When President Biden signed the American Rescue Plan Act (“ARPA”) into law on March 11, 2021, he signed a bill that provides significant temporary subsidies for the Affordable Care Act (“ACA”). With silver plan ACA premiums that average $436 per month, it is understandable that in order for more people to enroll in ACA plans, the premiums must come down.
The bill is expected to reduce premiums for up to 15 million people who are currently uninsured and lower premiums for 9 million people who are currently receiving some subsidy for the ACA plans. For someone who already has an ACA plan and believes they may be eligible for increased subsidy, they should go into their healthcare.gov account and update it starting on April 1 so that they receive the full subsidy as soon as possible.
What Does the Bill Do?
The bill takes the current subsidy program and lowers the income threshold so that more people are eligible to receive subsidies starting on April 1, 2021. The bill takes your household’s annual income during 2021 and 2022 and multiples it by 8.5%. According to the bill, that number is the maximum amount you should pay for an ACA plan during the course of the year.
These subsidies are expected to lower premiums by $50 per person, per month on average and depending on income may impact someone by as much as $200 per month.
Who Should Apply for ACA Coverage?
Right now – anyone who is interested in an ACA plan should sign up and get covered. Starting on February 15 and going through August 15, 2021, the Biden administration created an open enrollment period that allows anyone who is uninsured and who would like to buy an ACA plan to buy a plan. And with the premium subsidies beginning on April 1, ACA plans have never been so affordable or accessible.
ACA plans are particularly attractive to those who have chronic pre-existing conditions and need continual care to manage the condition. With an ACA plan, those individuals are able to receive health insurance and then receive treatment for conditions that will be covered by their plan.
In addition to those with pre-existing conditions, ACA plans are attractive to those who would like coverage in the event of an unexpected catastrophe or illness. For example, the average cost of hospitalization for COVID-19 is $51,000 - $78,000, depending on the age of the patient. If you are concerned about incurring costs like that, an ACA plan may be the right choice for you.
What’s Next for The Subsidies?
During a health pandemic, health insurance has become a priority for many. The ARPA recognized not only the importance of health insurance but also the high cost of ACA plans such that for more people to become covered by health insurance, premiums need to be lowered. While the ARPA’s subsidies are now in place for 2021 and 2022, the next question is what will happen to these subsidies in 2023? Will they be extended or will higher premiums return?
For now, we can rest assured that starting April 1, ACA premiums will be more affordable for many and those who want to buy an ACA plan will be able to do so.
Jan Dubauskas is a healthcare expert, enthusiastic insurance pro, attorney and mom serving as Vice President of healthinsurance.com
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