What does the American Rescue Plan (third stimulus package) mean for the Affordable Care Act?

This blog content applies to health care coverage for 2021 and 2022.

Need to enroll in a health insurance policy or update the one you have? Open Enrollment for the Health Insurance Marketplace (Healthcare.gov) is Nov. 1, 2022, to Jan. 15, 2023.

What people need to know about the relief bill and its changes to the ACA: 

1. Lower monthly premiums: federal government subsidies will reduce the amount you have to pay for health insurance each month. 

The plan significantly increases premium tax credits for 2021 and 2022. These increased subsidies will substantially reduce or even eliminate monthly premiums for millions of people with Marketplace plans.  

On average, premiums will decrease by $50 per month. No one will have to spend more than 8.5% of their income on premiums. People with income below 150% of the poverty line (about $19,000 for a single person, $25,800 for a couple, and $39,000 for a family of four) will pay no premiums for some plans, including Silver plans with cost sharing reductions. 

Current enrollees, including those who recently enrolled through the 2021 Special Enrollment Period, will need to update their Healthcare.gov applications to get the new subsidies. These subsidies will be visible on Healthcare.gov starting April 1, and you will start receiving them on May 1. You will need to reselect your current plan for the changes to take effect to reduce your premiums for the remainder of the year. If you do nothing, you do not lose access to the tax credits, but you’ll get them as a refund when you file your taxes next year. When you file your taxes in 2022, you will get a reimbursement of the additional tax credits you would have qualified for from January through April 2021.  

Due to the SOEP, you may be able to change plans until August 15. If you qualify for these additional benefits, the new tax credits will be applied to your policy starting on May 1.  

If you purchase a plan now, you will get a refund if you go back into your Healthcare.gov application after April 1. 

2. Increase Subsidies for Those Who Have Lost Their Jobs 

The plan expands premium tax credits for people who receive unemployment benefits in 2021. This means that individuals currently unemployed are guaranteed to get the most generous subsidies on Healthcare.gov. It doesn’t matter what their actual year-end income is.  

These additional tax credits will be available starting this summer. 

3Protect Families from Having to Pay Back Subsidies 

In 2020 some people lost their jobs early in the year but later got new ones with higher earnings than they had expected. Others worked additional hours or received bonus pay as essential workers. The American Rescue Plan exempts low- and moderate-income families from having to repay the premium tax credit they received in 2020.  

4. Government will pay the cost of COBRA coverage 

If you lost your job and your job’s health insurance, you can use COBRA to keep your same health insurance plan. But instead of losing your employer’s contribution for your premiums, the government will pick up the bill. The government will pay the entire COBRA premium from April 1 through September 30, 2021. 

If you get a new job that offers health insurance before Sept. 30, you will lose eligibility for this no-cost COBRA coverage. And someone who left a job voluntarily would not be eligible, either. 

We encourage you to review your options with the Marketplace before signing up for COBRA, since plan options may be more attractive to you, depending on your particular situation.