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.

Unemployment Compensation and Eligibility for Advance Premium Tax Credits

The American Rescue Plan included provisions to increase the amount of advance premium tax credits (APTCs) people can receive if they received, or were approved to receive, unemployment compensation for a week or more during 2021. The law also enables these individuals to qualify for significant reductions in their out-of-pocket costs through cost-sharing reduced (CSR) plans.

If I received unemployment compensation in 2020 but not in 2021, am I eligible for the new APTCs?

No, the enhanced APTCs are available only to people who have received, or been approved to receive, unemployment compensation for at least one week during 2021. However, you may still be eligible for financial assistance based on your income level and household size.

When can I begin receiving the enhanced APTCs related to 2021 unemployment compensation?

If you are enrolling in coverage offered on the federally facilitated marketplace (FFM) you can begin receiving enhanced APTCs on July 1, 2021. Some state-run marketplaces may have different start dates, so check with your state. APTCs for marketplace coverage should cover the entire premium for a benchmark marketplace plan if you received unemployment compensation or were approved for unemployment compensation for any week during 2021, so long as you are otherwise eligible for APTCs. You are also eligible for a cost-sharing reduced plan if you enroll in a silver level plan. The eligibility is prospective, so it is important to go back into your marketplace application and update with your unemployment compensation status. If you enroll in a marketplace plan you may be able to receive retrospective premium tax credits for previous months of 2021 when you file your federal income tax return for 2021.

If anyone in my household received unemployment compensation during 2021, does the whole family qualify for APTCs?

If a non-dependent taxpayer received unemployment compensation or was approved for unemployment compensation during any week of 2021, the entire tax household is eligible for APTCs that cover the entire premium of a benchmark marketplace plan. However, if a tax dependent is the only one who received or was approved for unemployment compensation, the household will be eligible for generous cost-sharing reductions, but not for the new unemployment compensation APTCs. The household may still be eligible for financial assistance based on household income and size.

I was approved to receive unemployment compensation in 2021 but I still haven’t received any payments. Am I eligible for the enhanced APTCs?

Yes, you are eligible for the unemployment compensation APTCs as long as you were approved for unemployment compensation for any week during 2021. You do not have to wait until you start receiving unemployment compensation to enroll, but you are encouraged to maintain your proof of approval in case the IRS requires proof to verify your unemployment compensation when you file your 2021 income tax return.

Will the marketplace require documentation to prove I received unemployment compensation?

No, the federal marketplace will not require documentation to provide proof of receipt or approval to receive unemployment compensation, but some state-run marketplaces may have different requirements so check with your state. In addition, depending on what the IRS is able to verify on the attestation of receipt of unemployment compensation you may be required to submit proof when you file your federal income tax return for 2021.

I received unemployment compensation earlier this year, but now I am eligible for employer coverage. Am I eligible for the unemployment compensation APTCs?

No, you are only eligible for the unemployment compensation APTCs if you are otherwise eligible for APTCs. Those who have an offer of affordable employer coverage are not eligible for APTCs. Your employer coverage is considered affordable if the premium for self-only coverage is less than 9.83 percent of your household income in 2021.

I received unemployment compensation during 2021 and now I have an employer that provides affordable group coverage but I missed my employer’s open enrollment period. Can I receive the enhanced APTCs?

No, unfortunately you are only eligible for the unemployment compensation APTCs if you are otherwise eligible for APTCs. Those who have an offer of affordable employer coverage are not eligible for APTCs, even if you missed your employer’s open enrollment period. Your employer coverage is considered affordable if the premium for self-only coverage is less than 9.83 percent of your household income in 2021.

If I received unemployment compensation during 2021 but I am now eligible for Medicaid can I choose to enroll in a marketplace plan with these new APTCs instead?

No, because eligibility for the new unemployment compensation APTCs is contingent on being otherwise eligible for APTCs. If you are eligible for Medicaid, you are not eligible for APTCs.

I live in a state that has not yet expanded Medicaid, but I have previously not been eligible for APTCs because my income is below 100% of the federal poverty level. If I received unemployment compensation during 2021, am I still ineligible for APTCs because of my income level?

