March 11, 2021
STAFF REPORT
The America Rescue Plan, approved by Congress this week, will extend short- term economic relief to tens of millions of Americans through a two-year boost in Obamacare subsidies, the first expansion of the law since it was approved in 2010.
The subsidies could help a majority of the nearly 14 million people who buy coverage on the individual market and the nearly 15 million people who are uninsured but eligible to buy coverage on the federal or state exchanges, according to the Kaiser Family Foundation.
Democrats are eager to immediately get the subsidies out, while addressing its high premiums and laying the groundwork for permanent changes.
The new subsidies are retroactive to Jan. 1, 2021 and will go into effect when President Biden signs the ARA. People who are already enrolled in Obamacare plans are expected to see the benefits automatically.
Good news!
Most people who already get premium subsidies will receive more under the new law because Congress is changing the way subsidies are calculated based on their annual income.
For instance, people who make $19,320 for an individual and $39,750 for a family of four, will no longer be required to pay anything toward their premium.
The people who stand to benefit the most are those who make just over the poverty level because their premium costs will go down to zero, according to several estimates.
I Don’t Qualify for Obamacare
Obamacare previously offered no subsidies to anyone making over 400% of the poverty level, regardless of the size of their insurance bills.
The new 8.5% threshold now applies to everyone, regardless of income addressing the cliff that was created in the law for people whose income was just above the 400%.
Older adults stand to benefit substantially because their insurance costs are higher.
For instance, a single 64-year-old who makes $58,000 received no ACA subsidies; that person will now get a $7,950 credit, according to the Congressional Budget Office.
People who are now eligible for subsidies but not enrolled in the exchange may have to make a decision to switch mid-stream and lose any deductible payments made.
It is unknown how many people who don’t have insurance coverage today will enroll to take up the benefit.
Estimates indicate an additional 1.7 million people would take advantage, and Kaiser surveys of the uninsured show that cost is a top reason to forgo coverage.
So look at your income level, age and the cost of insurance coverage in your region and get an estimate online at the various exchanges, those exchanges should be updated soon.