The American Rescue Plan, which became law on March 11th, makes buying healthcare coverage through the Affordable Care Act (ACA) more affordable for a lot more people. The law expands the premium tax credits available for everyone, including those in higher income brackets, for coverage years beginning in 2021 and 2022.
The tax credits are based on where individuals and families fall on the federal poverty level (FPL). The tax credits lower, and in some cases eliminate monthly premiums and help reduce other out-of-pocket costs, like deductibles. The new law:
- Guarantees access to at least 1 silver plan with a $0 premium payment for people making between 100% – 150% of the Federal Poverty Level (FPL):
- Your deductible would also be less, making the plan more affordable.
- Pays for more of the healthcare costs for people making between 150% – 400% of the FPL:
- Lowers healthcare premiums for most people who bought a plan through the ACA marketplace, even those making more than 400% of the FPL.
- Provides income-based tax credits for people making more than 400% of the FPL.
The law also helps people who will receive at least 1 unemployment check-in 2021. Workers who were laid off or whose hours were reduced will have 100% of the cost of COBRA premiums covered. If you are unemployed and have access to an “affordable plan” through your spouse or another family member, you may not qualify for this savings. Have your spouse or family member ask their employer if the health plan offered is considered affordable based on your household income. The subsidy is available from April 1 – September 30, 2021, for those who are eligible.
What Kind of Savings Can I Expect?
Starting April 1, 2021, you can take advantage of the lower costs if you enroll in an ACA Marketplace health plan or already have an ACA plan. The Department of Health and Human Services states that:
- Monthly premiums will be about $50 lower per month for most individuals with plans, or about $85 per policy per month for families.
- Many enrollees will be able to buy a plan for $10 or less per month after premium tax credits are applied.
- Some lower-income individuals will qualify for a Silver plan for $10 or less per month after tax credits are applied.
- A small number of ACA enrollees will be able to pay the same or a lower premium amount to upgrade to a higher metal category plan that covers more out-of-pocket costs:
- You cannot upgrade if you already have the highest metal plan available.
- Anyone eligible for a tax credit will not have to pay more than 8.5% of their household income to buy a marketplace health plan.
Examples of Savings
The Department provides examples of savings that ACA plan enrollees can expect:
- A couple with no health insurance who has a household income of more than $70,000 could save more than $1,000 per month on their monthly premium costs.
- A family of four with a household income of $90,000 could pay $200 less in monthly premiums per month.
- An individual earning $19,000 can get a health plan with a $0 monthly premium.
What Do I Need to Do to Get the Savings?
If you have no health insurance, you have to act before August 15, when the special open enrollment period ends. The sooner you enroll, the sooner you will be covered by a health plan that fits your needs.
If you already have an ACA plan, you may want to change your plan to lower your costs or get more coverage for the rest of the year. This is especially true if you are paying a low or $0 premium now. You have until August 15 to change plans. If you change plans, you could have to start your deductible over again, so it’s important to get all the information you need before you decide to change plans.
Everyone who has an ACA plan has to open your ACA application after April 1, 2021. You must do this even if you don’t make any changes to get any tax credits you are eligible for this year.
If you live in a state that operates its own marketplace, visit your state’s marketplace site for more information.
If you are receiving unemployment compensation, you have to act before August 15, when the special open enrollment period ends. The sooner you enroll, the sooner you will be covered by the plan you choose.
All People with ACA Plans Will Have to Update Their Applications Beginning April 1
The tax credits are much needed for millions of Americans who have no health insurance, and many of the individuals and families who currently have ACA plans. But you have to open your ACA application after April 1, 2021, even if you don’t make any changes, to get any tax credits you are eligible for this year. The tax credits you receive will be reconciled when you file your 2021 tax return next year.
Need help accessing your application after April 1? American Exchange has created How to Access Your Marketplace Application. The guide gives step-by-step instructions on how to access and update your ACA account.
Where Can I Get Help?
If you don’t need help to enroll in an ACA plan, click the link below to begin your enrollment application:
American Exchange’s licensed, ACA-certified brokers have been helping people understand marketplace coverage and enroll in affordable plans that fit their needs since 2013. We can answer your questions, get you the premium tax credit assistance you qualify for and enroll you in a plan. We do this at no cost to you.