What You Need to Know
Most individuals and families will get direct stimulus payments of $1,400 or less per person.
Tax credits for health insurance premiums will increase for many.
The government will pay 100% of COBRA premiums for a limited time.
The American Rescue Plan Act of 2021 will send thousands of dollars in immediate financial aid to individuals and families. It will also provide economic relief for the unemployed and disadvantaged for the foreseeable future. The bill addresses the impact of COVID-19 on the economy, in addition to aiding public health, state and local governments, individuals, and businesses.1 It was signed into law by President Biden on March 11, 2021.
How Will the American Rescue Plan Act Affect You?
Besides providing about 85% of citizens up to $1,400 in stimulus,2 the American Rescue Plan Act (ARPA) expands access to Affordable Care Act (ACA) coverage. It does so by lowering the cost of health insurance and addressing healthcare disparities. This will provide about 14.9 million Americans access to more affordable healthcare policies; nearly 1.8 million will qualify for a $0 premium Silver plan.3
Some highlights include:4
- On average, people will save $50 per person per month on an ACA plan premium and $85 per policy per month.
- Four out of five people looking for a plan will find one for $10 or less per month after a premium tax credit.
- Over 50% will be able to find a Silver plan for $10 or less per month.
- ARPA removes the income cap to get subsidy help to pay for health insurance. This will last for two years. Only ACA plans qualify for premium tax credits.
- Instead, the amount you pay would be limited to 8.5% of your income, as measured by the exchange. (And the older you are, the better because your monthly premiums are higher.)
- Anyone who received too much in tax credits in 2020 won’t have to pay back the excess.
- People who collect unemployment insurance will get $0 monthly premiums (this year alone). So even if you don’t qualify for COBRA, you can still get free insurance.
How Does the American Rescue Plan Act Affect COBRA?
Keeping employer-sponsored coverage when leaving a job will also become more affordable. The federal government will pay the entire premium for anyone who qualifies for Consolidated Omnibus Budget Reconciliation Act (COBRA). This applies from April 1 to September 30, 2021.
How Does the American Rescue Plan Affect the Uninsured?
Also, the federal government is offering money to expand insurance coverage for the uninsured. For two years, twelve states who haven’t expanded Medicaid will be offered funding to insure more of their residents.5
What Are Other Features of the American Rescue Plan Act?
Funding will also affect:6
- Funding for rural health care providers and rural development to combat the virus.
- COVID-19 vaccinations, testing, treatment, and prevention.
- Mental health and substance abuse services.
- Emergency rental assistance, homeowner assistance, and other housing programs.
- Small business assistance, including specific programs for restaurants and live venues.
- Programs for health care workers, transportation workers, federal employees, veterans, and other targeted populations.
- Tribal government services.
- Scientific research and development.
- Make up to $10,200 of 2020 unemployment compensation tax-free.
- Make student loan forgiveness tax-free through 2025.
- Expand and otherwise modify certain tax credits, including the child tax credit.