return. However, some state-based marketplaces may give you an additional credit towards your premiums for the balance of the year, to reflect the amount you are entitled to from January until the marketplace begins applying the enhanced tax credits to monthly premiums.

I am currently enrolled in an individual market plan outside of the marketplace. Will I be able to find a more affordable plan on the marketplace?

Most likely, yes. Many people with incomes that previously did not qualify them for premium tax credits will now qualify, thanks to the American Rescue Plan. Everyone, regardless of income, will have plans available with premium contributions set at no more than 8.5 percent of their household income. For example, under the American Rescue Plan, a 64-year-old earning $58,000 (450 percent of the federal poverty level) would have their premium contributions reduced from $12,900 per year to $4,950.

COBRA Subsidies

I was recently laid off and heard I might qualify for free COBRA benefits, is that true?

Probably, yes. Under the American Rescue Plan, the government will subsidize 100 percent of COBRA premiums between April 1 and September 30, 2021. The law also allows individuals who missed their 60-day enrollment window for COBRA prior to the availability of subsidies to go back and enroll. For example, if you were laid off from your job in August of 2020 but found the premiums too high to enroll at the time, you can come back and enroll for up to 60 days after you are notified of the availability of the subsidies under the American Rescue Plan. You would not have to pay premiums back to the date you were originally eligible to enroll in COBRA, but note that coverage for any medical claims you incurred would only apply from your date of enrollment.

However, if you were laid off more than 18 months ago, check with your plan administrator to see if you are eligible. No one can enroll in COBRA if their coverage window (either 18 or 36 months from their qualifying event) has passed.

I was laid off from a small business. Will I be eligible for COBRA subsidies?

Most likely, but it could depend on where you live. Under federal law, small employers with fewer than 20 employees are exempt from COBRA. However, forty states have a state continuation of coverage program for small employer plans. These are often called “mini-COBRA” laws. The American Rescue Plan extends its COBRA subsidies to these mini-COBRA programs. However, the federal law defers to state rules on how employees of these small businesses will be notified of their eligibility. You may want to check with your former employer or state department of insurance for information about how to access these subsidies.

I left my job voluntarily. Will I qualify for COBRA subsidies?

No. The American Rescue Plan’s COBRA subsidies are not available to people who voluntarily terminate their employment.

I read about new subsidies for COBRA benefits, but my employer hasn’t given me any information about how to enroll. What should I do?

Under the American Rescue Plan, if you are eligible for COBRA subsidies, your former employer or health insurance company is required to notify you by May 30, 2021. You will have 60 days from the date of that notification to enroll in the COBRA coverage. However, note that the COBRA subsidies are only available through September 30, 2021.

I was laid off 19 months ago, and couldn’t afford COBRA at the time. Can I sign up now?

Probably not. Most people are eligible for COBRA coverage for just 18 months after their qualifying event* (in your case, the date you were laid off). If that 18-month period has passed, you are no longer eligible for your former employer’s COBRA benefits. However, you may be eligible for Medicaid or enhanced premium tax credits through the Marketplace. In fact, under the American Rescue Plan, four out of five people will now be able to find a Marketplace plan for $10 per month or less.

*Individuals may be eligible for COBRA for up to 36 months in the following circumstances: (1) death of the covered employee; (2) Divorce or separation of the covered employee from his or her spouse; (3) the covered employee becoming eligible for Medicare benefits; or (4) a dependent child ceasing to become a dependent.

I’ve heard the COBRA subsidies expire in September. I won’t be able to pay the COBRA premiums without the subsidy. Will I be able to switch to a Marketplace plan?

Possibly not. Currently, under federal and most state rules, there is no special enrollment opportunity for individuals who dis-enroll from COBRA because they can no longer afford the premium. You may not be able to switch to a Marketplace plan after September 30 unless you have experienced another life event that would qualify you for a special enrollment opportunity.

Reconciliation of 2020 Premium Tax Credits

Help! I just got a big tax bill for excess premium tax credits I received in 2020. Do I have to pay these back?

No. The American Rescue Plan waives the requirement that you pay back premium tax credits you received in 2020 to which you were not entitled. Under the Affordable Care Act, individuals must estimate their income for the coming year, and the marketplace advances premium tax credits to eligible enrollees on a monthly basis. In a typical year, if your actual income exceeded the amount you originally estimated, you could owe some or all of the excess premium tax credits back to the federal government via your annual tax filing. This process is called “reconciliation.”

While the American Rescue Plan provides relief from this process for tax year 2020, it did not do so for future years, so if you are receiving premium tax credits for your marketplace plan in 2021, and experience a change in your income or household, be sure to promptly report it to the Marketplace.

I’ve filed my 2020 tax return and paid back excess premium tax credits. Now I hear that I didn’t owe that money back. What should I do?

That is correct. The American Rescue Plan waived the requirement that you pay back excess premium tax credits that you received in 2020. If you have already submitted your tax return and paid back the excess premium tax credits, the Internal Revenue Service (IRS) will issue you a refund. While it is not yet clear when or how that refund will be processed, the IRS has advised that people refrain from filing an amended return at this time, and that it will issue more guidance soon.

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