If you received unemployment compensation during any week of 2021 you are eligible for APTCs that cover the entire premium of a benchmark marketplace plan regardless of your income. You are also eligible for enhanced CSR benefits. This is including those whose household income falls below 100% of the federal poverty level who may have been previously ineligible for APTCs, as long as a taxpayer in the household received or was approved to receive unemployment compensation during any week of 2021.

I received unemployment compensation earlier this year but now I have an income that makes me ineligible for APTCs. Am I still eligible for the unemployment compensation APTCs?

Yes, you will still qualify for the enhanced APTC/CSR benefits under this provision, as long as you received unemployment compensation during 2021 and would otherwise qualify for APTCs. The enhanced benefits apply for the full year, even if you have since gone back to work or had a change in income. However, if you are offered affordable job-based coverage, you may not be eligible for these enhanced APTCs.

Does the unemployment compensation APTC apply for Bronze, Silver and Gold plans?

The increased APTC benefit can be applied to any plan but the APTC provides a $0 premium for the benchmark silver-level marketplace plan, which is the 2nd lowest cost silver plan available to you. In order to qualify for a cost-sharing reduced plan, you must enroll in a silver plan.

If my spouse qualifies for unemployment compensation, but is not the primary marketplace applicant, does the APTC apply to the entire household or only my spouse?

In order to qualify for expanded APTC benefits, a taxpayer must receive or be approved to receive unemployment compensation for any week beginning during 2021. So, if either spouse receives or is approved to receive unemployment compensation, the whole household can qualify as long as you and your spouse file taxes jointly.

I received unemployment compensation earlier this year and updated my marketplace application to reflect this. Do I need to go in and update my marketplace application again?

Yes, if you received unemployment compensation in 2021, you need to update on or after July 1, 2021 to receive the extra benefits if you are enrolled in coverage offered on the FFM. If you do not return to get the extra APTC, you will receive the tax credit you are eligible for when filing your 2021 federal income tax return. If you are enrolled in coverage offered by a state-run marketplace, check with your state to determine whether your application needs to be updated.

What if my unemployment compensation income puts my household income above what will qualify me for APTCs?

If you or a taxpayer in your household receives or is approved to receive unemployment compensation, then the household may be eligible for a premium tax credit that covers the entire premium cost for the benchmark marketplace plan for the whole household, regardless of the taxpayer’s actual household income amount.

I was approved to receive unemployment compensation in 2020, and I received my last payment the first week of January 2021. Does this count towards eligibility for the enhanced APTC/CSR eligibility for unemployment compensation?

According to the statute, only consumers who receive or are approved to receive unemployment compensation for any week during 2021 are eligible for the new benefits. If you were approved to receive unemployment compensation for at least one week in 2021 then you are eligible for the enhanced subsidies.

I currently receive unemployment compensation, but I also receive capital gains income at the end of the year which is greater than 450% of the federal poverty level. Am I still eligible for any assistance?

If a taxpayer in the household receives or is approved to receive unemployment compensation, then the taxpayer may be eligible for a premium tax credit that covers the entire premium cost for the benchmark marketplace plan for the whole household, regardless of the taxpayer’s actual household income amount. However, you must otherwise meet the eligibility requirements for APTCs.

I received unemployment compensation this year but it is set to expire before July 1. Will I still qualify for the enhanced APTC/CSR?

Yes, after July 1st, if you are not receiving unemployment compensation during the month you are filing an application, you will be asked if you received or have been approved to receive unemployment compensation at any point in 2021. If you received or have been approved to receive unemployment compensation in 2021 you should attest as such.

If I received unemployment compensation in 2021, will I be able to receive APTC retroactive prior to July 1 when I file my 2021 income tax return or is it just applicable to August through December premiums?

You may claim the APTC from prior months as PTC when you file your annual federal income tax return for 2021.

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?

Yes. New special enrollment policies have expanded the opportunities consumers have to sign-up for health coverage outside the annual open enrollment period. This includes offering consumers a special enrollment period when they no longer receive employer contributions or COBRA subsidies for continued employer health coverage.

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.

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