The American Rescue Plan Act (ARPA) was signed into law on March 11, 2021, and it includes significant expansions of the Affordable Care Act (ACA) that will dramatically improve marketplace access and affordability over the next two years by:
- Extending ACA subsidies to higher-income individuals / families who do not currently qualify;
- Increasing ACA subsidies for lower-income individuals / families who already qualify;
- Providing maximal ACA subsidies for individuals / families that receive unemployment benefits in 2021; and
- Preventing taxpayers who misestimated their income in 2020 from having to repay excess premium tax credits at tax time (unless the income earned exceeded the 400% of the Federal Poverty Level threshold).
These changes are currently temporary, and will apply to 2021, and 2022 coverage years.
One of the most significant changes is the elimination of the “subsidy cliff” of 400% of the Federal Poverty Level (FPL). Previously, if your household Modified Adjusted Gross Income is greater than 400% of the FPL, you were ineligible for subsidy to lower the cost of your health insurance premiums. Now, subsidy eligibility will be determined based off of the premium of the second lowest cost Silver level plan available to you. If that benchmark plan is greater than 8.5% of your household Modified Adjusted Gross Income, then you will now be eligible for a subsidy to lower your monthly premiums. This will significantly increase the number of individuals / families who are eligible for a subsidy, specifically for those who are older (50+), families, and those who live in our mountain and rural communities where premiums are significantly higher than in our metro area communities.
For example, previously, a 55 year old individual (non-smoker) earning $53,000 / year, in Adams County, has not been eligible for a subsidy. However, now, that same individual will be eligible for an estimated subsidy of $207 / month. Connect for Health Colorado has partially updated the Quick Cost and Plan Finder Tool (QCPF) to support the changes in the American Rescue Plan (ARP), if you would like to know how this might impact you specifically.
Another significant provision of the act will provide maximum subsidy to those who receive unemployment benefits for at least one week in 2021. Meaning, your subsidy will be calculated as if your income is 138% of the Federal Poverty Level, the lowest income amount to be subsidy eligible in the state of Colorado, which will give you maximum subsidy toward your health insurance premium.
A final significant provision of ARPA has to do with COBRA. For anyone who has involuntarily lost health insurance coverage due to a termination of employment, or reduction in hours, COBRA will be fully subsidized for 6 months (beginning April 1, 2021 – September 30, 2021). This does not apply to individuals who have voluntarily left, or will voluntarily leave employment. There is a lot to this one, so if you believe it may affect you, please give us a call, or read more from the following link – https://www.healthaffairs.org/do/10.1377/hblog20210311.725837/full/.
So what does this mean for you, and when can you take advantage of these changes?
If you are currently enrolled in Affordable Care Act qualified health insurance coverage, off or on the marketplace (Connect for Health Colorado), a new Open Enrollment Period will open on May 15th, 2021, and is currently set to extend through August 15th, 2021. Yes, this is being described as a new Open Enrollment Period, different from the current Special Enrollment Period, which means you will have the option to shop, and change your current health insurance plan without a separate Qualified Life Event.
If you are currently enrolled in your health insurance plan through Connect for Health Colorado, and you are receiving a subsidy, you can expect your subsidy to increase, however that increase will not be automatic. You will have three options:
- Keep everything as-is. You can keep your current health insurance plan, and continue to pay what you are paying for that plan, and when you file your 2021 taxes you will be refunded in one-lump-sum all additional tax credit / subsidy you were eligible for.
- Update your subsidy amount, and remain on your current plan. After May 15th, 2021, log into your Connect for Health Colorado account, click the Make Changes button, scroll through and review your eligibility application (make changes if necessary), and resubmit that application. This action will then update your APTC for the remainder of 2021. DO NOT TAKE THIS ACTION UNTIL MAY 15th, 2021. Chances are the update APTC, and your updated monthly premium will not accurately reflect on your health insurance bill until the July cycle. If you pay your current premium for the month of June, any excess will be credited to your July bill.
- Update your subsidy amount, and shop for, and enroll in a different health insurance plan. After May 15th, 2021, log into your Connect for Health Colorado account, click the Make Changes button, scroll through and review your eligibility application (make changes if necessary), and resubmit that application. This action will then update your APTC for the remainder of 2021, and you will be allowed to shop for, and enroll in a different health insurance plan, effective 06/01/2021. If you change your plan, but remain with your current health insurance carrier we are currently being told that any deductible and annual max out of pocket accumulation will be carried over to your new plan. However, if you switch to a different health insurance carrier then your deductible and max out of pocket will start over with your new coverage / effective date, and you will lose any accumulation toward your previous deductible and annual max out of pocket. AGAIN, DO NOT TAKE THIS ACTION UNTIL MAY 15th, 2021.
If you are currently enrolled in a health insurance plan direct with a health insurance carrier (not through Connect for Health Colorado), we recommend you check if you might now be eligible for a subsidy. Connect for Health Colorado has partially updated the Quick Cost and Plan Finder Tool (QCPF) to support the changes in the American Rescue Plan (ARP). Connect for Health Colorado has removed the 400% federal poverty level (FPL) cap, which was the previous cutoff amount to receive APTC. Simply enter some basic information for you, and/or your household, including estimated 2021 income, and click the Get Your Estimated Savings button. This will let you know if you will now be eligible for subsidy.
- If you determine that you will now be eligible for a subsidy please schedule an appointment with me (after May 15th) to discuss this in more detail. To receive the subsidy you will need to create an account on Connect for Health Colorado, and complete and submit an eligibility application. You will then be allowed to shop for, and enroll in a subsidized health insurance plan for the remainder of 2021. If you change your plan, but remain with your current health insurance carrier we are currently being told that any deductible and annual max out of pocket accumulation will be carried over to your new plan. However, if you switch to a different health insurance carrier then your deductible and max out of pocket will start over with your new coverage / effective date, and you will lose any accumulation toward your previous deductible and annual max out of pocket.
- If you determine that you are still not eligible for a subsidy then you have two options:
- Remain on your current health insurance plan, direct with your current carrier, and continue to pay your current monthly premium.
- After May 15th, 2021, and through August 15th, 2021 you will be able to shop, and change your health insurance plan if you would like. Again, if you change your plan, but remain with your current health insurance carrier we are currently being told that any deductible and annual max out of pocket accumulation will be carried over to your new plan. However, if you switch to a different health insurance carrier then your deductible and max out of pocket will start over with your new coverage / effective date, and you will lose any accumulation toward your previous deductible and annual max out of pocket.
If you receive unemployment benefits for at least 1 week in 2021 then it is highly recommended you resubmit your eligibility application in Connect for Health Colorado after May 15th, 2021, as you will receive maximum subsidy for the remainder of 2021.
If you currently do not have health insurance coverage, or are a member of a Health Share program, or non-ACA qualified health insurance plan, you will be able to shop and enroll in an Affordable Care Act qualified plan after May 15th, 2021. Again, this is a new, one-time, Open Enrollment Period that is currently set to last through August 15th, 2021. Please use Connect for Health Colorado’s Quick Cost and Plan Finder Tool to find out if you will now be eligible for a subsidy – Quick Cost and Plan Finder Tool.
I understand this is a lot of information. This is all still fairly new, and there are some things we are still learning, and awaiting guidance / clarification with regard to. If you are enrolled in a plan through Connect for Health Colorado you will receive notifications and information from Connect for Health Colorado in the coming weeks, so please pay attention to those. If you are enrolled direct with a carrier you should also be receiving notifications and information about your options.
Of course, if you have questions, or would like to schedule an appointment with your licensed health insurance agent at the Integra Insurance Group, please reach out to us – 303.466.5500.