The American Rescue plan Act increases and expands cost assistance under the Affordable Care Act. Up to 29 million Americans stand to benefit from the changes.[1][2][3][4]

Under the American Rescue Plan Act, for 2021 – 2022:

  • People under 100% FPL who are not eligible for Medicaid expansion and are on unemployment can get market subsidies (i.e. the Medicaid gap is closed for those on unemployment),
  • People up to 150% FPL can get silver plans for $0 premiums and reduced deductibles,
  • People over 400% FPL can get assistance (premiums capped at 8.5% of income; i.e. the subsidy cliff is removed),
  • and everyone with Marketplace assistance gets increased assistance.

Changes to Tax Credit Caps 2021-2022 Under the American Rescue Plan Act

Table 1: Percent of Income Paid for Marketplace Benchmark Silver Premium, by Income
Income (% of poverty) Affordable Care Act
(before legislative change)
COVID-19 Relief (current law 2021-2022)
Under 100% Not eligible for subsidies* Not eligible for subsidies**
100% – 138% 2.07% 0.0%
138% – 150% 3.10% – 4.14% 0.0%
150% – 200% 4.14% – 6.52% 0.0% – 2.0%
200% – 250% 6.52% – 8.33% 2.0% – 4.0%
250% – 300% 8.33% – 9.83% 4.0% – 6.0%
300% – 400% 9.83% 6.0% – 8.5%
Over 400% Not eligible for subsidies 8.5%
NOTES: *Lawfully present immigrants whose household incomes are below 100% FPL and are not otherwise eligible for Medicaid are eligible for tax subsidies through the Marketplace if they meet all other eligibility requirements.
**In the COVID-19 relief law, lawfully present immigrants in states that have not expanded Medicaid would continue to be eligible for marketplace subsidies. In addition, people receiving Unemployment Insurance (UI) are treated as though their income is no more than 133% of poverty for the purposes of the premium tax credit. This could extend premium tax credits to some individuals with incomes below poverty.
SOURCE: KFF

NOTE: The Act also includes a tax holiday for tax credit repayment for 2020, temporary COBRA premium subsidies, and more. For more on what the Act includes, see the citations below.

Impacts of the American Rescue Plan Act

Although it is unlikely all eligible uninsured will take advantage of the changes, this could substantially lower costs for the 15 million uninsured who are eligible for marketplace assistance under the changes and the nearly 14 million people insured who are already utilizing the assistance.

Although these changes just generally do a lot of good and should incentivize shoppers to sign up, especially during the COVID special enrollment until May 15th, one of the most important changes is the removal of the subsidy cliff for those making over 400% FPL. Previously even being $1 over the limit meant you got no assistance and perhaps worse, would owe back every credit if you had taken assistance and your income changed. Now those making over 400% FPL can’t pay more than 8.5% of household income, which means in some cases this will result in assistance for those making over 400% FPL and will limit tax credits that would be owed back.

NOTE: The Act also includes a tax holiday for tax credit repayment for 2020, temporary COBRA premium subsidies, and more. For more on what the Act includes, see the citations below.

Citations

  1. The American Rescue plan Act. Congress.gov.
  2. How the American Rescue Plan Act Affects Subsidies for Marketplace Shoppers and People Who Are Uninsured. KFF.Org.
  3. How the American Rescue Plan Will Improve Affordability of Private Health Coverage. KFF.Org.
  4. Impact of Key Provisions of the American Rescue Plan Act of 2021 COVID-19 Relief on Marketplace Premiums. KFF.Org.

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