The American Rescue Plan Act
On March 11, 2021, President Joe Biden signed into law the American Rescue Plan Act (ARPA) to provide economic relief during the coronavirus pandemic. This $1.9 trillion measure includes provisions that directly affect health insurance.
ARPA IMPACT ON GROUP HEALTH INSURANCE
The law contains a 100% subsidy of COBRA premiums for individuals who lost health coverage as a result of an involuntary termination of employment or reduction in hours. ARPA also provides a “second chance” election for those who did not initially elect COBRA or who let their COBRA coverage lapse. The subsidy begins on April 1, 2021 and ends on September 30, 2021.
This subsidy also applies to State Continuation which is the small employer version of COBRA. The extended election period does not. State continuation eligible policies will only need to notify current and future terminations of the subsidy. More specific details on this subsidy (as it relates to COBRA) will be available by mid-April.
Employers are responsible for notifying affected individuals that they are eligible for this subsidy. It will first be important to identify all assistance-eligible individuals. This will include both those currently on COBRA and those employees /dependents who lost health plan coverage within the past 18 months (on or after November 1, 2019), because of an involuntary termination of employment or reduction in hours. These are some next steps for which employers will want to be prepared:
- Be prepared to send out new COBRA notices. Governmental agencies are creating the new COBRA documents that include information on the subsidy. That should be available on April 10.
- Be prepared to track individuals who are assistance-eligible and that elect the COBRA subsidy.
- Be prepared to work with payroll providers to claim the refundable tax credit. Further guidance on this is likely to be issued.
ARPA IMPACT ON INDIVIDUAL HEALTH INSURANCE
ARPA also has a significant impact on the individual health insurance market. These are policies that are obtained on an individual basis, not through an employer. Most people who are enrolled through the Marketplace will qualify for a higher Premium Tax Credit. Those who are not enrolled through the Marketplace are likely now eligible.
The maximum income limit for receiving a Premium Tax Credit has been eliminated. The new guideline is that a benchmark Silver plan can be no more than 8.5% of your household adjusted gross income.
There is a special enrollment period to allow people to enroll or update their enrollment due to ARPA, which runs from April 1 – August 15.